In General
It was not contemplated that the adoption of the Fourteenth Amendment would restrain or cripple the taxing power of the States.[450] Rather, the purpose of the amendment was to extend to the residents of the States the same protection against arbitrary State legislation affecting life, liberty, and property as was afforded against Congress by the Fifth Amendment.[451]
Public Purpose
Inasmuch as public moneys cannot be expended for other than public purposes, it follows that an exercise of the taxing power for merely private purposes is beyond the authority of the States.[452] Whether a use is public or private is ultimately a judicial question, however, and in the determination thereof the Court will be influenced by local conditions and by the judgments of State tribunals as to what are to be deemed public uses in any State.[453] Taxes levied for each of the following listed purposes have been held to be for a public use: city coal and fuel yard,[454] State bank, warehouse, elevator, flour-mill system, and homebuilding projects,[455] society for preventing cruelty to animals (dog license tax),[456] railroad tunnel,[457] books for school children attending private as well as public schools,[458] and relief of unemployment.[459]
Other Considerations Affecting Validity: Excessive Burden; Ratio of Amount to Benefit Received
When the power to tax exists, the extent of the burden is a matter for the discretion of the lawmakers;[460] and the Court will refrain from condemning a tax solely on the ground that it is excessive.[461] Nor can the constitutionality of the power to levy taxes be made to depend upon the taxpayer's enjoyment of any special benefit from use of the funds raised by taxation.[462]
Estate, Gift, and Inheritance Taxes
The power of testamentary disposition and the privilege of inheritance being legitimate subjects of taxation, a State may apply its inheritance tax to either the transmission, or the exercise of the legal power of transmission, of property by will or descent, or to the legal privilege of taking property by devise or descent.[463] Accordingly, an inheritance tax law, enacted after the death of a testator, but before the distribution of his estate, constitutionally may be imposed on the shares of legatees, notwithstanding that under the law of the State in effect on the date of such enactment, ownership of the property passed to the legatees upon the testator's death.[464] Equally consistent with due process is a tax on an inter vivos transfer of property by deed intended to take effect upon the death of the grantor.[465]
The due process clause places no restriction on a State as to the time at which an inheritance tax shall be levied or the property valued for purposes of such a tax; and for that reason a graduated tax on the transfer of contingent remainders, undiminished by the value of an intervening life estate but not payable until after the death of the life tenant, is valid.[466] Also, when a power of appointment has been granted by deed, transfer tax upon the exercise of the power by will is not a taking of property without due process of law, even though the instrument creating the power was executed prior to enactment of the taxing statute.[467] Likewise when a transfer tax law did not become effective until after a deed creating certain remainders had been executed, but the State court applied the tax on the theory that the vesting actually occurred after the tax law became operative, no denial of due process resulted. "* * *, the statute unquestionably might have made the tax applicable to this transfer, * * * [and the Court need] * * * not inquire * * * into the reasoning by which * * *" the State held the statute operative.[468]
On the other hand, when remainders indisputably vest at the time of the creation of a trust and a succession tax is enacted thereafter, the imposition of said tax on the transfer of such remainder is unconstitutional.[469] But where the remaindermen's interests are contingent and do not vest until the donor's death subsequent to the adoption of the statute, the tax is valid.[470] Another example of valid retroactive taxation is to be found in a New York statute amending a 1930 estate tax law. The amendment required inclusion in the decedent's gross estate, for tax computation purposes, of property in respect of which the decedent exercised after 1930, by will, a nongeneral power of appointment created prior to that year. The amendment reached such transfers under powers of appointment as under the previous statute escaped taxation. In sustaining application of the amendment, the Court held that the inclusion in the gross estate of property never owned by the decedent, but appointed by her will under a limited power which could not be exercised in favor of the decedent, her creditors, or her estate, did not deny due process to those who inherited the decedent's property, even though, because the tax rate was progressive, the net amount they inherited was less than it would have been if the appointed property had not been included in the gross estate.[471] In summation, the Court has noted that insofar as retroactive taxation of vested gifts has been voided, the justification therefor has been that "the nature or amount of the tax could not reasonably have been anticipated by the taxpayer at the time of the particular voluntary act which the [retroactive] statute later made the taxable event * * * Taxation, * * *, of a gift which * * * [the donor] might well have refrained from making had he anticipated the tax, * * * [is] thought to be so arbitrary * * * as to be a denial of due process."[472]