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F.2d 346 (1st Cir. 1927), an estate challenged an estate tax
regulation that expressly disallowed the deduction of estate
taxes from the determination of the net estate for purposes of
computing estate tax liability, as unconstitutional and as
inconsistent with the statute (Revenue Act of 1916, ch. 463,
sec. 203, 39 Stat. 778, as amended). The estate contended
that the amount of estate tax imposed by the statute should
not be included in the base used as a measure of the tax. The
Court of Appeals rejected the challenge, finding the
regulation consistent with the meaning of the statute and the
constitutional challenge “a claim so obviously unsound as to
call for no discussion.” Old Colony Trust Co. v. Malley,
supra at 347.
Third, petitioner's fundamental claim, and the fatal flaw
in its argument, concerns the nature of the transfer required
to insulate the estate tax from attack based on the "direct
tax" strictures of the Constitution. Petitioner sums up its
argument as follows:
Petitioner views the estate tax as a tax on the transfer
of property at death, consistent with Knowlton v. Moore,
178 U.S. 41 (1900), and is concerned solely with the
amount of property that a decedent can transfer at death.
The problem with the estate tax as it is currently
assessed is that a large portion of the tax is imposed on
the decedent's property not because of its transfer at
death but, rather, merely because of its ownership by the
decedent, in clear violation of Pollock v. Farmers' Loan
& Trust Co., 157 U.S. 429, reh'g granted, 158 U.S. 601
(1895). Specifically, the amount of a decedent's estate
that must be paid as estate tax is not "transferred" at
death to anyone. Therefore, it cannot itself be taxed
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