
    JOHN G. ROUSE, EXECUTOR OF THE WILL OF WILLIAM C. ROUSE, v. THE UNITED STATES
    [No. H-400.
    Decided May 28, 1928]
    
      On the Proofs
    
    
      Federal estate-transfer ta<o;_ credit for payment to State, Territory, or District of GoltimMa; constitutionality. — Section 301 (b) of tbe revenue act of 1924, which provides that the Federal estate-transfer tax “ shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any State or Territory, or the District of Columbia, in respect of any property included in the gross estate,” such credit not to exceed “ 25 per centum of the tax imposed by this section,” is uniform in its operation, is not a restriction on the exercise or nonexercise of the taxing powers of a State, and does not permit a credit of 25 per centum in the tax return of an estate paying no estate, inheritance, legacy, or succession taxes to a State, Territory, or the District of Columbia.
    
      The Reporter’s statement of the case:
    
      Mr. Charles Marhell for the plaintiff.
    
      Mr. Dwight E. Rover, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    
      The court made special findings of fact, as follows:
    I. The plaintiff is the executor of the will of William C. Rouse, late of Baltimore, Maryland. William C. Rouse died on September 24, 1925, leaving a will, which was duly probated in the Orphans’ Court of Baltimore, by which the plaintiff was appointed executor, and on which letters testamentary were duly granted by the said Orphans’ Court to the plaintiff, who duly qualified and ever since has been and is acting as such executor.
    II. The plaintiff as such executor duly made return for Federal estate tax in manner and form (Form 106) proscribed by law and by the Treasury Department and the Commissioner of Internal Revenue. In said return the “ net estate for tax ” shown in Schedule L was $550,533.59. On $550,533.59 the amount of tax mentioned in subdivision (a) of section 301 of the revenue act of 1924 (as amended by section 322 of the revenue act of 1926) is $19,532.02. After deducting therefrom twenty-five per centum thereof, viz, $4,883, a balance of $14,649.02 was shown in said return as “ amount of estate tax payable after subtracting credits ” and was paid by the plaintiff to the collector of internal revenue on September 23, 1926.
    By letters dated February 12, 1927, and March 10, 1927, the Commissioner of Internal Revenue advised the plaintiff that from an audit and review of the plaintiff’s estate-tax return the “ net estate for tax ” had been determined to be $553,701.69, $3,168.10 more than the amount shown in the return, and a deficiency in estate tax had been determined to be $190.08 over and above the aforesaid deduction of $4,883 made in the return but not allowed by the commissioner. Said amount, $190.08, is the amount of tax mentioned in subdivision (a) of section 301 of the revenue act of 1924 (as amended by section 322 of the Revenue act of 1926) on $3,168.10 (over and above $550,533.59). Subsequently the plaintiff received notices of assessment and demands for payment of taxes accordingly, viz, $190.08 with interest at six per cent per annum from September 24, 1926, and $4,883 with interest at one per cent per month from the same date. On April 19, 1927, the plaintiff paid under protest the amounts so assessed, viz, $4,883 plus $335.30 interest, a total of $5,218.30, and $190.08 plus $5.62 interest, a total of $195.70. The plaintiff claimed the right to a deduction of twenty-ñve per centum of the last-mentioned amount of $195.70, viz, a deduction of $48.92. The plaintiff also claimed the right to a deduction of the entire amount of $5,218.30, viz, $4,883 plus $335.30 interest.
    III. No estate, inheritance, legacy, or succession taxes have actually been paid by the plaintiff to any State, Territory, or the District of Columbia. In the plaintiff’s return for Federal estate tax, however, the plaintiff claimed the right to deduct from the amount of tax mentioned in subdivision (a) of section 301 of the revenue act of 1924 (as amended by section 322 of the revenue act of 1926) twenty - five per centum, because the tax alleged to be imposed by said section 301 as amended and said section 301 itself is, to the extent of any amount in excess of seventy-five per centum of the amount mentioned in said subdivision (a), null and void, for the reasons (1) that such alleged tax is contrary to the provision of Article I, section 8, of the Constitution of the United States, that “ all duties, imposts, and excises shall be uniform throughout the United States,” and (2) that such alleged tax is an attempt to tax and control the sovereign taxing powers of the several States and the exercise and nonexercise of such powers.
    IV. On or about June 23, 1927, the plaintiff filed with the collector' of internal revenue a claim for refund of $5,267.22, the amount of tax (including interest) exacted from and paid by the plaintiff as the result of disallowing the deduction of twenty-five per centum hereinbefore mentioned. Said claim for refund was by the Commissioner of Internal Revenue disallowed and rejected on July 25,1927.
    The court decided that plaintiff was not entitled to recover.
   GRAham, Judge,

delivered the opinion of the court:

The plaintiff as an executor made a return for Federal estate tax in the manner prescribed by the Commissioner of Internal Revenue. The details as to the assessments and payments are set forth in the findings.

Section 301 of the revenue act of 1924, 43 Stat. 303, is the section of the statutes involved and is quoted below.

The plaintiff claimed a deduction of 25% of the tax, although he had paid no estate, inheritance, legacy, or succession tax in any State, Territory, or the District of Columbia. The commissioner disallowed this deduction and assessed him for the full amount of the tax provided in the statute. The plaintiff rests his case here upon the ground that the said act is unconstitutional. He states his contention as follows:

“ This so-called estate tax, to the extent of twenty-five per cent [the excess over seventy-five per cent] of the amount mentioned in subdivision 301 (a), is unconstitutional, because to this extent (1) it is a tax, not on the transfer of estates but on the taxing powers of the several States, and a tax or penalty on the exercise and nonexercise of such powers, and (2) it is contrary to the provision of Article I, section 8, of the Constitution that ‘ all duties, imposts, and excises shall be uniform throughout the United States.’ ”

The principles controlling here were settled in the cases of New York Trust Co. v. Eisner, 256 U. S. 345, 349, and Florida v. Mellon, 273 U. S. 12. The latter case expressly held constitutional a corresponding section of the revenue act of 1926, except for the difference in the increase of the credit for estate taxes from twenty-five to eighty per cent, and which is identical with section 301 of the revenue act of 1924 under consideration here.

The act here is uniform in its operation, as the rule of liability is the same in all parts of the United States. If in the case of individual residents of different States it re-suits in inequalities it is not due to the act, but to the inequalities created by the action of the State authorities either in the kind of estate tax act established or the failure to establish one. It is in no sense a restriction on the exercise or non-exercise of the taxing powers of the State. Any State can pass any sort of an estate tax it pleases or refrain from doing so. There are no restrictions. The act does not apply to the States but to individuals. Had it allowed no deduction, there could have been no question in regard to its constitutionality. It was an act passed in the exercise of the constitutional power of Congress to levy and collect the tax, and it has been repeatedly held that such an act can not be nullified or set aside by any statute of a State, and that where the two come in conflict, the latter must give way.

The power to levy and collect taxes is a vital and necessary part of sovereignty. No Government can exist without its exercise. It is a power, where granted by the Constitution to the Federal Government, which can not be interfered with or nullified by any act of the States. But as stated, this act does not interfere in any way with State statutes. This court has on several occasions in somewhat similar cases upheld this principle. See Steedman et al. v. United States, 63 C. Cls. 226, 233, and Aldridge v. United States, decided January 16, 1928 (64 C. Cls. 424).

In the Florida case, supra, the court said:

“ Congress can not accommodate its legislation to the conflicting or dissimilar laws of the several States nor control the diverse conditions to be found in the various States which necessarily work unlike results from the enforcement of the same tax.”

The petition should be dismissed, and it is so ordered.

GeeeN, Judge; Moss, Judge; and Booth, Chief Justice, concur. 
      
       Sec. 301 (a) In lieu of the tax imposed by Title IV of the revenue act of 1921, a tax equal to the sum of the following percentages of the value of the net estate (determined as provided in section 303) is hereby imposed upon the transfer of the not estate of every decedent dying after the enactment of this act, whether a resident or nonresident of the united States:
      (b) The tax imposed by this section shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any State or Territory, or the District of Columbia, in respect of any property included in the gross estate. The credit allowed by this subdivision shall not exceed 25 per centum of the tax imposed by this section.
      (Subdivision (a) was amended by section 322 of the revenue act of 1926, reducing the graduated percentages of the net estate retroactively, as of June 2, 1924.)
     