International Revenue Act Of 1918

By: Chas. C. Harrison

Originally Published in 1919

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Exempts From All Federal Estate Inheritance Taxes Bequests to the University Museum

To the Benefactors and Friends of the University Museum:

I beg to call your attention to that provision of the Internal Revenue law of 1918, which exempts from Federal Estate Inheritance Taxes all bequests to the University Museum and to other “charitable” Institutions, in the legal sense of that word. Section 403 of this Revenue Tax law of 1918 reads as follows:—

“Third.—The amount of all bequests, legacies, devises or gifts to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary or educational purposes, including the encouragement of art, and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary or educational purposes. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917.”

It is to be expected that this new regulation will result in larger sums being left by will to the classes of institutions and purposes mentioned. (The references to this legislation, relating both to residents and non-residents, are to be found upon pp. 1, 12, 46 and 47 of Senate document No. 385, “The Revenue Bill of 1918.”)

I wish also to call attention to a letter from Dr. Samuel McCune Lindsay, of New York, who was chairman of the national committee which urged the passage of the above section before committees in Congress. Doctor Lindsay writes:

“Dear Dr. Harrison,—In reply to your letter of March 19, I beg to say that Clause 3 of Section 403 on page 46 of the revenue bill of 1918 operates to reduce the amount of the net estate by the total amount of all bequests, legacies, devises or gifts for public purposes or for charitable, educational and religious purposes, and all federal estate taxes are then levied and based upon the net estate so reduced. This means first that the public or educational bequest, legacy or gift goes entirely free of tax to the legatee, neither the estate or the legatee being required to pay any tax on this amount.

“Second, it means that the testator has the further advantage that the rate of tax levied upon his net estate may pay a lower rate upon the whole net estate—that is, his executors or estate may be required to pay a lower rate upon his whole net estate because the tax is a progressive one, as you will see from the rate specified in Section 401, being 1 per cent of the amount of the net estate in excess of $50,000; 2 per cent of the amount by which the net estate exceeds $50,000, and does not exceed $150,000, etc. There are no surtaxes and normal tax rates in the matter of estate taxes; these belong to the individual and corporation income taxes.

“As an example, a man leaving an estate of the gross value of $75,000, where the expenses of burial, administration, etc., amounted to $5,000 would be entitled to a flat exemption of $50,000, thus leaving as his net estate $20,000, on which the executor would have to pay a tax of 1 per cent. If that man, however, had left $25,000 to the University of Pennsylvania, his executor would deduct that amount also and there would be no net estate and no tax to pay.

“You will see from this illustration that on larger estates the advantage accruing from the deduction of bequests for public, educational and charitable purposes, while they might not result in the total exemption of the estate from taxation unless they reduced the net estate to $50,000, would be correspondingly substantial and attractive in enabling a testator to have more money to give to unselfish purposes voluntarily, instead of being compelled to give it away to the government for uses which are not of his choosing.

“I, of course, have no facts to show how far the burden of the federal estate tax in the revenue act of 1917 caused people to change their wills or in making wills to reduce the amounts of bequests for public purposes, but I have no doubt that the total burden of taxation has had a very substantial result in that direction. I know of a few individual cases where people were obliged to cut down or cut out bequests for such purposes in order to meet the obligations they felt devolved upon them for the protection of the property of their estates and provision for their dependents. Trusting that this will give you the information you desire, and if not, that you will call on me for any further information I can give or get for you, I am


Inasmuch as the facts above stated appear not to be as well known as their importance warrants, the University Museum has much pleasure in making public the above announcement.

There will be found upon another page the “Form of Bequest” to the Museum, which reads as follows:—

“I give and bequeath to the Trustees of the University of Pennsylvania the sum of . . . . . . . . . . . . . . . . . dollars, in trust for the uses of the University Museum. (Here specify in detail, if so desired, the purposes.)”

I beg to remain, etc., etc.,



Cite This Article

Harrison, Chas. C.. "International Revenue Act Of 1918." The Museum Journal X, no. 1-2 (June, 1919): 5-7. Accessed February 21, 2024.

This digitized article is presented here as a historical reference and may not reflect the current views of the Penn Museum.

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