COLORADO.

In General.

Colorado enacted an inheritance tax in 1901, using the Illinois statute of 1895 as a model. It was radically amended in 1909.

Colorado taxes stock in a Colorado corporation owned by a non-resident. It is only within the past year that such property has been taxed to any appreciable extent. The state is now deriving considerable revenue from this source.

Any person or corporation must notify the attorney general before delivering or transferring securities of a non-resident, and must see that the tax is paid. A non-resident's estate must make an affidavit as to its property before consent will be given to the transfer of securities.

Constitutional Limitations.

Colorado Constitution 1876, a. 10.

S. 3. All taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws, which shall prescribe such regulations as shall secure a just valuation for taxation of all property, real and personal. . . .

[This language remains unchanged, although the balance of the section was amended in 1880, 1392 and 1904.]

Mill's Annotated Statutes (Revised Supplement 1891-1905), ss. 3813-3832 inclusive. (This is the 1902 Act above referred to.)

THE STATUTE OF 1901.

Colo. St. 1901, c. 94, s. 23, imposes a tax of 2 per cent on lineals, with an exemption of $5,000; 3 per cent on collaterals, and in all other cases the rate is graduated. On all estates of $10,000 or less, 3 per cent; $10,000 to $20,000, 4 per cent; $20,000 to $50,000, 5 per cent; over $50,000, 6 per cent, with an exemption of any estate valued at less than $500.

Colo. St. 1901, c. 94, ss. 24-43, provide for the assessment and collection of the tax. This statute was approved April 5, 1901.

THE STATUTE OF 1902.

History.

The Colorado statute is based upon the Illinois statute. Inheritance Tax, 23 Colo. 392, 48 P. 535.

In re

Colo. St. 1902, c. 3, s. 21, et seq., was approved March 22, 1902. The act is entitled "An Act in relation to public revenue and repealing all previous acts or parts of acts in conflict therewith."

This act is not void as being too general in title in view of the financial history of the state. One would expect to find in an act entitled Revenue, provisions imposing a duty upon privileges or

successions.

The statute is not void as containing more than one subject simply because it includes an inheritance tax and a property tax. The claim was made that the statute modified the law of descent and the law of wills and also included the taxation of property. The court is of the opinion that the title of the act clearly embraces provisions providing for public revenue by tax on inheritances. In re Magnes, 32 Colo. 527, 77 P. 853.

S. 21. All property, real, personal and mixed, which shall pass by will or by the intestate laws of this state from any person who may die seized or possessed of the same while a resident of this state, or if decedent was not a resident of this state at the time of his death, which property or any part thereof shall be within this state or any interest therein or income therefrom, which shall be transferred by deed, grant, sale or gift made in contemplation of the death of the grantor or bargainor or intended to take effect, in possession or enjoyment after such death, to any person or persons or to any body politic or corporate in trust or otherwise, or by reason whereof any person or body politic or corporate shall become beneficially entitled in possession or expectation to any property or income thereof, shall be and is, subject to a tax at the rate hereinafter specified to be paid to the treasurer of the proper county for the use of the state, and all heirs, legatees and devisees, administrators, executors and trustees shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed. When the beneficial interests to any property or income therefrom shall pass to or for the use of any father, mother, husband, wife, child, brother, sister, wife or widow of the son or the husband of the daughter, or any child or children adopted as such in conformity with the laws of the state of Colorado, or to any person to

whom the deceased, for not less than ten years prior to death, stood in the acknowledged relation of a parent, or to any lineal descendant born in lawful wedlock, in every such case the rate of tax shall be two dollars on every hundred dollars of the clear market value of such property received by each person, and at and after the same rate for every less amount; Provided, that the sum of ten thousand dollars of any such estate shall not be subject to any such duty or taxes, and that only the amount in excess of ten thousand dollars shall be subject to the above duty or tax. When the beneficial interests to any property or income therefrom shall pass to or for the use of any uncle, aunt, niece, nephew or any lineal descendant of the same, in every such case the rate of such tax shall be three dollars on every one hundred dollars of the clear market value of such property received by each person. In all other cases the rate shall be as follows: On each and every hundred dollars of the clear market value of all property and at the same rate for any less amount; on all estates of ten thousand dollars and less-three dollars on all estates of over ten thousand dollars and not exceeding twenty thousand dollars, four dollars; on all estates over twenty thousand dollars and not exceeding fifty thousand dollars, five dollars, and on all estates over fifty thousand dollars, six dollars; Provided, that an estate in the above case which may be valued at a less sum than five hundred dollars shall not be subject to any such duty or tax.

Nature.

The fact that a statute is called an inheritance tax is of much significance. A tax upon an interest in personal property is a legacy tax. A tax upon an interest in real property could be aptly termed a succession tax. No term sufficiently comprehensive could be more aptly employed to embrace a tax upon the right to acquire interests in both real and personal property passing by will or by inheritance whether lineal or collateral than the term "inheritance tax." By this term the legislature intended to express the specific nature of the tax and that it should operate upon all interests to which a person succeeded upon death. In re Macky, 46 Colo. 79, 102 P. 1075.

Not a Local or Special Law.

Colo. St. 1902, c. 3, is not repugnant to the constitutional prohibition against local or special laws. The court decides that the imposition of a succession tax does not change the law of descent but that the laying of the tax merely casts upon the devolution of property a burden that was not borne before. In re Magnes, 23 Colo. 527, 77 P. 853.

Uniformity. - Nature of Tax. - Succession Not a Natural Right.

The Colorado inheritance tax law, St. 1902, c. 3, s. 21 et seq., is not void on the ground that it lacks uniformity as the Colorado

Constitution, article 10, section 3, applies only to taxes upon property and the inheritance tax is not one on the property but on the succession, and furthermore a right to take property by devise. or descent is a creature of the law and not a natural right; and therefore the authority which confers it may impose conditions upon it. In re Magnes, 32 Colo. 527, 77 P. 853.

The Colorado inheritance tax of 1902, c. 3, s. 21, is not a tax upon the property but is a tax or excise upon the power or right of receiving property by a will or under intestate laws. In re Macky, 46 Colo. 79, 102 P. 1075.

"The right to impose such inheritance] tax is based upon the power of the state in its sovereign capacity to 1egulate and control the transmission of property by inheritance. Although designated as a tax, it is not such a tax upon property as is contemplated by section 3 of article 10 of the state constitution. It is rather a contribution which the state levies for itself as a condition upon which the title to property shall pass upon the death of its owner." In re Inheritance Tax, 23 Colo. 492, 493, 48 P. 535.

A Tax on Beneficiaries.

The Colorado statute of 1902 imposes a tax on the right to receive and not on the right to give, on the beneficiary rather than the estate of the decedent. In re Macky, 46 Colo. 79, 102 P. 1075.

The exemptions apply to the amount taken by each beneficiary and not to the amount of the whole estate of the deceased. The tax is levied on the receipt of some beneficial interest and the expression "such estate" relates to this beneficial interest and not to the whole estate. People v. Koenig, 37 Colo. 283, 85 P. 1129.

The court quotes as sustaining its doctrine Howell's Estate, 147 Pa. St. 164, 23 A. 403; Matter of Cager, 111 N. Y. 343, 18 N. E. 866; State v. Hamlin, 86 Me. 495, 30 A. 76, 25 L. R. A. 632, 41 Am. St. Rep. 569; Knowlton v. Moore, 178 U. S. 41, 20 Sup. Ct. 747, 44 L. Ed. 969. In the Pennsylvania case a peculiar provision of the statute led to an opposite result to that in the other cases. People v. Koenig, 37 Colo. 283, 85 P. 1129.

An implied exemption from taxation should be allowed to state institutions as laying a tax upon them would in the end produce no net revenue. And bequests to a state and county for a hospital and to the regent of the state university for an auditorium are not subject to the state inheritance tax. In re Macky, 46 Colo. 79, 102 P. 1075.

Compromise with "Heirs."

Where a son contested a will of his father and to settle his contest he was paid a sum in excess of the legacy provided by the will, this sum is subject to taxation. The money was paid to him by virtue of his heirship because he was the son of the decedent. People v. Rice, 40 Colo. 508, 91 P. 33.

Section 22 provides that life estates shall be exempt; and property shall be appraised after the death of the owner; and imposes a lien on property.

Colo. St. 1902, c. 3.

S. 23. All taxes imposed by this act, unless otherwise herein provided for, shall be due and payable at the death of the decedent, and interest at the rate of six per cent per annum shall be charged and collected thereon for such time as said taxes are not paid; Provided, that if said tax is paid within six months from the accruing thereof, interest shall not be charged or collected thereon, but a discount of five per cent shall be allowed and deducted from said tax, and in all cases where the executors, administrators or trustees do not pay such tax within one year from the death of the decedent, they shall be required to give a bond in the form and to the effect prescribed in section twenty-two of this act for the payment of said tax, together with interest.

"If said tax is paid within six months. . . interest shall not be charged."

This proviso does not have the effect of rendering the interest charged a penalty, but it is only the usual inducement held out to make those interested in estates pay their taxes promptly and cannot be considered as fixing a time when the tax becomes delinquent after which a penalty is imposed for non-payment. People v. Rice, 40 Colo. 508, 91 P. 33.

"Interest

for such time as said taxes are not paid."

The interest is chargeable although the estate for a long time was involved in litigation and it was impossible to say at what rate the tax should be paid if at all, as it was impossible to say what the value of the estate was; and although a contest was made against the will which lasted more than six months after the death of the decedent, and although claims against the estate were made which if successful would have made the estate insolvent. People v. Rice, 40 Colo. 508, 91 P. 33.

Sections 24 to 30 contain various provisions as to collection and payment of the tax.