The taxation of inheritances was adopted by Texas in 1907. The tax applies to "all property within the jurisdiction of this state, real or personal, corporeal or incorporeal, any interest therein, whether belonging to inhabitants of this state or not, which shall pass, absolutely or in trust by will or by the laws of descent of this or any other state, or by deed, grant, sale or gift, made or intended to take effect in possession or enjoyment after the death of the grantor or donor, . . . passing to or for the use of any person except the father, mother, husband, wife or direct lineal descendant, ... or any public corporation or charitable, educational or religious organization within this state . . . to be used within this state."1

There are three schedules and their rates differ according to the degree of relationship and the amount of the bequest. The schedules are as follows:

The tax is thus one on collateral heirs, and the rates are moderate. It does not avoid double taxation of a vicious sort. Residents of the state are taxable on all tangible property within the state and on all intangible property wherever located, the latter being in accord with the rule that personalty follows the owner for purposes of taxation. Non-residents of the state are taxable on both tangible property and intangible property within the state". This taxation of intangible property of a non-resident is clearly in violation of the rule that personalty follows the owner. Probably a non-resident would be taxed on the shares of stock of a Texas corporation, even when the shares are held outside the state.

1 Laws of 1907, p. 496. Rev. Civil Stats., 1911, arts. 7487-7502.

The tax is collectible by the county collectors, and they receive one per cent of the amount collected. It is a state tax exclusively, and the receipts accrue to the general revenue fund. During seven years operation the receipts from this tax have averaged only $32,709 a year. The smallness of the receipts is prima facie evidence that the state is losing some revenue through a failure of efficient administration of the law. The loss has been estimated at $500,000 annually, but this is no doubt an exaggeration.1 The loss is attributed mainly to the failure of the probate judge to certify to the tax collector the amount of the tax due. The law, it seems, does not provide a fee for the probate judge for certifying the amount, and this oversight of the lawmakers results in a lightening of judicial labors and a lessening of state revenues.

1 Report of the grand jury of Travis County, in the San Antonio Express, April 30, 1916. Comptroller H. B. Terrell stated in a speech at Rockwall, Texas, June 24, 1916, that in one county there were 53 estates on which inheritance taxes were unpaid, and he estimated that as least $1,000,000 was due throughout the state as a whole; San Antonio Express, June 25, 1916.