Plummer v. Coler

Background

An estate in New York included United States bonds issued under a federal law that called them exempt from state taxation. New York assessed an inheritance tax on the full estate value, and the executor and heirs challenged the assessment. Lower state courts had consistently held similar taxes valid, and the question reached this Court: may a State include federal bonds when valuing an estate for inheritance taxes?

Reasoning

The Court reviewed prior state and federal decisions and concluded the New York tax was lawful. It explained that these taxes are imposed on the transfer or the right to receive property at death, not directly on the United States’ property. The opinion said Congress’ statement on the bonds’ exemption did not create a contract preventing states from measuring succession taxes by the estate’s full value. The Court also rejected the claim that including bonds in estate valuations would clearly and substantially harm the federal government’s borrowing power, calling such harms speculative and noting longstanding practice and precedent supporting the state approach.

Real world impact

States may include U.S. government bonds when calculating inheritance taxes, and executors may be required to pay taxes before legacies pass. Heirs and administrators should expect estate tax assessments even if estates hold federal securities. The ruling follows prior cases treating franchise and succession taxes as taxes on privileges created by the State, not as direct taxation of federal property.

Dissents or concurrances

Justice White dissented. The published opinion records his disagreement but does not give detailed reasons in the text provided.