Attorney General Opinion WW-0807

THE .&TJJORNEY GENERAL OF TEXAS AUST~NII.‘~%~R February 1.8, 1960 Honorable Bill Allcorn Commlssloner General Land Office Austin, Texas Opinion No. WW-807 Re: Whether Veterans' Land Bonds are exempt from inheritance taxes Dear Mr. Allcorn: You have requested the opinion of this office on the above- captioned matter. If exemption were to be accorded, it would be by virtue of Section 30 of Article 5421m, Vernon's Civil Statutes, which reads as follows: "Bonds heretofore and hereafter issued pur- suant to the provisions of Section 49-b of Article III of the Constitution as same may be amended, and Statutes enacted to implement said provision of the Constitution, shall be exempt from every character and kind of taxation by the State of Texas, cities, towns, villages, counties, school districts, and all other political sub-divisions, and public agencies of the State of Texas." The constitutional provision above referred to contains no specific provision for exemption of Veterans' Land Bonds from any kind of taxation. It has long been settled in Texas that inheritance taxes are privilege taxes rather than property taxes. We quote the following excerpt from State v. Hogg, 123 Tex. 568, 72 S.W. 2d 593 (1934): "An examination of the authorities convinces us that the almost universal rule is that inheritance taxes such as are levied by our statutes are held to be privilege taxes, and not property taxes. In other words, the tax is upon the right of succession and not upon the property . . . . Following the above-quoted statement the court cites approx- imately fifteen authorities and states that these authorities could be multiplied several times. Honorable Bill Allcorn, Page 2, Opinion No. WW-807 The holding in the m case was expressly approved in Cahn v. Calvert, -Tex -, 321 S. w. 2d 869 (1959). In 85 C. J. S. 862, Taxation, Sec. 11.18, it is stated that It is generally held that death taxes may be imposed with respect to Federal bonds or securities which could not be taxed directly because of the theory that such taxes are on the privilege of transmission or succession. Since the statutory provision in question only exempts Veterans' Land Bonds from direct taxation, you are advised that they would be subject to inheritance taxes, assuming the transfer is accomplished in a manner covered by the provisions of the ln- heritance tax statutes. SUMMARY Veterans' Land Bonds are not exempt from State Inheritance Taxes. Very truly yours, WILL WILSON Attorney General of Texas Assistant Attorn MMP:ag APPROVED: OPINION COMMITTEE: W. V. Geppert, Chairman John C. Phillips Harris Toler Arthur Sandlin John Wlldenthal REVIEWED FOR THE ATTORNEY GENERAL By: Leonard Passmore