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The estate tax regime at issue in New York Trust Co.32 was "tax
inclusive" in the same manner now faulted by petitioner in the
current estate tax structure provided in sections 2001-2209.
We think petitioner's effort to dissect the estate tax at
issue herein into a constitutionally permissible portion
(i.e., the tax imposed with respect to property transferred to
heirs) and a constitutionally impermissible portion (i.e., the
tax imposed with respect to property paid to the Government as
tax, or the "tax on a tax payment") is the kind of "scientific
distinction" long ago rejected in New York Trust Co., Knowlton
v. Moore, supra, and Nicol v. Ames, 173 U.S. 509 (1899). Just
as the differences in estate and inheritance taxes were deemed
inconsequential for purposes of determining what constitutes a
direct tax in New York Trust Co., we believe petitioner's
distinctions likewise lack constitutional significance.
Second, both the inheritance tax upheld in Knowlton v.
Moore, supra, and the estate tax upheld in New York Trust Co.,
against "direct tax" challenges were "tax inclusive" in the
same manner as that with which petitioner finds fault in the
current estate tax. Concededly, the "direct tax" attack in
the prior cases was not framed in terms of the taxes' "tax
inclusive" structure. We have found only one case where the
"tax inclusive" feature of the estate tax was attacked on
constitutional grounds. In Old Colony Trust Co. v. Malley, 19
32 Revenue Act of 1916, ch. 463, sec. 201, 39 Stat. 777.
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