Fernandez v. Wiener, 326 U.S. 340 (1945)
Fernandez v. Wiener
No. 58
Argued November 5, 1945
Decided December 10, 1945
326 U.S. 340
APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES
FOR THE EASTERN DISTRICT OF LOUISIANA
Syllabus
1. Upon the termination of a Louisiana marital community by the death of the husband, a federal estate tax, measured by the value of the entire community property, was levied pursuant to § 811(e)(2) of the Internal Revenue Code as amended by § 402 of the Revenue Act of 1942.
Held: that the tax does not infringe any provision of the Federal Constitution. Pp. 342, 362.
(1) The statute is a revenue measure enacted by Congress in the exercise of the federal power to lay and collect an excise. P. 351.
(2) The tax does not violate the due process clause of the Fifth Amendment. Pp. 346, 357.
(a) The power of Congress to impose death taxes is not limited to the taxation of transfers at death, but extends to the creation, exercise, acquisition, or relinquishment of any power or legal privilege which is incident to the ownership of property when any of these is occasioned by death. P. 352.
(b) Upon the termination of a Louisiana marital community by the death of either the husband or wife, there occurs, by virtue of state law, a redistribution of powers and restrictions upon power with respect to the entire community property which affords an appropriate occasion for the levy of an excise tax measured by the value of the entire community property, although, from the moment the community was established, the respective rights of the spouses in the community were in every sense "vested," and it was certain that the changes in legal and economic relationships to property which occasion the tax would occur. P. 355.
(c) The statute is not invalid as arbitrary and capricious, although it taxes transfers at death and also the shifting at death of particular incidents of property. P. 358.
(d) The statute is an excise tax upon the shifting at death of the incidents of property, regardless of their origin, and does not depend for its operation upon any presumption that the entire community property is owned or economically attributable to the spouse first to die. P. 358.
(3) The statute does not contravene the requirement of Article I, § 8 of the Constitution that "excises shall be uniform throughout the United States." P. 359.
(a) The uniformity commanded by the Constitution is geographical uniformity, not uniformity of intrinsic equality and operation. P. 359.
(b) The tax on community property interests is not lacking in geographical uniformity by reason of the fact that, in some States, such interests are not found. A taxing statute does not fall short of the prescribed uniformity because its operation and incidence may be affected by differences in state laws. P. 359.
(c) The statute is not lacking in uniformity, even though it applies to community property interests and not to interests in tenancies in common and limited partnerships. P. 360.
(4) The tax imposed by the statute, laid upon the shifting at death of some of the incidents of property, is not a direct tax which the Constitution requires to be apportioned. P. 361.
(5) The tax does not invade the powers reserved to the States by the Tenth Amendment. P. 362.
(a) The Tenth Amendment does not restrict the power delegated to the national government to lay an excise tax qua tax. P. 362.
(b) The incidental regulatory effect of the tax is embraced within the power to lay it. P. 362.
(c) It is not within the province of the courts to inquire into the unexpressed purposes or motives which may have moved Congress to exercise a power constitutionally conferred upon it. P. 362.
2. Also included in the decedent’s gross estate, pursuant to § 811(g)(4) of the Code as amended by § 404 of the Act, were the entire proceeds of insurance policies on the life of the decedent, on all of which policies the wife was named beneficiary, the right to change the name of the beneficiary was reserved to the insured, and premiums were paid from community funds.
Held: that the tax, as so applied, is constitutional. Pp. 362-363.
The death of the insured, since it ended his control over the disposition of the proceeds and gave his wife the present enjoyment of them, may constitutionally be made the occasion for the imposition of an indirect tax measured by the proceeds themselves. P. 363.
60 F.Supp. 169, reversed.
Appeal under § 2 of the Act of August 24, 1937, from a judgment for the plaintiffs in a suit against the Collector of Internal Revenue to recover an alleged overpayment of federal estate tax, the decision being against the constitutionality of the federal estate tax statute as applied.