Treichler v. Wisconsin

Background

A Wisconsin county court and the state Supreme Court allowed Wisconsin to levy an additional emergency inheritance tax on the estate of Fred A. Miller, a Wisconsin resident who died in 1943. The estate totaled $7,849,714.84, with $6,869,778.61 in Wisconsin and $979,936.23 in Illinois and Florida. Wisconsin calculated ordinary inheritance and estate taxes, used an 80% federal credit, then imposed a 30% emergency tax under Wis. Stat. § 72.74(2), arriving at $172,015.20 for the emergency tax.

Reasoning

The central question was whether that emergency tax violated the Due Process Clause of the Fourteenth Amendment by being measured in part by tangible property located outside Wisconsin. The Court explained that the statutory formula effectively measured the tax using the 80% federal credit without apportioning it to property inside the State. Relying on Frick v. Pennsylvania, the Court held a State may not impose an inheritance tax measured by tangible property whose situs is in other States, and thus the emergency tax is invalid to that extent. The Supreme Court of Wisconsin’s judgment was reversed and the cause remanded for further proceedings consistent with this opinion.

Real world impact

The ruling prevents Wisconsin from collecting that portion of its emergency inheritance tax based on tangible out-of-state property. Estates that include physical property in other states will not be subject to Wisconsin’s emergency tax on those items under this statute. More broadly, the decision limits a State’s ability to reach physical property beyond its borders when computing similar inheritance taxes.

Dissents or concurrances

Justice Black dissented, agreeing the result follows from the Court’s reading of Frick but arguing that Frick gives States too little authority over tax legislation; Justice Douglas did not participate.