THE AMERICAN LAW INSTITUTE Norris Darrell, President Harrison Tweed, Chairman of the Council R. Ammi Cutter, 1st Vice-President Bernard G. Segal, 2nd Vice-President Laurens Williams, Treasurer Herbert Wechsler, Director Paul A. Wolkin, Assistant Director COUNCIL Francis A. Allen Dillon Anderson Frederick A. Ballard F. M. Bird Charles D. Breitel John G. Buchanan William T. Coleman, Jr. R. Ammi Cutter Norris Darrell Hardy C. Dillard Erwin N. Griswold Ross L. Malone Carl McGowan FOREWORD This volume is the product of more than five years of study of federal estate and gift taxation by the Reporter, Professor A. James Casner of the Harvard Law School, aided by Professor William D. Andrews of Harvard as Associate Reporter and a distinguished group of Consultants and Advisers drawn from the leading specialists in this important field. The object of the study was to recommend improvements in the present taxes on these donative transactions, not only to surmount their purely technical deficiencies but also to enhance the fairness and the wisdom of the policies that they are shaped to serve. This made for an ambitious project, to be sure, but one that the Council of the Institute believed "was a task that lawyers must assume as part of their professional responsibility," as President Darrell told the Falk Foundation in applying for its supporting grant. The Institute's conclusions are expressed in forty-five recommendations for improvements in the law, embodied in resolutions adopted at the Annual Meeting in May 1968. Each of the recommendations is accompanied by a brief commentary defining the problem to which it is addressed and marshaling the considerations adduced in its support. Though this is not the usual form in which the Institute pursues its organizational objective "to promote the clarification and simplification of the law and its better adaptation to social needs," it was thought to be impracticable and superfluous in dealing with this subject to prepare a statutory text. What was essential was to focus sharply on the substance of particular proposals and this focus was effectively achieved. The Official Draft of the recommendations of the Institute comprises but a portion of this book (pp. 5-57), the only part, it may be well to add, that speaks for the American Law Institute. The balance of the volume contains studies made by the Reporter and Associate Reporter with the help of the Consultants and Advisers, who considered and debated the material presented in successive meetings through the years, the Consultants holding twenty-one such meetings for a total of approx For a list of the Consultants, see page xi, infra. ** The members of the Tax Advisory Group and of the various liaison committees working with the Group are listed on pages xiii-xvi, infra. imately fifty days and the Tax Advisory Group meeting seven times for a total of fifteen days. The Institute was informed of the content of these studies in the course of their development by the distribution of Study Draft No. 1 of 1965 and Study Draft No. 2 of 1966. Neither the Council nor the membership, however, discussed or passed upon the drafts and it was clear that their section by section presentation and consideration was totally impracticable, given the agenda of the Institute. It was, accordingly, resolved at the 1968 Annual Meeting that the studies, as revised by the Reporters, should be published by the Institute, making clear that they do not have Institute approval, except, of course, as the positions taken are reflected in the recommendations that the Institute has made. The Reporter's study by Professor Casner explores the major problems posed in any effort to improve the present separate taxes on estates and inter-vivos gifts and those presented in devising a substitute for the dual system in the form of a single, unified tax on both types of transfers. Within each system he proposes what he deems to be the best solution of the problems, indicating also the views of the Consultants and the Tax Advisory Group to the extent that they were canvassed. The Associate Reporter's study by Professor Andrews explores the problems and potentialities of an accessions tax, treating the taxable event as the acquisition of property by the donee rather than its transfer by the donor. Interesting as this alternative approach appears to be to some experts in this field, it received only brief consideration by the Consultants and Advisers, in the view, endorsed by the Council of the Institute, that a shift to such a system is not at this time a practical legislative possibility. The study is included in this final publication so that, as President Darrell put it to the Tax Advisory Group "it may be available to anyone who cares to pursue it at some future time." It is appreciated that, notwithstanding an explicit explanation, the publication of the Reporters' studies raises some risk of beclouding the distinction between the positions of the Institute and the voluminous material it neither has approved nor disapproved. That risk was thought worth taking to preserve for future generations the exhaustive and incisive work of the Reporter, his Associate, the Consultants and the Tax Advisory Group, so painfully developed since the work began. Wholly apart from controversial issues of tax policy, that work will give enormous aid to legislators and to lawyers through the years. The recommendation of changes in the law has long been deemed by the Law Institute to be no less important an organizational objective than its clarification by restatement. It is, however, well to add that when the Institute develops such proposals, it completes its work with the promulgation and the publication of an Official Draft. If efforts are to be made to promote their adoption, others must assume the task. HERBERT WECHSLER Director The American Law Institute March 15, 1969 |