117, 145, 445-455.]

[Footnote 6: See Vol. I, pp. 117, 146, 453.]

[Footnote 7: See above, sec. 4.]

[Footnote 8: No reference is made in what follows to fees payable but
once for the incorporation of new companies or at times of increasing
the capital stock of an old one, variously called taxes on corporate
charters, license taxes, incorporation fees, organization fees, and
charter fees.]

[Footnote 9: See above, sec. 3.]

[Footnote 10: E.R.A. Seligman, "Essays on Taxation" (1895), p. 156.]

[Footnote 11: Seligman, op. cit. p. 136.]

[Footnote 12: See above, sec. 7.]

[Footnote 13: See above, sec. 5.]

[Footnote 14: The assessment feature of this proposal is exemplified
more nearly than anywhere else, tho still imperfectly, in the "Indiana
plan," in which, however, the true concept of property is recognized
only in so far as the shares of corporations of which all the wealth
is taxed are not assessed to the shareholders.]

[Footnote 15. This need not prevent a supplementary system of
graduated taxation on incomes. See below, ch. 18, sec. 10.]

CHAPTER 18

PERSONAL TAXES

Sec. 1. Inheritance tax laws. Sec. 2. Fiscal importance of inheritance taxes.
Sec. 3. Income taxes; general nature. Sec.4. Income taxation by the states.
Sec. 5. History of federal income taxation. Sec. 6. Events leading up to the
law of 1913. Sec. 7. Main features of the law. Sec. 8. Exemptions and
stoppage at source. Sec. 9. The graduation principle. Sec. 10. A system of
taxation.

Sec. 1. #Inheritance tax laws.# There remain to be considered at least
two important forms of taxation that are essentially _personal_ in
their unit of assessment, in contrast with the foregoing which are (or
should be, if consistent) essentially _impersonal_[1] These are the
inheritance and the income taxes.

Until 1916 little use had been made of inheritance taxation for
federal purposes. In that year, however. Congress passed a law which
was expected to obtain about $20,000,000 a year from inheritances.

Forty-one states in America have inheritance tax laws (in 1915)
which apply generally to property passing either by will or under the
intestate laws of the state. The tax is for state purposes. These laws
differ in many ways, but are nearly all alike in certain respects:

(1) In applying to the separate legacies rather than to the estate as
a whole.[2]

(2) In taxing legacies to relatives in the direct line at a lower
rate (o