WISCONSIN INHERITANCE TAXATION*

Abstract

SINCE the enactment of its first permanent inheritance tax in 1903 the state of Wisconsin has substantially altered and extended its transfer tax system. Although these inheritance, estate, and gift taxes have provided on the average somewhat less than 2 per cent of the total state and local revenue, their present and future potential yield is far from negligible to a state faced with the usual, difficult problem of budget balancing. Thorough investigation of the legal, administrative, and economic aspects of these transfer taxes is the design of this thesis. Primary reliance has necessarily been placed upon a study of court reports, session laws, and records of the State Department of Taxation and upon personal interviews with state and county officials who administer the death and gift taxes. With the assumption that there is no federal legislation basically affecting state transfer taxes the following major conclusions are reached: 1. Wisconsin should not replace its well-established and generally well-accepted inheritance tax by a full-fledged estate tax. (Its present estate tax, which should be retained, is effective only in rare cases when the inheritance tax does not collect the full amount permitted a state under the federal estate tax credit provision.) 2. The base for the state gift tax should not be made cumulative over the years because of the danger of driving property out of the state. The present system whereby each year's gifts to the same donee from the same donor is aggregated into a single non-cumulative base is unfair, illogical, and unproductive of revenue. Yet there is no federal gift tax credit and only twelve states levy gift taxes so that any state attempting to collect a really effective gift tax faces a real migration threat. 3. The deduction allowed under the Wisconsin inheritance tax for death taxes paid by the estate to the federal government should be continued.