- 17 -
interest held by the decedent before death or the interest held
by the legatee after death”).
1. Petitioner’s Constitutional Challenge
Petitioner argues that the gift tax must be measured not by
reference to the value of the property in the hands of the donor
but “by the value of the property in gratuitous transit.”
Otherwise, petitioner argues, the gift tax would be a direct tax
on the transferred property, in contravention of the
constitutional restraint on the imposition of direct taxes (the
Direct Tax Clause). See U.S. Const. art. I, sec. 9, cl. 4 (“No
capitation, or other direct, Tax shall be laid, unless in
Proportion to the Census or Enumeration herein before directed to
be taken.”).
Petitioner’s argument is without merit. In upholding the
Federal gift tax against a challenge based on the Direct Tax
Clause, the Supreme Court stated in Bromley v. McCaughn, 280 U.S.
124, 136-138 (1929):
While taxes levied upon or collected from persons
because of their general ownership of property may be
taken to be direct, * * * this Court has consistently
held, almost from the foundation of the government,
that a tax imposed upon a particular use of property or
the exercise of a single power over property incidental
to ownership, is an excise which need not be
apportioned, and it is enough for present purposes that
this tax is of the latter class * * *
* * * * * * *
It is said that since property is the sum of all
the rights and powers incident to ownership, if an
unapportioned tax on the exercise of any of them is
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011