PROBATE AND LEGACY DUTIES. TO THE EDITOR OF THE SPECTATOR.

London, 23(1 January 1849.

Sin—I endeavoured in my last letter to show, that the Probate and Legacy

Duties are in reality the equivalent of an annual tax upon realized personal pro- perty; that they are payable at the moment of acquisition; and that they are pre- ferable to an annual income-tax on such property, in that they fall on that vast MILS of the results of savings, which includes all objects of enjoyment or con- venience not productive of income. I would now inquire how far these taxes ac- complish their object

It Is evident that a considerable time must elapse before such an impost is in full or fair operation, because a whole generation of owners must die before their successors can be called on to pay: but when this has once come to pass, the equitable operation of these duties depends on their coming into play on every de- volution of property, and on their affecting all property in proportion to its amount. On the death of an individual, whether leaving a will or intestate, the property

absolutely vested in him passes to his succes.sors subject to the payment of both probate and legacy duty : and when his successors die, their property (including all that they had obtained by succession) passes to their successors liable to the payment of the same duties. Now, though it is permitted to any one to settle his property by will or by deed so as to prevent his immediate successors taking an absolute interest for r considerable time, such permission is quite irrespective of any question of taxation, and none should be allowed to avail himself of it so as to evade payment of taxes. It has been decided, however, that probate-duty is only payable on such property of the deceased as his executor has become pos- e-used of by virtue of his probate. When, therefore, a man bequeaths personal property to his son for life, and after his death to the children of the son as he shall by will appoint, the probate-duty is not payable at the death of the son, though legacy-duty is. If, however, a deed be preferred to a will, a man may convey the whole of his personal property to trustees, upon trust to pay the an- nual income to himself for life, after his death upon trust for his son if living at the time of the execution of the deed for life, after his death upon trust for his grandchildren absolutely. In the first case, probate-duty on one devolution of property is evaded ; in the second, both probate and legacy duties would be evaded on two devolutious; and they may be thus evaded ad infinitum. Again, if a man settle a marriage-portion on his daughter, giving her a life interest only, and an absolute interest to her children as she shall appoint, no probate-duty will be payable at her death, but legacy-duty will. Moreover, the father may not choose to pay the portion at the time of the marriage, but may only covenant that his executors shall do so after his death, and may give no power of appointment to his daughter, but an absolute interest to his grandchildren, who will take the property free of probate or legacy duty. Here, again, in the first instance, we have the probate-duty evaded on one devolution of property, and in the second

Instance both mobate and legacy duties evaded on two devolutions. Probate-duty is not payable upon property abroad, though legacy-duty is. Probate-duty on a given amount of property is on the average double the amount of

the legacy-duty on the same property if bequeathed to children of the testator. The loss to the revenue, therefore, by the evasion of this duty in the manner pointed out, mast be very great ; for it is notorious that a vast mass of the income-paying ;Personal property of the country is already in settlement, and that a greater por- tion is yearly absorbed into settlement than is in the same time released from set- tlement by the determination of trusts. And so long as this evasion of the duty is permitted, it is unjust to accuse the owners of landed property as if they en- joyed a special immunity—more especially when the extension of these duties, as they are, to land, would cot affect the great estates, which are commonly settled to as not to be liable to these duties even if they were personalty.

But it may be urged that these inequalities of pressure may be removed; and

that, then, these duties would be justly extended to real property. I shall leave it to others to argue the question of there being burdens on land equivalent to these duties, and, assuming for my present purpose, that the landowners will be beaten on that point, shall proceed to inquire into the applicability of the amended system to land.

If personal property is bequeathed to a man for life, and then to his children,

legacy-duty is charged on both devolutioas; but on the first, only as if the income were an annuity for his life, and therefore to a much smaller amount than on the next devolution, when the absolute interest passes. Now it is the general custom to resettle land before any absolute interest in possession is acquired: the amount of all the legacy-duty on land, as compared with that on personalty, would not, therefore, be the equivalent of an annual tax on the actual income of land, but of an annual teL on the income calculated to arise from the capitalization of the life interests of the landowners; a result which ought to be highly pleasing to the Finance Reformers, but with which they would be sure to quarrel, and which would be palpably unjunjust.i The probate-duty s not on an ad valorem scale, for it has a limit (15,0001.) beyond which it does not go whatever the amount of the property may be: it is chargeable, too, with other absurdities; of which the following is a specimen—

On property amounting to £1,000 the duty Is £30 or £3 per cent.

„ to 10,000 „ 200 or 2 „

, to 1,000,000 „ 15,000 or 1 Los. „

Surely Mr. Cobden does not wish to let a millionaire, whether he be owner of personalty or realty, escape in this way, but will see that this is forthwith re- medied.

But the most important question as to the probate-duty is, whether it be, as I

have contended, a duty on successions: for if it be so, it is as at present levied a most unjust tax. For, suppose a family of six children, three sons and three daughters, and that the father, wishing to give them equal shares of his property, but adopting a very common because a very convenient mode of bequest, provides for his daughters by sums named in the will, and gives the residue amongst his sans: the daughters will pay one per cent on their legacies, but the sons must each pay one-third of the probate-duty on the whole property; which, if that duty be two per cent, will be four per cent on his share, making his total payment of probate and legacy duty amount to five per cent upon his share. If, in similar circumstances, the family consists of three daughters and one son, calculating in the same way the son will have to pay no less than nine per cent on his share: and there can be no doubt that in many cases the duty falls still heavier on the residuary legatee. Now, if we apply this to land, which generally comes into the hands of the heir charged with large sums of money for portions to younger chil- dren, it is obvious that the heir would have to pay duty, not only on the value of his own succession, but also on that of his brothers and sisters, and that his case would be one of similar hardship with that of a residuary legatee. Further, it is a hardship on the residuary legatee' and would be one on the heir or devisee of real property, that, whatever may be the value of his life, the probate-duty is the same: consequently, when property devolves on many persons in quick succession, the revenue receives a disproportionate amount as compared with cases where long lives intervene. It will be urged that the injustice will bear similarly on the owners of realty and personalty, and that therefore both classes ought to bear it. Such an argil- Mein can only be admitted when the injustice is not easily removeable; but un- less this is shown to be the case, the landowners are fairly entitled to demand that these duties shall be put on an equitable footing, before they be extended to land.