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THE CALIFORNIA TAX SYSTEM

By

J. GOULD

Deputy Legislative Counsel

Analysis

[Reprinted with Permission (59 West's Annotated California Codes 1-77 (1956))]

1. Present Composition

2. General Historical Background

A. 1849-1879

B. 1879-1910

C. 1910-1933

D. 1933-Present

3. Major Taxes

A. General Property Tax

(1) Outline

(a) Tax Base

(b) Assessment and Equalization

i. Under Existing Law

ii. Under Chapter 1466 of Statutes of 1949

(c) Levy

(d) Collection

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i. Secured Property Taxes

ii. Unsecured Property Taxes

(e) Miscellaneous

(2) History

B. Sales and Use Taxes

(1) Sales and Use Tax Law

(2) Bradley-Burns Uniform Sales and Use Tax Law

C. Highway Users Taxes

(1) Motor Vehicle Fuel License Tax Law

(2) Use Fuel Tax Law

(3) Motor Vehicle Transportation License Tax Law

(4) Vehicle License Fee Law

(5) Vehicle Registration Fees

D. Private Car Tax

E. Insurance Company Taxes

(1) Ocean Marine Insurers

(2) Other Insurers

(3) History

F. Inheritance and Gift Taxes

(1) Inheritance Tax Law

(a) Outline

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(b) History

(2) Gift Tax Law

G. Personal Income Tax

(1) Outline

(2) History

H. Bank and Corporation Taxes

(1) Outline

(2) History

I. Alcoholic Beverage Taxes

J. Unemployment and Disability Compensation Insurance Taxes

K. Horse Racing Fees 1. PRESENT COMPOSITION

California's current taxing system is a combination of various state and localtaxes, fees, assessments, and other levies imposed or made to obtain revenue forfinancing the operations of government.

The system has been shaped partly by numerous constitutional requirements andlimitations, both federal1 and state.2

In the Revenue and Taxation Code are most of the major components of thesystem. Enacted in 1939,3 it now consists primarily of three divisions. The firstembraces provisions of the general property tax, currently the principal source ofrevenue for California's counties and cities; the second contains, for the most part,the texts of laws imposing privilege taxes from which the State Governmenttoday derives the greatest percentage of its revenue; and the third, titled Division30, lists and cites various repealed tax laws which either have been codified in theRevenue and Taxation Code or been considered obsolete. Immediately precedingDivision 1, grouped under the heading "General Provisions," are also sections ofgeneral application throughout the code.

The code originally consisted only of Divisions 1 and 30 and the last-mentioned

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'"General Provisions." Division 2, -now consisting of fourteen parts, has sincebeen added piecemeal. Part 1-the Sales and Use Tax Law-was added in 1941;4Part 1.5-the BradleyBurns Uniform Local Sales and Use Tax Law-in 1955;5 Part2-the Motor Vehicle Fuel License Tax Law-in 1941;6 Part 3-the Use Fuel TaxLaw-in 1941;7 Part 4-the Motor Vehicle Transportation License Tax Law-in1941;8 Part 5-the Vehicle License Fee Law-in 1941;9 Part 6-the Private Car TaxLaw-in 1941;10 Part 7- the Insurance Company Tax Law-in 1941;11 Part 8-theInheritance Tax Law-in 1943;12 Part 9-the Gift Tax Law-in 1943;13 Part 10-thePersonal Income Tax Law-in 1943;14 Part 11-the Bank and Corporation TaxLaw-in 1949;15 Part 12-containing property tax provisions most of which aretoday apparently either obsolete or inoperative16--in 1951;17 and Part 14-theAlcoholic Beverage Tax Law-in 1955.18

Other important sources of revenue for state purposes are levies made by theUnemployment Insurance Code19 for unemployment and disability compensationinsurance, horse race licensing and parimutuel fees imposed by the Business andProfessions Code,20 and vehicle registration and license fees imposed by theVehicle Code.21

Miscellaneous sources of state revenue include tonnage taxes imposed by theAgricultural Code on commercial fertilizers and agricultural minerals22 andfeeding stuffs;23 taxes on admissions to boxing and wrestling matches imposedby the Business and Professions Code;24 privilege taxes imposed by the Fish andGame Code on fish canners and dealers25 and for the harvesting of kelp;26license taxes imposed by the Public Resources Code27 on millers, refiners,purchasers, and others dealing in gold or silver bearing ores, concentrates oramalgams; oil and gas charges and assessments levied by the Public ResourcesCode;28 fees imposed by the Public Utilities Code29 on property transportationagencies subject to the jurisdiction of the Public Utilities Commission; regulatorylicenses and fees imposed on numerous occupations and professions by theBusiness and Professions Code, and fish and game sporting license fees imposedby the Fish and Game Code.30

Complementing the general property tax provisions in Division 1 of the Revenueand Taxation Code are provisions in the Government Code31 relating to anannual county levy of property taxes for county and special district purposes.

Cities are also authorized by the Government Code32 to impose property taxes.

Pursuant to the Business and Professions Code,33 counties and cities may licensebusinesses for purposes of regulation, in the exercise of their police powers.

As of April 1, 1956, counties will be empowered by Part 1.5 of Division 2 of the

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Revenue and Taxation Code to impose sales and use taxes.34 Cities are nowauthorized by the Government Code35 to impose such taxes.

Under the Business and Professions Code36 counties may license itinerantpeddlers for revenue.

In the case of a city which has been chartered in accordance with the StateConstitution37 taxation is ordinarily a matter of strictly local concern,38 and tothe extent that it is, state laws on the subject do not apply, unless the city providesotherwise.

In accordance with authorization contained in Section 6 of Article 9 of the StateConstitution, the Legislature has provided in the Education Code39 for an annuallevy of school district property taxes.

Also included in California's taxing system are numerous types of special districttaxes and assessments imposed or levied on property on a special benefit or advalorem basis to provide facilities or services for persons or property within thedistricts. The provisions authorizing them are found scattered throughout thelaw.40

The administration of the state's taxes is not centralized in any one agency orofficial, but is vested in several. Principal among these are the State Board ofEqualization, which alone administers the Sales and Use Tax Law, the Use FuelTax Law, the Private Car Tax Law, the Alcoholic Beverage Control Law, and theItinerant Merchants Law, which shares with the State Controller theadministration of the Motor Vehicle Fuel License Tax Law and the Motor VehicleTransportation License Tax Law, and which shares with the Department ofInsurance the administration of the Insurance Company Tax Law; the StateController, who, in addition to sharing with the State Board of Equalization theadministration of the laws mentioned, is charged with the general administrationof the Inheritance Tax Law and the Gift Tax Law; the Franchise Tax Board,which administers the Personal Income Tax Law and the Bank and CorporationTax Law; the Department of Motor Vehicles, which administers the VehicleLicense Fee Law and the provisions of the Vehicle Code imposing license andregistration fees; the Department of Insurance, which, as stated, shares theadministration of the Insurance Company Tax Law with the State Board ofEqualization; the Department of Employment, which administers theunemployment and disability compensation insurance provisions of theUnemployment Insurance Code; and the California Horse Racing Board, whichadministers the horse race licensing and pari-mutuel fee provisions of theBusiness and Professions Code.

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In addition to the State, California's taxing jurisdictions presently include 58counties, 316 cities,41 1,898 school districts,42 and at least 2,590 other types ofspecial taxing and assessing districts.43

2. GENERAL HISTORICAL BACKGROUND

The development of taxation in California can be conveniently considered withrespect to the periods 1849 to 1879, 1879 to 1910, 1910 to 1933, and 1933 to thepresent day. 1849 was the year in which the state's first Constitution was adopted;1879, the year of its second and current Constitution; and 1910 and 1933, years inwhich major revisions in the California tax system occurred.

A.1849 - 1879

Until 1910 the principal source of revenue for both state and local governmentalpurposes in California was the general property tax.

The basis of the tax was originally contained in Section 13 of Article 11 of the1849 Constitution,44 which read:

"Taxation shall be equal and uniform, throughout the State. Allproperty, in this State, shall be taxed in proportion to its value, tobe ascertained as directed by law; but assessors and collectors oftown, county and State taxes shall be elected by the qualifiedelectors of the district, county, or town in which the property taxedfor State, county, or town purposes is situated." 45

Section 13 was evidently principally the result of a compromise betweendelegates to the constitutional convention who believed that the Legislatureshould have unrestricted power to tax, and others, mostly from the southern partof California, who were in fear that such power would vest too much politicalstrength in the north, and who indicated that without the language they would riotsupport any proposed constitution.46 The second clause of the second sentencewas declared particularly necessary in order to overcome the objection of largelandowners against the possible assessment of their property by persons notresiding in the area where the property was located.47 The first sentence and thefirst clause of the second were, according to the delegate who proposed them,taken from the Constitution of Texas.48

At its first session in 1850, the California Legislature enacted a comprehensiverevenue law which imposed a general property tax for state purposes, providedfor the imposition of such a tax for local purposes, and imposed also a poll tax .49A military commutation tax,50 a foreign miners' license tax,51 and duties on

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sales of property at public auction52 were additionally imposed at the 1850session. Counties were also authorized to levy license taxes on merchants,peddlers, insurance companies, and other occupations and businesses.53

The act by which California became a member of the Union on September 9,1850,54 curbed the state's taxing power to a limited extent in providing that theState "shall never levy any tax or assessment of any description whatsoever uponthe public domain of the United States, and in no case shall non-residentproprietors, who are citizens of the United States, be taxed higher than residents.* * * "

A new general revenue law was enacted in 1851,55 this imposing or providing forproperty, poll, and business and occupation license taxes. Any provisions to thecontrary in the 1850 general revenue law were repealed.56 Also in 1851, the 1850foreign miners' license tax was repealed57 and a gaming license tax imposed.58

The 1851 general revenue law was in 1852 superseded by still another generalrevenue law.59 This continued the property and poll taxes, and, in addition,imposed a license tax on sellers of consigned goods. At its 1852 session theLegislature also imposed license taxes on foreign miners,60 passengercommutation,61 and various types of businesses and occupations.62

In 1853 yet another general revenue law was enacted.63 This repealed the 1852general revenue law, but continued the property and poll taxes. It also imposedbusiness and occupational license taxes and an inheritance tax.

A new general revenue law was enacted in 1854.64 It repealed the 1853 law, butimposed or provided for substantially the same taxes, -with the exception of theinheritance tax, for which it made no provision.

In 1857 the Legislature enacted a general revenue law65 which repealed most ofthe property tax provisions of the 1854 law but reenacted the substance of manyof them. A stamp tax on insurance policies and various kinds of commercialinstruments was also imposed in 1857.66

In 1861 another major revenue law was enacted.67 This repealed and supersededthe 1854 and 1857 general laws, but imposed or provided for substantially thesame types of taxes.

The 1857 stamp tax was repealed and supplanted by another in 1861.68

In 1862 an act was passed imposing a gross premiums tax on foreign insurancecompanies doing business in California with less than $50,000 invested in California property.69

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Until 1879, the Legislature also enacted numerous special laws which authorizedthe levy of special taxes for specific purposes by particular counties.70

Prior to 1870, county officials assessed and equalized property for both state andcounty property tax purposes.71 There was no central control or supervision oftheir efforts in these respects, however, and, as a consequence, inequalities inassessment and equalization practices developed which frequently causedvariances among the counties in valuations of the same types of property.72 Localassessment and equalization also enabled local officials to maintain the good willof their taxpayers by keeping assessments low so that the state tax would not betoo burdensome.73 The result was such that it was believed by many that localassessors were generally disregarding the requirement in Section 13 of Article 11of the State Constitution that taxation should "be equal and uniform, throughoutthe State."74

As a remedy for the situation, the establishment of a state board of equalization,with advisory and supervisory jurisdiction over the work of the local assessorsand boards of equalization, was recommended from time to time,75 and in 1870such an agency was created.76

The board consisted of the State Controller and two other members appointed bythe Governor. It was required to examine local assessments to determine whetherthey were "equal and uniform, according to location, soil and improvements,productions and manufactures."77 Upon completing the examination it could, atany time prior to final action by the local boards of equalization on theirassessment rolls, equalize local assessments "by adding to or deducting from thevaluation of taxable property in any county or counties, such percentage as willproduce, relatively, equal and uniform valuations between the several counties ofthe State. * * *"78 The percentage added or subtracted in any case was to beentered on the board's records, and a certified copy of the entry was to be sent tothe local board affected before that board -finally acted on its roll.79 A change inits roll was then to be made accordingly by the local board.80 The state board wasalso to frame rules for the guidance of the local boards in making the additions orsubtractions.81

In 1872 a Political Code was adopted, and in it were incorporated the state'srevenue laws.82 Commenting on the effect of the code in this connection,William C. Fankhauser stated in his "A Financial History of California" (1913), atp. 232:

"The adoption of the political code repealed all the old revenuelaws. The new law was in part based on the laws repealed, in parton the decisions of the supreme court of California, in part on the

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previous recommendations and suggestions of the state board ofequalization, state controllers Watt and Green, and in part onpublic opinion."83

The Political Code continued the existence of the State Board of Equalization,84with, however, greater powers and duties than it had under the 1870 law.

In Houghton v. Austin (1874) 47 C. 646, it was held that Section 3693 of thecode, which authorized the board to raise or lower assessments, wasunconstitutional on the ground that it purported to give the board a functionwhich had been vested in local assessors by the provision in Section 13 of Article11 of the 1849 Constitution for the election of assessors by voters in the countiesor districts where assessable property was located. In the same case, the courtconstrued Section 3696, which authorized the board to calculate the state propertytax rate, after allowing for collection costs and delinquencies, as making anunlawful delegation of legislative power.

Evidently as a consequence of Houghton v. Austin, the continuation of the boardfor the purposes for which it had originally been created was considered futile;85and in 1876 its composition was changed to consist of the Governor, the AttorneyGeneral and the State Controller, its equalization and assessment investigationpowers were eliminated, and it became virtually a mere statistical bureau andadvisory body.86

Also in 1876, the Supreme Court of the State of California decided in People v.Hibernia Sav. & Loan Soc., 51 C. 243, 21 Am.R. 704, that credits, even if securedby mortgages, were not "property" for purposes of taxation.

B. 1879 - 1910

The evolution of California's taxing system was next significantly influenced bythe adoption of a new constitution in 1879. For one thing, that instrument omittedthe provision in the 1849 Constitution for equal and uniform taxation. It alsodiffered from the latter in these respects: it defined taxable property as includingmoney, credits, bonds, stocks, dues, franchises, and anything else capable ofprivate ownership;87 it exempted from taxation growing crops and public schooland other publicly-owned property;88 it authorized the Legislature to provide fora deduction from credits of debts due bona fide residents of California, except inthe case of credits secured by mortgage or trust deeds;89 it required the separateassessment of land and improvements, and directed that cultivated anduncultivated land of the same quality and similarly situated be assessed at thesame value;90 it required the assessment by sections or fractions of sections oftracts of land containing more than 640 acres which the United States

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Government had sectionized, and, in accordance with law, the assessment insmall tracts of land not sectionized by the United States;91 it provided for thetaxation of mortgages and deeds of trust;92 it prohibited and made null and voidany contract by which a debtor obligated himself to pay any tax on borrowedmoney or on any mortgage or deed of trust;93 it prohibited the surrender orsuspension by the State of the power to tax;94 it authorized the Legislature toprovide by law for the payment of taxes on real property in installments;95 itdirected the Legislature to require taxpayers to furnish the county assessor annualstatements showing all property owned by them or in their possession at 12o'clock noon on the first Monday of March;96 it created a new State Board ofEqualization and new county boards of equalization;97 it required that allproperty, other than the franchises, roadways, roadbeds, rails, and rolling stock ofrailroads operated in more than one county, be assessed locally where situated,and that such excepted railroad property be assessed by the State Board ofEqualization and the value determined by it be apportioned locally in proportionto the miles of railway in each locality;98 it authorized the levy of income taxeson persons and businesses;99 it directed the Legislature to provide for the levy ofa poll tax of not less than $2 on male inhabitants over 21 and under 60, for stateschool fund purposes;100 it prohibited any local or special legislation for theassessment or collection of taxes,101 the extension of time for the collection oftaxes,102 and the exemption of property from taxation;103 it prohibited therelease of any county, city, or other local subdivision, or any inhabitant of anysuch subdivision, from its or his proportional share of taxes levied for statepurposes;104 and it prohibited the Legislature from imposing taxes for localpurposes, at the same time authorizing it to enact general laws vesting in localauthorities the power to assess and collect taxes for such purposes.105 It wasbelieved by many that these new revenue provisions would, in general, "secure amore equitable distribution of the burden of taxation. * * * "106

The new State Board of Equalization was to consist of the State Controller, actingex officio, and one member elected f or a four-y ear term in and representing eachof the several congressional districts in California, of which there were four in1879. It was expressly required to equalize the valuation "of the taxable propertyof the several counties in the State for the purposes of taxation." Each countyboard of supervisors was to constitute the county's board of equalization, and assuch equalize the value of property in the county for tax purposes. Further, it wasgenerally provided (Article 13, § 9):

is * * * such State and county Boards of Equalization are herebyauthorized and empowered, under such rules of notice as thecounty boards may prescribe, as to the county assessments, andunder such rules of notice as the State Board may prescribe, as tothe action of the State Board, to increase or lower the entire

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assessment roll, or any assessment contained therein, so as toequalize the assessment of the property contained in saidassessment roll, and make the assessment conform to the truevalue in money of the property contained in said roll." Insofar asthe State Board of Equalization was concerned, this language hadthe effect of precluding the possibility of a repetition of a courtholding like that in Houghton v. Austin, supra.

In 1880, in Wells, Fargo & Co. v. State Board of Equalization, 56 C. 194, 6P.C.L.J. 358, the California Supreme Court construed the provisions of the 1879Constitution on the state and local boards of equalization (i. e., Article 13, § 9) asauthorizing the State Board of Equalization to increase or lower the entireassessment roll of a county, but not any individual assessment, and, conversely, asempowering a county board of equalization to increase or lower an individualassessment on the county roll, but not the entire roll.

In People v. Dunn (1881) 59 C. 328, 8 P.C.L.J. 319, and Schroeder v. Grady(1884) 5 P. 81, 66 C. 212, the court sustained an action of the State Board ofEqualization increasing an entire assessment roll in a specified percentage by wayof equalization with respect to mortgages and deeds of trust which had evidentlybeen shown on the local assessment roll at their face value, less the value of theproperty involved. These decisions apparently prompted an amendment ofSection 9 of Article 13 of the 1879 Constitution on November 4, 1884,prohibiting the State Board of Equalization from raising "any Mortgage, deed oftrust, contract, or other obligation by which a debt is secured, money or solventcredits above its face value. * * " The section was amended at the same time toempower the Legislature to redistrict the State into four districts, "as nearly equalin population as practical," for the election of members of the State Board ofEqualization. A redistricting of the State pursuant to such authorization was firstprovided for in 1907.107

From 1880 to 1883, taxes on railroad property assessed by the State Board ofEqualization were collected locally, along with all other property taxes, both stateand local. This proved unsatisfactory, however, because of resistance by therailroads to the payment of their taxes, and the consequent acceptance by manycounties in need of revenue for amounts less than the sums legally payable.108As a result, the law was amended in 1883 to require the State Controller to collectall taxes, both state and local, on railroad property assessed by the board.109

License fees for fishing were apparently first imposed in 1887.110

Between 1879 and 1910, the 1879 Constitution was amended from time to time toprovide for additional property tax exemptions. These included exemptions in

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1894 of property used for free public libraries111 and free museums112 and ofspecified fruit and nut-bearing trees;113 exemptions in 1900 of the property ofStanford University,114 the California School of Fine Arts,115 and ofchurches;116 an exemption in 1902 of state, county, and district bonds;117exemptions in 1904 of the California Academy of Sciences118 and the personalproperty of householders up to $100;119 and an exemption in 1906 of CogswellPolytechnical College.120

A collateral inheritance tax was imposed by the Legislature in 1893.121

In 1903 an annual tax on gross premiums, less returned premiums, reinsurance,and losses actually paid, received by insurance companies other than life, wasimposed on foreign insurance companies doing business in California.122 Thetax was extended to life insurance companies in 1905.123

A tax on the sale of agricultural minerals or commercial fertilizers, where theselling price to the consumer was more than $8 per ton, was imposed in 1903.124

In 1905 the 1893 inheritance tax law was repealed and superseded by another lawwhich imposed a direct as well as a collateral inheritance tax.125

An annual license tax on corporations, with respect to their right to do business inCalifornia, was also imposed in 1905.126

In addition, the year 1905 marked the commencement of the payment of fees forthe registration of motor vehicles.127 These fees, the general property tax, theinheritance tax, the corporation license tax, the poll tax, and the foreign insurancecompany tax comprised the principal sources of the State Government's taxingrevenue in 1905, the general property tax alone accounting for 80 percent of theState's total revenue.128

In 1906, Section 5 of Article 13 of the State Constitution was repealed. This wasthe section which prohibited and made null and void any contract by which adebtor obligated himself to pay a tax on money borrowed or on any mortgage ordeed of trust.

The first hunting license fees were apparently provided for in 1907.129

C. 1910 - 1933

California in 1879 was essentially a rural state with a relatively simple businessand financial structure, and under the circumstances the existing tax system, inwhich the general property tax was a basic source of revenue for both state and

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local purposes, seemed adequate. As the years rolled on, however, bringing withthem a growth in business and industry, inequities and inequalities of suchcharacter developed as to suggest a need for study, investigation, and change.130This culminated in the creation by the Legislature in 1905 of a Commission onRevenue and Taxation, consisting of the Governor, as chairman, an expert intaxation to be appointed by him, and two members from each of the two housesof the Legislature, whose function was to investigate the system of revenue andtaxation then in force and recommend a plan for its revision and reform.131 Thecommission made an exhaustive study and examination of such system, and inDecember of 1906 submitted its final report to the Legislature.132

The commission found, in general, that the system had become antiquated; that itwas full of inequalities, placing an undue burden on farmers, as contrasted withpersons engaged in industry, farmers paying taxes equivalent to 10 percent oftheir income, whereas those in industry paid taxes amounting to only 2 percent oftheirs; that the general property tax had become in fact a real estate tax, only 15to 18 percent of all property taxes being levied on personal property; that moneysand credits escaped taxation almost entirely; that national banks paid no taxes atall, except on their real estate, of which they owned little, with a resultingdiscrimination against the state's commercial banks; that "equalization" did notand, in the nature of things, could not, equalize, and often intensified inequalities;that revenue derived from the taxation of large organizations, like the railroads,which belonged by right to the people of the State as a whole, was distributedinequitably among the State's local divisions; that it was impossible to adjust thetax burden equitably among the different classes of corporations; and that thecurrent system was a "school for perjury," put "a penalty on honesty," and paid"high premiums for dishonesty."133

As a remedy for the major ills of the system, the commission recommended thatthe sources of state and local revenue be separated; that the general property taxon common property134 be abandoned as a source of revenue for stategovernmental purposes; that the counties and cities have a generally exclusiveright to impose the general property tax on common property for their purposes;and that there be reserved to the State Government a generally exclusive right toderive revenue for its purposes from the existing inheritance tax, corporationlicense tax, poll tax, insurance company tax (expanded to apply also to domesticinsurance companies), and motor vehicle registration fees, and, in addition, fromnew taxes on the operative property of public utilities (measured by their grossreceipts and imposed at varying rates for different classes of corporations), on theshares of the capital stock of banks, and on the assessed value (as determined bythe State Board of Equalization) of corporate franchises.

As practical reasons in support of the separation of state from local taxation, the

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commission stated that separation would abolish "the expense, friction andannoyance of the vain attempt to equalize between the different counties," that itwould thereby "place each tax in the hands of that branch of the governmentwhich is best adapted to administer it;" and that the "different taxing districtscould each have practical 'home rule' in matters relating to taxation."135

To achieve separation, the commission believed that it was first necessary toamend the State Constitution. It observed in this regard that in the absence of allamendment, an express bar to separation was found in Section 10 of Article 11,the section incorporated in 1879 to prohibit the release of any county, city, orother local subdivision, or any inhabitant thereof, from its or his proportionalshare of taxes levied for state purposes.136 It suggested, accordingly, that thesection be repealed. In addition, it recommended that Article 13 of theConstitution, which contained most of the more important revenue and taxationprovisions in that instrument, be revised to eliminate or modify other provisionswhich might prohibit separation, to enumerate the subjects of taxation to be setaside for the exclusive use of the State, to specify the method of their taxation,and to bring all exemption provisions together.137

At its 1907 Session the State Legislature proposed that the Constitution beamended along the lines suggested by the commission.138 This proposal wassubmitted to a vote of the people in 1908, but failed to carry. These reasons havebeen given for such failure:139 no provision was made for a possible deficit instate revenue without again amending the Constitution; public utility corporationswere not made clearly liable for their share of the past indebtedness of countiesand cities; if a state tax on property were found necessary, the property ofcorporations taxed for state purposes would have been exempt therefrom; and noprovision was made for varying the rates imposed on corporations.

In 1909 the Legislature again proposed an amendment of the Constitution to carryout the recommendations of the Commission on Revenue and Taxation.140 Theproposal called for the repeal of Section 10 of Article 11, the amendment ofSection 10 of Article 13 by the deletion of the provision therein for theassessment of railroad property by the State Board of Equalization, and theaddition of a new Section 14 to Article 13. Incorporated in the latter were theprovisions for the taxation for state purposes of public utility corporations,insurance companies, the shares of capital bank stock, and corporate franchises.There were included also in the section a provision for the levy of a state propertytax for state purposes in the event of a deficit in state revenue; a provision makingbank shares and the property of public utilities and insurance companies liable forthe outstanding bonded indebtedness of counties, cities, and districts; a provisionauthorizing the Legislature to change the tax rates specified in the section upon atwo-thirds vote of the members of each house; a provision that until 1918 the

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State should reimburse each county sustaining loss as a result of the withdrawalof railroad property from local taxation, for the net loss sustained; and a provisionthat the Legislature should provide for reimbursing districts from county generalfunds for loss occasioned the districts by the withdrawal of property from localtaxation.

Before the 1909 proposal was submitted to a vote of the people, Governor Gillettcalled a special session of the Legislature for October 3, 1910, to modify theproposal to the extent of making certain the period for which the gross receipts ofpublic utilities and the gross premiums of insurance companies were to becomputed. The Legislature convened in accordance with such call, rescinded andannulled the 1909 proposal,141 and adopted a new proposal incorporating themodifications requested.142 This proposal was submitted to and acted onfavorably by the people at the General Election held on November 8,1910.

At the same election a favorable vote was given proposals for the amendment ofSection 1 of Article 13 and the repeal of Section 4 thereof, to eliminate thetaxation of mortgages and deeds of trust on land given as security for the paymentof debts; for the addition of Section 11/1 to Article 13, creating the veterans'property tax exemption; and for the addition of Section 22 to Article 4, providingfor the Panama-Pacific International Exposition, and the levy of a property tax tofinance it.

Legislation implementing Section 14 of Article 13, popularly known as SenateConstitutional Amendment No. One, was enacted in1911.143 The legislationitself is sometimes referred to as the Comprehensive Tax Act of 11911.

The year 1911 also saw the repeal of the 1905 inheritance tax law and theenactment of a new one to replace it.144

In 1913 the 1905 corporation license tax was repealed .1145 The 1911inheritance tax law was repealed and replaced by another in 1913.146 This newlaw was in the same year supplemented by legislation which created theInheritance Tax Department.147 In addition, the 1905 motor vehicle registrationfee law was superseded in 1913 by the enactment of California's first true motorvehicle law.148

The Constitution was amended in 1914 to provide exemptions for collegeproperty generally149 and for ships,150 to prohibit the levy of poll taxes,151 andto provide for the taxation of land and improvements thereon of a county or citylocated outside its boundaries and subject to taxation when acquired.152

A new corporation license tax was imposed in 1915.153 In the same year a motor

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vehicle law was enacted to supersede the 1913 law on that subject,154 and thefirst oil and gas charges and assessments were imposed.155

Dissatisfaction having arisen in respect to the 1910 revision, chiefly on theground that the tax burden on common property was constantly increasing at agreater rate than the burden on public utility property, the Legislature in 1915provided for the appointment by the Governor of a state officer or of experts toinvestigate the tax systems then in force in California and elsewhere, payingparticular attention to the relative tax burdens of common and public utilityproperty, and the revenue losses sustained by the counties as a result of theremoval of railroad property from the tax rolls, and to submit a report thereon tothe Legislature at its 1917 session.156 Pursuant to this legislation, the Governorappointed a State Tax Commission,157 which made the investigation and, in1917, submitted a report.158

The commission concluded in the report that the 1910 revision of the State's taxsystem was an improvement over the old system, but that it had not resulted inequality in the tax burden either as between utilities and individuals or as betweenutilities, that it had not tended to correct the evil of county undervaluation, that ithad not lightened the burden on real property, that the provision for a two-thirdsvote of each branch of the Legislature to increase the rates on the gross receipts ofutilities was prohibitive, and that the tax system in respect to the gross receiptstax had become complicated by the necessity of first having to determine ratesaccording to the value of property before determining rates upon grossreceipts.159

The commission recommended that an effective system of budget control beworked out for all levels of government, that there should be a more scientificbasis for making assessments, that the tax burden as between common propertyand public utility property, and as between the various types of the latter property,should be equalized, and that an income tax be adopted.160As was said in a report of a subsequent tax commission:161

"The recommendations of the Commission in 1917 were submittedat a singularly unfortunate time. In the excitement andpreoccupations incident to America's entrance into the war thereport appears to have been almost completely ignored except forthe utilization of certain of its statistical results in connection withthe 1921 adjustment of the corporation tax rates."

The 1915 commission's recommendations appear also to have been acted on inpart through the enactment of a tax limitation law in 1917, which was designed toregulate and limit the amount that might be produced by local tax levies.162 The

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law required that local budgets be filed with a state board of authorization, and,except with the board's approval, prohibited any tax levy which would produce anamount more than 5 percent in excess of the amount produced by the precedingyear's levy. It never became operative, however, since it was defeated onreferendum at the General Election of November 5, 1918.

The privilege taxes on the harvesting of kelp and on fish canning were firstimposed in 1917.163 In the same year the Legislature revised and codified as partof the Political Code the Comprehensive Tax Act of 1911,164 repealed the 1913inheritance tax law, and enacted another inheritance tax law.165

In 1920 a constitutional amendment was adopted to exempt the property oforphan asylums from taxation,166 and another was adopted in the same year toprovide again for the levy of a poll tax, this time on alien male inhabitants.167

1921 witnessed the repeal of the 1917 inheritance tax law and the adoption of anew law of the same general type.168

Three measures relating to motor vehicles were enacted in 1923: new motorvehicle act, known as the California Vehicle Act;169 motor vehicle fuel taxact;170 and a motor vehicle transportation license tax act.171 In the same year anagricultural mineral products tax was imposed.172

In 1924 the Constitution was amended to provide for the levy of an annualeducational poll tax on all male inhabitants between the ages of 21 and 50, withcertain exceptions.173 This was evidently the result of a decision of theCalifornia Supreme Court in 1921,174 to the effect that the 1920 poll taxamendment was invalid in respect to Japanese aliens. An initiative act adopted atthe General Election in 1924 imposed a tax on the gross receipts from feescharged for admission to boxing and wrestling matches. Also in 1924, theConstitution was amended to provide that the tax rate on unsecured personalproperty for any current year should be based on the real property tax rate for thepreceding tax year.175

The Constitution was further amended in 1925 to authorize the Legislature toprovide for the assessment, levy, and collection of in lieu taxes on otherwisetaxable notes, debentures, shares of capital stock, bonds, solvent credits, ormortgages at a rate different from, but not greater than, that on any other taxableproperty, subject to change on a two-thirds vote of the members of both houses.116 The purpose of the authorization was to overcome administrative difficultythat had been encountered arising out of the concealment of intangibles and theirassessment.177

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The 1923 motor vehicle transportation license tax act was in 1925 repealed andsuperseded by another substantially similar law.178

At the General Election held on November 8, 1926, Section 15 was added toArticle 13 of the State Constitution to provide that highway common carrierswere to be classed as public utilities and taxed on the basis of their gross receipts,the tax to be in lieu of all other taxes and licenses; and implementing legislationwas enacted in 1927.179 The effect was to remove such carriers from the scopeof the motor vehicle transportation license tax, and narrow the application of thattax to highway contract carriers. This caused considerable difficulty in itsadministration,180 and apparently for that reason it was repealed in 1927, as ofJanuary 1, 1928.181 However, evidently on the recommendation of the StateBoard of Equalization,182 as a substitute for the repealed law183 the Legislaturein 1927184 amended Section 77 of the California Vehicle Act to provide forgraduated weight fees.

The Legislature in 1925185 enacted a bill to impose license and other fees onpersons manufacturing or selling oleomargarine, but the bill was disapproved onreferendum at the General Election of November 2, 1926. A constitutionalexemption of cemetery property was, however, approved at that election.186

Pursuant to the 1924 constitutional amendment regarding the assessment, levy,and collection of taxes on intangibles, the Legislature in 1925 enacted theso-called Solvent Credits Act,187 which provided for the assessment ofintangibles at 7 percent of their full cash value. Certain national banks thereafterprotested on the ground that as the result of the act, "other moneyed capital" incompetition with the banks was being less heavily taxed, and that this violatedSection 5219 of the Revised Statutes of the United States, which permitted thetaxation of national bank shares subject to the restriction that the tax "shall not beat a greater rate than is assessed upon other moneyed capital in the hands ofindividual citizens. * * *"188 The protests, together with various decisions of theUnited States Supreme Court, including, principally, that in Merchants' Nat. Bankof Richmond v. City of Richmond (1921) 41 S.Ct. 619, 256 U.S. 635, 65 L.Ed.1135, involving the Virginia bank tax, to the effect that the investments ofindividuals in bonds, notes, and other evidences of indebtedness came intocompetition with the activities of national banks, and, therefore, their taxation ata lesser rate than that on national bank stock violated Section 5219, led to theenactment in 19"-17 of another law to authorize the taxation of intangibles at arate of 1.45 percent of their full cash value, which was the exact rate of the bankstock tax.189 In 1928, however, the California Supreme Court declared that the1925 and 1927 enactments did not conform in specified details with the 1924constitutional amendment, and hence were invalid.190

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The constitutional provision exempting fruit and nut-bearing trees and grapevines was in 1926 amplified to cover specified immature forest trees.191

In March of 1927 the California Supreme Court held that in respect to foreigncorporations, the 1915 corporation license tax was violative of the FederalCommerce, Due Process, and Equal Protection Clauses, in that it was predicatedsolely upon the authorized capital stock of the corporation, and was in no wiserelated to the amount of property owned, capital employed, or business donewithin California.192 Shortly thereafter, in the same year, the Legislaturerepealed most of the provisions of the 1915 corporation license tax law,193apparently on the recommendation of the State Board of Equalization, which feltthat it would be inequitable to subject only domestic corporations to the tax.194

In 1927 legislation was enacted195 authorizing the appointment by the Governorof a tax commission to investigate the systems of revenue and taxation in force inCalifornia and elsewhere, and to submit a report thereon, includingrecommendations as to necessary changes in the state's system, to the Governorfor submission by him to the Legislature at its 1929 Session. Such a commission,known as the California Tax Commission, was appointed.196

On August 10, 1928, the Commission, in a special report197 to Governor Young,recommended that he call a special session of the Legislature to consider thesubmission of a suitable constitutional amendment to the people at the GeneralElection in 'November of 1928, to accomplish the following: provide for a tax onnational and other banks by the so-called "fourth method" permitted by Section5219 of the Revised Statutes of the United States, that is, "acording to ormeasured by their net income;"198 give the Legislature corresponding authorityto make -necessary changes in the form of the existing general corporationfranchise tax so as to permit the use of net income as the measure of the value ofgeneral corporation franchises; and remove the constitutional obstacles to thetaxation oil intangible personal property. The Governor, on August 16, 1928,199called tile Legislature into a special session to commence on September 4, 1928,to consider the submission of the constitutional amendment suggested; and in amessage to the Legislature on the date it convened, advised it that something hadto be done in respect to the bank tax problem if the State's bank tax revenue wasto be preserved.200 Responding to the exigencies of the situation, the Legislatureproposed the addition of Section 16 to Article 13 of the Constitution,201 and suchproposal was approved by the voters at the General Election held on November 6,1928.

Section 16 provided that all banks should pay an annual tax "according to ormeasured by their net income," at the rate of 4 percent of such income, to be inlieu of all other taxes and licenses, except taxes on their real property; that the

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Legislature might, by a two thirds vote of the members elected to each of itshouses, provide by law for any other form of taxation respecting national bankspermitted by Congress; that financial and general corporations subject to the taxon corporate franchises should pay in lieu of that tax an annual tax for theprivilege of exercising their corporatefranchises in California, according to ormeasured by their net income, at the rate of 4 percent of such income, subject toan offset, as provided by the Legislature, up to 90 percent of the tax, for personalproperty taxes paid, and subject also to an annual minimum tax of $25; that theLegislature, on a two-thirds vote of its members, might provide for any othermethod of taxation of such financial and other corporations; that the Legislature,by a two-thirds vote of its members, might change the bank and financial andgeneral corporation tax rates or the percentage of the property tax offset; and thattaxable intangibles should be taxed at the rate of 3/10 of 1 percent of their actualvalue, subject to change by the Legislature on a twothirds vote, but not to a rate inexcess of 4/10 of 1 percent. The section also authorized the Legislature to enactimplementing legislation, and provided that any such legislation enacted at the1929 Regular Session should be effective immediately on its passage.

Legislation carrying out the provisions of Section 16 was enacted in 1929.202

The California Tax Commission submitted its final report to the Governor onFebruary 1, 1929.203 It stated therein, in part: 204

"From the analysis it has made, the Commission is convinced thatthe system of separation of sources, as established in 1910 by'Amendment Number One,' has outlived its usefulness and shouldbe abandoned. Its faults are serious and fundamental. Itdiscriminates against certain localities and favors others by themanner in which it withdraws property for state taxation whichshould properly be subject to local tax levies. It supplies the statewith revenues in amounts determined by factors quite unrelated toits fiscal needs. The problem of adjusting the rates of the grossreceipts taxes on public utilities so as to equalize their burden withthe burden on common property is difficult, if not impossible tosolve and is provocative of disputes pregnant with unfortunatepolitical consequences. It is impossible to adjust the rates on grossreceipts so as to achieve a tolerable degree of equity as betweencompany and company. Its advantages of simplicity and fiscalproductivity are purchased at too high a price."It went on to say205 that it favored the gradual transformation ofthe existing tax system into one consisting of three main divisions:the first, an objective property tax imposed where property islocated, to serve primarily as a source of local revenue; the second,

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a comprehensive business tax, measured by net income carried onwithin the State's borders, to serve chiefly as a source of staterevenue; and the third, a personal contribution from each personresiding in the State, apportioned according to ability to pay, theyield to be divided between the State and its subdivisions.

Continuing,206 it recommended the following: that the operative real estate of allpublic utilities be valued by the State, but that it be taxed locally in the samemanner as common property; that public utilities be subject to a franchise taxmeasured by their net income in the same manner and at the same rate as the taxon banks and other corporations; that the State levy a direct tax on property in theevent of deficiencies in other revenues; that the property tax offset for franchisetax purposes be abolished, and that the franchise tax rate be increased, shouldexperience indicate the desirability of an increase; that the taxes on insurancecompanies be modified by reducing the rate from 2.6 percent to 2.5 percent, byeliminating the real estate tax offset, and by provisions to prevent the evasion oftaxation through reinsurance; that the people be given the opportunity to expressthemselves in regard to the substitution of a personal income tax for the tax onintangible personalty and any other classes of personal property; that localproperty taxes on motor vehicles be abolished, and the state's motor vehiclelicense tax be increased to reimburse the counties for any revenue losses suffered;that the Legislature be given authority to equalize the taxation of motor carriers;that the inheritance tax rates and exemptions be adjusted so as to reduce theburden falling on widows; and that the State Board of Equalization be abolishedand replaced by a permanent professional tax commission of three membersappointed by the Governor.

Following the submission of the California Tax Commission's final report, theLegislature at its 1929 Session provided for the appointment of a Joint LegislativeCommittee on Taxation to study and make recommendations regarding thereported.207 The committee was appointed,208 proceeded with the study, and onJanuary 23, 1931, submitted a report of its own.209

The committee recommended210 in its report that the existing system of taxationbe retained, the Legislature, however, to be empowered to make such additionalclassifications of public utilities as might be necessary to achieve a moreequitable distribution of the tax burden, and the State Board of Equalization toextend its studies respecting the tax burdens borne by common property and thepublic utilities; that a research department be created within the State Board ofEqualization, and the board's name be changed to State Tax and EqualizationBoard; that the State Constitution be amended to permit the State to assume alarger share of the cost of education; that each board of supervisors beempowered to review and revise the budgets of school districts within the county;

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that the research department consider ways and means of relieving the excessivetax burden on common property; that the Legislature take appropriate action tosecure an amendment of the federal law to permit greater latitude in the taxationof national banks; and that the Bank and Corporation Franchise Tax Act beamended to incorporate the oil and gas well depletion provisions of the FederalRevenue Act of 1928, together with other amendments for the improvement ofthe act.

The Legislature in 1931 apparently acted on two of these recommendations bycreating a Tax Research Bureau in the State Board of Equalization211 andmemorializing Congress to change the federal law on the taxation of nationalbanks.212 In 1933 the bureau submitted a summary report213 then a finalreport,214 and in the same year the law creating it was repealed.215

At the General Election in 1932 the Constitution was amended to authorize theLegislature to amend or revise the 1924 initiative act on boxing and wrestling,216and to permit it to provide for the cessation of tax liens.217

D. 1933 - PRESENT

At the 1933 Session a Joint Legislative Tax Committee, appointed to studysuggested sources of new revenue in order to provide relief for real estate throughthe lowering of property taxes and to effect a balancing of the State Budget, madethese general recommendations:218 that the constitutional provisions on theseparation of revenue sources be repealed and utility property be taxed like otherproperty; that utility companies be made subject to the Bank and CorporationFranchise Tax Act; that a limitation be placed on any property tax levied for statepurposes, this to provide that not more than 25 percent of all appropriations forstate support be raised by such a tax; that the inheritance tax exemption forwidows be reduced; that the State be permitted to assume a larger share of thecost of education; that a 2 percent consumers' retail sales tax be levied; that alimitation be imposed on the power of the boards of supervisors to levy taxes forgeneral purposes; and that an income tax be imposed.

Many of these recommendations, along with some that had been made by the1927 California Tax Commission and the 1929 Joint Legislative Committee onTaxation, were incorporated in 1933 in legislation and a proposed constitutionalamendment, which have since together been popularly known as the"Riley-Stewart Plan" or the "Riley-Stewart Act," so named after Mr. Ray L. Riley,then the State Controller, and Mr. Fred E. Stewart, then a member of the StateBoard of Equalization.

The proposed constitutional amendment 219 provided for the addition of Section

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34a to Article 4, limiting the State's General Fund appropriations, and furtherlimiting to 25 percent of all state appropriations any amount that the State mightraise by way of property taxation; for the amendment of Section 12 of Article 11,directing that all property subject to taxation be assessed at its full cash value; forthe addition of Section 20 to Article 11, limiting local governmentalexpenditures, and authorizing the Legislature to limit the amount of countyproperty taxes; for the amendment of Section 14 of Article 13, providing for theelimination of the gross receipts taxes on public utilities and the return of publicutility property to the local tax rolls, such property, however, to be assessedcentrally by the State Board of Equalization, subjecting public utility companiesto the same type of franchise taxation as general corporations, authorizing theLegislature to provide specially for the taxation of intangibles and other personalproperty, in respect to exemption, classification, and otherwise, and increasingthe tax rate on insurers; for the amendment of Section 15 of Article 13, giving thepublic school system and the State University a superior right to state revenue fortheir support, and providing for the raising of revenue by the State and theapportionment of such revenue locally in the event of a deficiency followingaction by the Legislature under Section 20 of Article 11 in limiting the amount ofproperty tax revenue that might be raised locally; and for the amendment ofSection 16 of Article 13, providing in part for the removal of the 4 percent bankand corporation tax rate limitation. The proposal also included the repeal ofSection 121/2 of Article 13, relating to intangibles, the substance of some of theprovisions of that section to be incorporated in Section 14, as was to be thesubstance of provisions on intangibles in Section 16. In addition, the proposalincluded the repeal of Section 18, relating to the taxation of ocean marineinsurers, the substance of that section, too, to be incorporated in Section 14, witha 5 percent rate limitation.

The proposal was submitted to and approved by the voters at a special electionheld on June 27, 1933.

At its 1933 Session the Legislature enacted the Retail Sales Tax Act of 1933,220apparently as part of the Riley-Stewart Plan, to enable the State to meet the addedobligation imposed upon it by the constitutional amendment to finance the costsof schools.221

Also in 1933, legislation was enacted for the taxation of Massachusetts orbusiness trusts,222 and the taxation of gross receipts derived from thetransportation of persons or property for hire by motor vehicles upon thehighways.223 In the same year horse racing was licensed and license feesimposed thereon.224 This legislation was ratified by constitutional amendment atthe special election of June 27, 1933.225

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Taxes on the manufacture, distribution, and sale of alcoholic beverages wereimposed in 1933, subject to Federal authorization of the sale of suchbeverages.226 An amendment of Section 22 of Article 20 of the StateConstitution in 1934 gave the State Board of Equalization the exclusive right tocollect excise taxes in respect to intoxicating liquor. In 1935 the AlcoholicBeverage Control Act superseded the 1933 legislation.227

The year 1935 saw also the enactment of the "Personal Income Tax Act of1935;"228 the "Inheritance Tax Act of 1935,"229 the latter repealing andsuperseding the 1921 inheritance tax law; the "Use Tax Act of 1935;"230 theunemployment insurance law;231 and the motor vehicle in lieu license feelaw.232 Legislation was additionally enacted in the same year for the taxing oftaxable intangibles other than solvent credits at the rate of 2/10 of 1 percent, andof solvent credits at the rate of 1/10 of 1 percent, with, however, a provision forthe exemption of all such intangibles other than solvent credits on the passage ofa net income tax law.233 Enacted, too, were oleomargarine and chain storetaxes234 but each was defeated on referendum at the General Election held in1936.

In 1937 the "Private Car Tax Act of 193711 235 the "Use Fuel Tax Act of1937,"236 and the "Corporation Income Tax Act of 1937" were enacted.237

In 1938 Section 14.75 was added to Article 13 of the State Constitution toprovide for the taxation of insurance companies after 1937. Article 26 was addedin the same year to confine to highway purposes the use of most highway users'revenue.

At the 1939 Session a gift tax was imposed on the enactment of the "Gift Tax Actof 1939."238 The same session witnessed the origin of the licensing of itinerantmerchants engaged in transporting goods by motor vehicle.239

By constitutional amendment in 1944,240 the Legislature was authorized toexempt property used for religious, hospital, or charitable purposes.

The constitutional provision241 authorizing a poll tax was repealed in 1946.

A constitutional amendment adopted in 1952 prohibited the allowance of any taxexemption in the case of any subversive person or group.242 Implementinglegislation for property tax and bank and corporation tax purposes was enacted bythe Legislature in 1953.243

At the recently adjourned 1955 Session, the "Bradley-Burns Uniform Local Salesand Use Tax Law" was enacted.244

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3. MAJOR TAXES

A. GENERAL PROPERTY TAX 245

As has been noted, the general property tax was abandoned in 1910 as a source ofrevenue for the support of the State Government,246 but has continued since thatdate as the chief source of revenue for the support of local government.

(1) OUTLINE

(a) Tax Base

The State Constitution requires that all but exempt property shall be taxed inproportion to its value.247 Exempt property includes the following: propertyexempt under the Constitution or laws of the United States;248 propertybelonging to the State, a county, or municipal corporation;249 the property ofveterans;250 the property of householders;251 church property used for purposesof religious worship;252 cemetery property;253 public school property;254College property generally;255 the property of free public libraries andmuseums;256 other property used for educational purposes;257 orphan asylumproperty;258 property used for religious, hospital, or charitable purposesgenerally;259 crops, trees, and vines;260 vessels of more than 50 tons;261 andbonds issued by the State and its subdivisions,262 and all other intangibles withthe exception of solvent credits.263

The general property tax attaches as a lien at noon of the first Monday in Marchimmediately preceding the fiscal year for which the tax is levied.264 The fiscalyear commences on July 1,265 and the tax is generally levied around September1.266

Each taxpayer, other than a public utility, must, between the lien date and 5 p. m.of the last Monday in May, deliver to the county assessor an annual propertystatement, made under oath, showing tile property in the county owned, or in hispossession or control, as of the lien date.267 Property statements must also befiled by public utilities and others with the State Board of Equalization in respectto public utility and other property assessable by the board.268

A person claiming an exemption in regard to common property must also file anaffidavit in support of the exemption. In most instances the affidavit must be filedwithin the same period as the property statement;269 in the case of the WelfareExemption (the exemption of property used for religious, hospital, or charitablepurposes), however, the affidavit must be filed on or before April 1.270 Except as

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to the Householder's Exemption, a loyalty declaration must be included.271

(b) Assessment and Equalization

i. Under Existing Law

Between the first Mondays in March and July, the county assessor is required toassess all taxable common property in the county to the person owning, claiming,possessing, or controlling it as of noon of the first Monday in March;272 and onor before the first Monday in August, the State Board of Equalization must assessall public utility and other property assessable by it to the owner, likewise as ofnoon of the first Monday in March.273 The Constitution provides generally thatall property subject to taxation "shall be assessed for taxation at its full cashvalue,"274 provides that property assessed by the board shall be assessed at"actual value,"275 and indicates that "actual value" shall also be the basis ofassessing taxable personal property.276 The courts, however, have sanctioned theassessment of property at a percentage less than its market value,277 and todaythe practice is to assess property at a fraction of that value.

On or before the first Monday in July,278 the county assessor is required tocomplete a portion of the assessment roll known as the ""local roll," which listsall the property that the assessor is required to assess, the values of such property,the names of the assessees, and other required information;279 and upon itscompletion must deliver it to the clerk of the board of supervisors.280

Immediately after the third Monday in August, the State Board of Equalizationmust transmit to each county auditor an assessment roll, known as the "boardroll," showing the assessments made by it of state-assessed property in thecounty.281 Such property is thereafter subject to local taxation to the same extentand in the same manner as property assessed by the county assessor.282

From the first Monday in July to a date not later than the third Monday in July,the county board of supervisors sits as a county board of equalization to equalizethe assessment of property shown on the local roll.283 To that end, it mayincrease or lower individual assessments, but cannot raise or lower the entire roll.Following such equalization, the local roll, as corrected by such process, isdelivered by the clerk of the board to the county auditor.285 The latter then totalsup the valuations, prepares duplicate valuation statements, one of which must besent to the State Board of Equalization and the other to the State Controller, and,for collection purposes, transmits that portion of the local roll showing unsecuredproperty either to the assessor or, if designated to collect taxes on such property,to the tax collector.286

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From the third Monday in July to the third Monday in August, the State Board ofEqualization meets at Sacramento for the purpose of equalizing the assessmentsof county assessed property.287 On the completion of equalization, the board'ssecretary transmits a statement of changes to the county auditor of each countywhose roll the board changes.288 It is then the duty of the auditor to makeappropriate entries on the assessment roll.289

ii.Under Chapter 1466 of Statutes of 1949

In an attempt to improve local assessment practices,290 the Legislature enactedChapter 1466 of the Statutes of 1949. This legislation was to become effective onSeptember 2, 1950, and operative initially with respect to assessments made as ofthe first Monday in March, 1951.

The State Board of Equalization was directed to make an annual survey in eachcounty to determine the relationship between the assessed and market values ofproperty assessed locally.291 In making the survey the board was to use sales andother appraisal data relating to representative samples of property subject to localassessment.

Using the same data, the board was also to determine the average relationshipbetween the assessed and market values throughout the State of property assessedlocally.292

Each survey was to be completed by the second Monday in July, and on or beforethe third Monday in that month a report of the survey, together with a notice ofthe board's determinations of both the state-wide and local ratios, was to betransmitted to the clerk of the board of supervisors of each CoUnty.293

A hearing on the ratios was to be afforded any county affected between the thirdMondays in July and August.294

In the event of a difference of not more than 10 percent between the local ratio ofany county and the state-wide ratio, the board was to equalize the valuation of thetaxable property in the county by assessing public utility property in the county ata figure bearing the same ratio to its market value as the ratio between theassessed and market values of locally-assessed property.295

Where there was more than a 10 percent difference in ratios, the board was toequalize the valuation of taxable property in the county either as provided in thelast paragraph or by raising or lowering the assessed value of locally-assessedproperty by the percentage necessary to make it conform to the state-wideratio.296

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State-assessed property was to be assessed by the board on or before the fourth,rather than the first, Monday in August.297

Following its notifying the board of supervisors of its determination of thecounty-wide and state-wide ratios, the board was to furnish a statement of theratios, upon request, to any owner or assessee of state-assessed property; and,upon written application filed not later than the first Monday in August, was tohear any objection made by such person to a ratio in any county in which propertymight be owned by or assessed to him.298 Any such hearing could beconsolidated with any hearing afforded any county on the ratios.

The board was before the first Monday in August to prepare tabulations showingits determination of the values of state-assessed property, and such tabulationswere to be open for the inspection of all persons interested.299

A petition for redetermination filed by an owner or assessee of state-assessedproperty was to be heard by the board at any time prior to the third Monday inAugust.300

After deciding every petition for redetermination, the board was to complete itsassessment of state-assessed property, other than intangibles, for each county byentering on its roll for each county assessed values bearing the same proportion tomarket values as it found existed between the assessed values of county-assessedproperty and the market values of the latter.301

The time for transmitting the board's roll to the county auditors was also changedfrom the third Monday to the fourth Monday in August.302

Chapter 1466 was also designed to provide a more equitable allocation of statefunds to local units of government in respect to the construction of schools and toassist in determining the eligibility of individuals to receive various types of stateaid, where the assessed value of property is a factor, and provisions foraccomplishing such objectives were, accordingly, also included.303

Opposition to Chapter 1466 has resulted in the postponement of its generaloperation for successive two-year periods, and it now is to become operativeinitially in regard to assessments made as of the first Monday in March of1957.304

(c) Levy

The board of supervisors must, on or before September 1, fix the rates of and levy

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county and district taxes on property on the secured roll.305 Taxes on property onthe unsecured roll are automatically imposed at the same rates as taxes for thepreceding year on property of the same kind on the secured roll.306 In the case ofsolvent credits the rate is fixed by law at 1/10 of I percent of actual value.307

After taxes are levied, the county auditor computes the secured property taxes andenters the amounts thereof on the secured roll.308 He must then, on or beforeOctober 1, deliver that roll to the county tax collector for tax collectionpurposes.309

(d) Collection

i. Secured Property Taxes

No lien for property taxes is removed until the taxes are paid or canceled, theproperty is deeded to the State for nonpayment, or 30 years have elapsed.310

Taxes on the secured roll are payable in two installments, the first being due onNovember 1 311 and the second on February 1.312 The first must include allpersonal property taxes and half the taxes on real property 313 and the second,the remaining half of the real property taxes,314 except where a county haselected to provide for the payment of secured property taxes in equal installments'315 in which case each installment must include one-half of all taxes payable316

A first installment which is unpaid at 5 p. in. of December 10 is delinquent,317and thereafter a delinquent penalty of 6 percent attaches to it. A similardelinquent penalty attaches to a second installment which is delinquent at 5 p.m.of April 10.318

After the second installment delinquent date, the tax collector prepares adelinquent roll showing all delinquent property on the secured roll.319 Thepreparation of this roll may be dispensed with where a county elects to prepare anabstract list of unpaid items on the secured roll.320

On or before June 8, the tax collector publishes a list, known as the "publisheddelinquent list" or "delinquent list," describing all property which is taxdelinquent for the current fiscal year, the names of the assessees, and the amountsdue.321 With such list must also be published a notice that unless the taxes,penalties, and costs involved are paid, the property "will be sold to the State byoperation of law."322 The notice is commonly referred to as the notice of "stampsale." There must also be published with the delinquent list a notice that allproperty sold to the State by operation of law in the fifth preceding calendar yearor in any calendar year before, will be deeded to the State, unless sooner

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redeemed.323 A copy of the publication must be filed by the tax collector withthe county recorder and county clerk;324 and, in addition, the tax collector mustby registered mail send the last assessee either another such copy or a printednotice of deeding to the State of any property that will be so deeded in theabsence of redemption.325

The "stamp sale," consisting merely of a declaration by the tax collector andentries on the delinquent roll, occurs not less than 21 nor more than 28 days afterthe -first publication of the delinquent list;326 and the property involved isthereafter known as "tax-sold property."327

Not less than 21 nor more than 35 days after the first publication of the notice ofdeeding of tax-sold property, and at least 5 years after the stamp sale, the taxcollector must execute a deed of the property to the State.328 The propertythereupon becomes known as "tax-deeded property," and continues to be untilsold by the State.329

Tax-deeded property may be classified by an Advisory Committee onTax-Deeded Property as suitable for public use, as suitable for return to privateownership, or as waste land unfit either for public or private use, and may bedisposed of accordingly.330

Provision is also made for the rental of tax-deeded property by the StateController331 or, under special circumstances, by local taxing agencies.332

The tax collector may sell tax-deeded property at public auction to any privateperson, including a former owner, with the approval of the board of supervisorsand the written authorization of the State Controller.333 A sale may be initiatedeither on the application of a prospective purchaser334 or directly by the taxcollector himself.335

After the Controller's authorization is received, and not less than 21 nor morethan 28 days before the date of intended sale, the tax collector must notify the lastassessee of such sale by registered mail.336 He must also publish notice of thesale.337

If the property is not redeemed before the receipt of the first bid at the time ofsale, the tax collector must sell it to the highest bidder; and on the completion ofthe sale, the right of redemption is terminated, if not previously terminated.338

The deed to the purchaser conveys title free and clear of all encumbrances, withexceptions principally in favor of liens for the unpaid taxes and assessments of ataxing agency, other than the county.339 The lien of any such agency which has

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consented to the sale is not preserved.340

Provision is also made for the purchase of tax-deeded property by taxingagencies.341

Tax-sold property and tax-deeded property may be redeemed until such time asthe right of redemption is terminated.342 Generally speaking, a payment forredemption must be made in an amount equal to the unpaid taxes on the property,plus the delinquent penalties and costs, redemption penalties on each year'sunpaid taxes computed at the rate of 1 percent for the first year and 1/2 of 1percent thereafter, and a redemption fee of $1.50.343

Delinquent taxes may also be paid in installments, with a right to redeem on thecompletion thereof.344

Court proceedings of various types are authorized to determine the validity of taxsales and tax deeds.345

There is today apparently no general personal liability for the payment of securedproperty taxes.346

ii. Unsecured Property Taxes

Taxes on unsecured property are due on the lien date,347 and if they aredelinquent at 5 p. m. of August 31, a delinquent penalty of 8 percent thereafterattaches to them.348

Taxes due on unsecured property may be collected by the seizure and sale of anyof the assessee's personal property, improvements, or possessory interests.349

Personal actions to obtain the payment of delinquent unsecured property taxesmay evidently also be brought against the assessees of such property.350

(e) Miscellaneous

There are numerous provisions relative to the cancelling or refunding of illegallyor erroneously levied or collected taxes.351

In addition, the law provides in detail for the distribution of property taxes,penalties, and costs to the various agencies involved.352

(2) HISTORY

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California has had a general property tax since 1850, when such a tax wasimposed for both State and county purposes by the general revenue law of thatyear.353

Notwithstanding the provisions of the 1849 Constitution that taxation should be"equal and uniform," and that all property should be taxed "in proportion to itsvalue,"354 the 1850 law exempted various types of property, including propertyof the United States and of the State, schoolhouses, jails, churches, cemeteries,buildings used by libraries and charitable and scientific institutions, and 'thepersonal property of widows and orphans up to the amount of $1,000.355

A lien for all taxes was to attach on the taxpayer's real property as of March 1,356and as of August 1 on the personal property of a taxpayer without real estate.357

Taxable property was to be assessed at its true money value by the countyassessor between the first Mondays in March and August.358 The assessmentswere then to be equalized by a court of sessions, sitting as a board of equalization,at its first term after the first Monday in August.359

The Legislature was to determine and levy the taxes needed for the support of theState Government, and each court of sessions, between the first Mondays inMarch and August, was to determine and levy the taxes needed for countypurposes.360

The county auditor was to make up a list of the taxes assessed and give aduplicate to the county treasurer.361 It was then the duty of the county treasurerto collect the taxes payable, both State and local.362

In the case of an owner of real estate, taxes delinquent after the first Monday ofNovember were to be collected by a sale of the property.363 A deed was to begiven the purchaser,364 but the taxpayer was to have a right to redeem within oneyear from the date of sale by the payment of the delinquent taxes, together withdamages equal to 100 percent of such taxes.365 Only in the event of a failure toredeem at the end of that period would absolute title vest in the purchaser.366

Taxes payable by a nonowner of real estate which were delinquent after the firstMonday of October were to be collected, together with damages equal to 10percent of the taxes, plus costs and charges, by the seizure and sale of hispersonal property.367

As is apparent on a mere cursory reading of the provisions of the present law,there have been numerous changes and refinements in the property tax since1850. Some of the more significant are considered in the following.

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It was noted earlier in the discussion of the general historical background of theCalifornia tax system that the general property tax -of 1850 was superseded byanother in 1851,368 that other general property taxes were enacted in 1852,3691853,370 1854,371 1857372 and 1861,373 each, in turn, superseding itsimmediate predecessor; and that in 1872 the general property tax laws wererevised and codified in the Political Code. To complete the picture, it should alsobe noted that the general property tax provisions of the Political Code, along withother general property tax laws, were in 1939 revised and codified in Division 1of the present Revenue and Taxation Code.374

Under the 1851 law the assessment period terminal date was moved up to the firstMonday in July,375 assessments were to be made on the basis of actual cashvalue,376 equalization was to be performed either by the court of sessions or, ifcreated by law, the board of supervisors,377 county taxes were to be levied inApril,378 the sheriff was made the tax collector,379 the tax lien was to attach toall of the taxpayer's property as of March 1,380 damages collectible on the sale ofpersonal property were reduced from 10 percent to 5 percent, plus $1,381 acertificate of sale was to be executed in favor of a purchaser -of real property at atax sale, followed by a deed at the expiration of a year from the date of sale in theabsence of redemption beforehand,382 and damages on redemption were reducedto 50 percent of the taxes.383

The 1852 law contained substantially the same exemptions permitted by the 1851and 1852 laws, but provided also for the exemption of county property.384 Itomitted the detailed tax sale and redemption provisions of the 1851 law, however.

The 1853 law extended the assessment period terminal date to the first Mondayof August,385 local taxes were to be assessed by the county board of equalization"on or before the first Monday of March, or as soon as practicable thereafter;"386and the general substance of the tax sale and redemption provisions of the 1851law, which had been omitted in 1852, was restored.387

Exemptions of growing crops and mining claims made the 1854 law particularlynoteworthy.388

Under the 1857 law the board of supervisors only was to constitute a board ofequalization,389 the tax collector could be someone other than the sheriff,390provision was made for the publication of a delinquent list,391 and theredemption period in the case of realty sold for delinquent taxes was reduced to aperiod of six months.392

By an 1859 amendment of the 1857 law, the assessment period was changed to

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between the second Monday in March and the second Monday in August.393

The 1861 law added Masonic halls and the property of TurnVerein associations tothe list of exemptions,394 changed the assessment period to between the firstMondays in March and August,395 provided for the assessment of property at itsfull cash value,396 provided that the tax collector was generally to be a personelected as such,397 and substituted for the 1857 provisions regarding thecollection of delinquent taxes by the tax collector through a sale of the taxpayer'sproperty, other provisions for the collection of such taxes in an action brought bythe district attorney.398 If the taxpayer was served personally or appeared in theaction, it was possible to obtain a personal judgment against him;399 otherwise,the property was to be sold, with a right of redemption within three months of thesale on the payment of judgment and costs, plus 30 percent thereof.400

In People v. McCreery (1868) 34 C. 432, the California Supreme Court held thatthe language in Section 13 of Article 11 of the 1849 State Constitution on equaland uniform taxation was a limitation on the power of the Legislature to exemptprivate property from taxation, and on that ground held unconstitutional theportion of the 1861 act, as amended, which exempted such property. This led toan amendment of the 1861 act in 1868 to provide that all property should besubject to taxation .401

In the consideration of the general historical background of the California taxsystem, mention was made of the institution of state equalization in 1870 with thecreation of the first State Board of Equalization.

The Political Code exempted only property of the United States, the State andmunicipal corporations.402 It continued the requirement of the 1857 law that allproperty be assessed at its full cash value,403 and, in addition, defined "full cashvalue" as the amount which the property would be appraised if taken in paymentof a just debt due from a solvent debtor."404 It provided also for the following:for a tax lien date as of the first Monday in March in the case of realty, and in thecase of personal property, as of the date of the assessment thereof ;405 for anassessment period extending from the first Monday in March to the first Mondayin July;406 for the completion of local equalization by the fourth Monday inJuly;407 for the completion of equalization by the State Board of Equalization bythe third Monday in September;408 for the levy of county taxes on the firstMonday of October;409 for the publication of the delinquent list, relative to taxeson or secured by real estate, on or before the first Monday in February of thecurrent fiscal year;410 for a tax sale at public auction not less than 21 nor morethan 28 days after the first publication411 for the issuance of a certificate of salein duplicate, one of which was to be delivered to the purchaser and one to therecorder for filing;412 for the vesting of the State's tax lien in the purchaser upon

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such filing;413 for the redemption of the property sold within 12 months from thedate of sale on payment of the purchase price, plus 50 percent thereof;414 and forthe execution and delivery of a deed to the purchaser in the absence of suchredemption.415

Provision was made in 1874 for the sale of tax delinquent property to the State inthe absence of a private purchaser when the property was offered for sale.416

The changes respecting taxation introduced by the 1879 Constitution have beenmentioned in the consideration of the general historical background of theCalifornia tax system. Many of them were reflected in implementing legislationenacted in 1880417 and 1881.418

In 1891 legislation was enacted to provide for the payment of taxes in twoinstallments, pursuant to authorization in Section 7 of Article 13 of the 1879Constitution.419

As has been noted, the 1879 Constitution has been amended from time to time toextend the classes oil property exempt from taxation. These amendments wereparticularly frequent in the years from 1894 to and including 1910, during whichexemptions were granted for fruit and nut-bearing trees and grapevines, for theproperty of free museums and free public libraries, for the property of StanfordUniversity, the California School of Mechanical Arts, the California Academy ofScience, and the Cogswell Polytechnical College, for church property used forpurposes of religious worship, for the bonds of public agencies, for the personalproperty of householders up to $100, and for real estate mortgages and trustdeeds.

In 1874 the redemption period was reduced from one year to six months from thedate of sale,420 and in 1876 it was again extended to one year.421

In 1885 the law was amended to condition the issuance of a deed to a purchaserof tax-delinquent property on the giving of a notice by the purchaser to thetaxpayer 30 days before the expiration of the time for redemption or applicationfor the deed.422 The taxpayer was to have the right of redemption indefinitelyuntil the notice was given, and no deed to the property was to be executed untilthe purchaser filed an affidavit with the tax collector that the notice had beengiven.

In San Francisco & Fresno Land Co. v. Banbury (1895) 39 P. 439, 441, 106 C.129, 135, the California Supreme Court held that the notice requirement appliedas well to the State when tax delinquent property was sold to it in the absence of aprivate purchaser; that no public officer, however, was authorized to give such

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notice; and, further, that on the purchase of tax-delinquent property by the State,the tax was extinguished and the State thereafter was not a creditor of the taxpayer, as evidently was the case usually on a purchase by a private person.

It has been said that the effect of the decision was to take tax-delinquent propertysold to the State off the tax rolls, but at the same time make it difficult for theState to acquire a title to the property of a kind sufficient to facilitate its sale andreturn to the rolls.423 It has also been said424 that to overcome that effect, theLegislature in 1895425 enacted the provisions for the sale of tax-delinquentproperty to the State by operation of law (known now as the "stamp sale"), for theexecution of a tax deed to the State five years later in the absence of redemption,and for the subsequent resale of the property by the State at public auction to thehighest bidder.

As thus modified, the general property tax law in 1895 became, structurally, thegeneral property tax law of today.

The tax base has become somewhat narrowed by the several amendments of theState Constitution granting or providing for exemptions. In addition to thosementioned as having been granted during the period from 1894 to 1910, are theveterans' exemption, the college exemption, the orphan asylum exemption, thewelfare exemption, and the exemption of intangibles. All of these, too, werenoted in the consideration of the general historical background of the Californiatax system.

It was observed in Roehin v. County of Orange (1948) 196 P.2d 550, 554-555, 32C.2d 280, 287-288, that the existing provisions on the taxation of intangibleswere based on the recommendation of the 1927 California Tax Commission thatin view of administrative difficulties in locating and assessing such property, theirspecial treatment was a practical necessity.

Until the revision in 1910 of the California tax system, the State Board ofEqualization continued to play an important role in the property tax field, both inthe matter of intercounty equalization and in the assessment of the franchises,roadbeds, roadways, rails, and rolling stock of railroads operated in more thanone county. Since the revision involved the abandonment of the general propertytax as a source of state revenue, intercounty equalization was thereafterconsidered unnecessary, inasmuch as such equalization was originally providedfor primarily to prevent local underassessments of common property having anadverse effect on the State's property tax revenue, all such property beingassessed locally for both state and local purposes until 1910.426

Not until the adoption of the Riley-Stewart Plan in 1933, and the revision in the

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tax system thereby accomplished, was intercounty equalization again considerednecessary. This was based, particularly, on the new provision in Section 14 ofArticle 13 of the State Constitution that after their assessment centrally by theState Board of Equalization, all public utility and other state-assessed property"shall be subject to taxation to the same extent and in the same manner as otherproperty."427

In recent years the need for intercounty equalization has become increasinglyimportant in the application of the veterans' exemption, in the allocation of statefunds to local units of government for school and other purposes, and indetermining the eligibility of individuals for various types of state aid.428 Theenactment of Chapter 1466 of the Statutes of 1949 was prompted in large part bysuch necessity.429

The collection phase of the general property tax law has often since 1895 beensubjected to a refining process, with the general objective of protecting andassisting both the taxpayer and the public.

Legislation was enacted in 1913 to provide for the sale of unredeemed propertyon the "addenda list" (i. e., on the list appended to the delinquent list showingproperty sold to the State five years Previously) by the tax collector at publicauction to the highest bidder.430 This legislation was continued in force in oneform or another until 1949, when it was repealed.431

During the 30's and early 40's, when the problem of returning tax-delinquentproperty to the tax rolls was particularly acute, considerable legislation on thesubject was enacted. Included were the "Latham Act"432 and the "TaxRedemption Termination Act."433 The former authorized the bringing of anaction by the State to quiet its title to real property deeded to it for delinquenttaxes; the latter provided in part for shortening the time within which the right toredeem tax delinquent property could be exercised.

Following the enactment of the Tax Redemption Termination Act, economicconditions became so improved that it was considered unnecessary to provideimmediately for a shortened period of redemption.434 As a consequence, theoperation of the termination provisions of the law was from time to timepostponed435 and in 1947 the provisions were repealed.436

Also included in the Tax Redemption Termination Act were provisions for theclassification and disposition of tax-deeded property, and for limiting the time inwhich to institute proceedings based on the alleged invalidity or irregularity of taxdeeds.

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In 1941 an action against the State to contest the validity of a tax deed to it wasauthorized.437 In 1943 an action to determine adverse claims or clouds on titlecould be brought by a purchaser of tax-deeded property.438

Moratorium legislation extending the due dates for the payment of current taxesand the various tax sale provisions respecting tax-delinquent property wasenacted in 1933 and the years immediately thereafter.439

The year 1931 saw the inception of the present permanent plan for the payment ofdelinquent taxes in five installments, followed by redemption.440 Temporaryinstallment plans were provided for in 1933 (the Ten-Year Payment Plan) 441and in 1934 (the Quarterly Payment Plan).442 Each of the latter having served itspurpose, the legislation authorizing it was repealed in 1955.443

B. SALES AND USE TAXES

(1) SALES AND USE Tax LAW 444

As its title implies, the Sales and Use Tax Law imposes both sales and use taxes.

The sales tax is imposed on retailers for the privilege of selling tangible personalproperty at retail in California;445 and the use tax, on the storage, use, or otherconsumption in California of tangible personal property purchased from aretailer.446

A "retail sale" or "sale at retail" is generally a sale for any purpose other thanresale in the regular course of business.447

A "retailer" includes anyone who makes more than two retail sales during anytwelve-month period.448

The sales tax is imposed at the rate of 3 percent of the retailer's gross receipts,449and the use tax at the rate of 3 percent of the sales price of the propertypurchased.450

There are exemptions applicable to both taxes relating to the sale, use, storage, orother consumption of gas, electricity, water, gold, ships, aircraft, motor vehiclefuel, animals, feed, seeds, fertilizer, food products for human consumption, ice,dry ice, newspapers, periodicals, and containers.451

Applicable particularly to the sales tax are exemptions relative to sales of silverbullion, sales of property to a contractor in connection with the performance of acontract with the United States, sales to common carriers, sales for use in

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connection with out-of-state realty, and sales of other property for delivery anduse outside the State.452

Specially applicable to the use tax are exemptions respecting property the sale ofwhich is subject to the sales tax, and property purchased from the UnitedStates.453

Liability for payment of the sales tax is on the retailer,454 but the latter mustcollect it from the purchaser whenever possible.455

Liability for payment of the use tax is on the storer, user, or consumer.456However, a retailer with a place of business in California who makes a sale ofproperty for storage, use, or consumption must collect the tax from thepurchaser;457 and any tax so required to be collected represents a debt which theretailer owes the State.458

Quarterly payments and returns are generally required for both sales and usetaxes.459 They must be made to the State Board of Equalization, the agency thatadministers the taxes.460

The revenue from the sales and use taxes is first deposited in the Retail Sales TaxFund, and then is withdrawn therefrom for the payment of refunds and transfer tothe State General Fund.461

The Sales and Use Tax Law is a codification of the former Sales Tax Act of1933462 and Use Tax Act of 1935.463 The codification was enacted in 1941 andbecame effective on July 1, 1943.464

The Retail Sales Tax Act of 1933 was evidently enacted because of a need forstate revenue to enable the State to meet the additional burden for the support ofthe public schools that was placed on its shoulders on the adoption of theRiley-Stewart Plan.465

In Roth Drugs, Inc. v. Johnson (1936) 57 P.2d 1022, 13 C.A.2d 720, theconstitutionality of the act was successfully defended against numerous points ofattack.

The use tax complements the sales tax, and was enacted to put local retailers onan equal footing with out-of-state retailers,466 and prevent the avoidance of thesales tax by California residents through purchases made in other States.467

At its inception the Sales Tax Act of 1933 imposed a tax at a rate of 1/5 percentuntil June 30, 1935, and at a rate of 2½ percent thereafter.468 Moreover, it did,

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not then exempt foodstuffs nor apply to rentals or leases of property. In 1935,however, and apparently on the recommendation of a Special Joint Committee onRevenue and Taxation,469 the rate was increased to 3 percent as of July 1,1935,470 an exemption of food products was provided,471 and the tax wasextended to cover leases and rentals.472

In 1943, the rates for both sales and use taxes were reduced temporarily to 2½percent, and it was at the same time provided that a portion of the revenue fromthe taxes as so reduced should be deposited in a postwar reserve for use on publicwork projects to provide employment.473 The reduced rates continued in effectuntil June 30, 1949, when they were restored to 3 percent.474 The postwarreserve provisions had, however, been deleted previously in 1947.475

(2) BRADLEY-BURNS UNIFORM SALES AND USE TAX LAW 476

This law authorizes any county to enact a I percent sales and use tax ordinance.As a condition, however, the ordinance must include provisions similar to thos eof the Sales and Use Tax Law; and must, among other things, provide that thecounty shall contract with the State Board of Equalization for the performance bythe latter of functions incident to the administration of the tax, and allow creditsfor city sales and use taxes imposed at rates of 1 percent or less pursuant toordinances containing provisions generally similar to those required to beincorporated in the county ordinance.

Aside from the purpose of affording an avenue for obtaining additional, localrevenue, the Bradley-Burns Uniform Sales and Use Tax Law was apparentlydesigned to reduce the possibility of subjecting retailers and consumers to morethan one local sales or use tax, and at the same time simplify the problem ofadministering such a tax.477

C. HIGHWAY USERS TAXES

(1) MOTOR VEHICLE FUEL LICENSE TAX LAW 478

The tax imposed by this law, commonly known as the "gas tax," is a license taximposed on distributors of motor vehicle fuel for the privilege of distributing suchfuel.479

"Motor vehicle fuel" includes gasoline and any other type of inflammable liquidwhich is or can be used to propel a motor vehicle operated by an explosion typeengine.480

A distribution of motor vehicle fuel is broadly defined, and includes, among other

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things, the refining, manufacturing, blending, and sale of such fuel .481

The rate of the tax is presently 6 cents per gallon, and is to remain such untilDecember 31, 1959, when it is to be reduced to 5½ cents per gallon.482

Exemptions are allowed in respect, among others, to distributions from onedistributor to another, to distributions of exported fuel, and to fuel sold to theUnited States.483 In addition, refunds are allowable in favor of the following: aperson who buys and uses fuel for a purpose other than the operation of a vehicleupon the highways; a person who exports fuel for use outside the State; anemployee of the United States who buys fuel and uses it exclusively intransporting rural free delivery and special delivery mail; and a person who sellsfuel to the Armed Forces of the United States for use in ships or aircraft or for useoutside California.484

A distributor must file a return with and pay the tax monthly to the State Board ofEqualization.485

General administration of the tax is vested in the board,486 but the StateController does the collecting.487

The revenue from the tax is deposited in the Motor Vehicle Fuel Fund,488 and isappropriated therefrom for the payment of refunds and costs of administrationand to the Highway Users Tax Fund.489 Of the amount refundable which isattributable to taxes imposed on motor vehicle fuel used or usable for propellingaircraft, $350,000 is appropriated annually for use by counties and cities inconnection with airports.490

The Motor Vehicle Fuel License Tax Law originated in a fuel tax licensing lawenacted in 1923,491 as a result of a need for more revenue to meet increasinghighway costs.492 As enacted, the 1923 law imposed a tax equal to 2 cents pergallon,493 permitted a deduction up to one percent of the tax for evaporation andhandling losses,494 provided for quarterly payments and returns,495 provided forthe deposit of the revenue received in the Motor Vehicle Fuel Fund, allocatedone-half of such revenue to the counties for county road purposes on the basis ofautomobile registration, and allocated the remaining half to the State HighwayMaintenance Fund.496

In 1927, by a separate law, an additional one cent per gallon tax was imposed, therevenue from which was to be deposited in the State Highway ConstructionFund.497 This law was repealed in 1933, when at the same time the tax rateunder the 1923 law was increased to 3 cents per gallon.498

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Monthly returns and payments were provided for in 1931,499 and in 1937 thededuction for evaporation losses and handling was eliminated.500

The tax rate remained at 3 cents per gallon until the enactment of theCollier-Burns Highway Act of 1947, when it was increased to 4½ cents pergallon.501 In 1953 the rate was changed to 6 cents per gallon for the period fromJuly 1, 1953 to June 30, 1955, and thereafter to 5.5 cents per gallon.502 In 1955the 6 cents per gallon rate was continued until December 31, 1959.503

Insofar as the revenue distribution and use provisions of the 1923 law areconcerned, changes too numerous to recount here occurred at various times overthe years. The distribution and use of gas tax revenue is now provided for by theCollier-Burns Highway Act of 1947, of which the Highway Users Tax Fund is apart.

Article 26 was added to the State Constitution in 1938 to confine the use of gasrevenue to highway purposes, and the Collier-Burns Highway Act of 1947 isconsistent with it.

The 1923 act was in 1941 codified in Part 2 of Division 2 of the Revenue andTaxation Code.504

(2) USE FUEL TAX LAW 505

The tax imposed by this law, commonly known as the "diesel tax," is an excisetax imposed on the use of fuel by a so-called "user."506

"Fuel" includes any combustible gas or liquid used in an internal combustionengine for the generation of power to propel a motor vehicle on the highways,other than fuel the distribution of which is subject to the gas tax.507

"Use" includes the placing of fuel in any receptacle on a motor vehicle fromwhich fuel is supplied to propel the vehicle.508

The rate of the tax is presently 7 cents per gallon, and is to remain such untilDecember 31, 1959, when it is to be reduced to 6.5 cents per gallon.509

Exemptions are allowable in respect to fuel used to propel vehicles used inagricultural operations or on private property or for purposes other than thegeneration of power to propel a vehicle.510

A user must file a return with and pay the tax monthly to the State Board ofEqualization.511

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The board is charged with the administration and enforcement ,of the tax.512

The revenue from the tax is deposited in the Motor Vehicle Fuel Fund,513 and isappropriated therefrom for the payment of refunds and transfer to the HighwayUsers Tax Fund.514

The Use Fuel Tax Law originated in the Use Fuel Tax Act of 1937.515 The latterimposed the tax at the rate of 3 cents per gallon, and provided for the deposit ofthe revenue received therefrom in the Motor Vehicle Fuel Fund.

Along with the gas tax rate, the diesel fuel tax rate was increased to 4½ cents pergallon by the Collier-Burns Highway Act of 1947.516 In 1953 the rate waschanged to 7 cents per gallon for the period from July 1, 1953 to June 30, 1955,and thereafter to 6½ cents per gallon;517 and in 1955 the 7 cents per gallon ratewas continued until December 31, 1959.518

The revenue from the diesel fuel tax deposited in the Highway Users Tax Fund isused for highway purposes in accordance with the provisions of the Collier-BurnsHighway Act of 1947. This, too, is consistent with Article 26 of the StateConstitution.

The Use Fuel Tax Act of 1937 was in 1941 codified in Part 3 of Division 2 of theRevenue and Taxation Code.519

(3) MOTOR VEHICLE TRANSPORTATION LICENSE TAX LAW 520

The tax imposed by this law, commonly known as the "truck tax," is a license taximposed on operators at the rate of 3 percent of their gross receipts.521

An "operator," generally speaking, is a person who transports persons or propertyfor hire or compensation by motor vehicle upon the public highways outsidecities.522 Such a person may be a common carrier, a contract carrier, or any otherperson who transports as indicated.523

Exclusions from the term are specified in respect to persons who transport theirown property, farmers who occasionally transport for others, nonprofitagricultural cooperative associations, transporters of school children, operators ofhearses, persons who transport fellow-workers and others to or on the way towork, and persons who collect and dispose of garbage.524

A credit is allowed against the tax in the amount of one-third of the yearly motor

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vehicle registration fees paid on motor vehicles used in the operator'sbusiness.525

Monthly returns and tax payments are required.526

The general administration of the tax is vested in the State Board ofEqualization,527 but the State Controller collects it,528 and the Department ofMotor Vehicles performs various functions regarding registration and theissuance of number plates and emblems.529

The revenue from the truck tax is deposited in the Motor Vehicle TransportationLicense Tax Fund, from which, after deductions for the costs of administration, itis withdrawn either for the making of refunds or for transfer to the Highway UsersTax Fund.530 Upon becoming part of the latter, it is used for highway purposes inaccordance with the Collier-Burns Highway Act of 1947. Unlike the situation asto the gas and diesel taxes, however, the use of the truck tax revenue for highwaypurposes is not required by Article 26 of the State Constitution, since Section 4 ofthat article expressly excludes the tax imposed by Chapter 339 of the Statutes of1933, of which the present truck tax law is a codification.531 The exclusion wasprobably incorporated because of a provision at the time in Chapter 339, asamended, appropriating most of the truck tax revenue to the State GeneralFund.532

The history of the truck tax law since 1933 is notable in part for the gradualincorporation of the various exclusions from the term "operator." There were nosuch exclusions in 1933.

In the consideration of the general historical background of California's taxsystem, mention was made of a motor transportation license tax imposed in 1923,of its supercession by another substantially similar tax in 1925, of the repeal ofthe latter in 1927 as a result of the addition of a former Section 15 to the StateConstitution, which had the effect of removing highway common carriers fromthe impact of the 1925 tax, and of the substitution in 1927 of graduated, vehicleregistration weight fees under the California Vehicle Act. Thereafter, aninequitable situation arose with respect to common carriers, which evidently werepaying more, comparatively, in gross receipts taxes than contract carriers did inthe form of weight fees, and the 1933 law was enacted as a consequence.533

(4) VEHICLE LICENSE FEE LAW 534

This law imposes a license fee, known as the '"in lieu tax," for the privilege ofoperating upon the public highways a vehicle of a type subject to registrationunder the Vehicle Code.535

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The fee is a sum equal to 2 percent of the market value of the vehicle asdetermined by the Department of Motor Vehicles.536 It is in lieu of all othertaxes on the vehicle for state or local purposes.537

The fee is inapplicable with respect to publicly-owned or operated vehicles, tovehicles owned by certain disabled veterans, and to certain fire-fighting vehiclesowned by colleges.538

The fee is due and payable to the Department of Motor Vehicles on January 1 ofeach year, and, if unpaid, becomes delinquent on February 5.539

Enforcement is in the hands of the Department.540

Revenue is deposited in the Motor Vehicle License Fee Fund, and is appropriatedtherefrom for various administrative costs, for the payment of specified highwaybonds, and for distribution to counties and cities on a population basis for lawenforcement, highway traffic, and other state purposes.541 Special provision ismade for the distribution of the revenue derived from fees collected on trailercoaches.542

The present law represents a codification in 1941 543 of Chapter 362 of theStatutes of 1935. Prior to 1935, automobiles had been subject to property taxationlocally, but in the administration of that type of tax problems arose out ofinequities in valuation from county to county and because of the inherent ease ofescaping the tax.544 The 1935 law was recommended as an alternative by boththe 1927 California Tax Commission545 and the 1935 Special Joint Committeeon Revenue and Taxation.546

From 1935 to 1948 the in lieu tax rate was 13/4 percent, and has thereafter beenfixed at 2 percent.547

It is well settled that the in lieu tax is an excise tax, and not a property tax.548

(5) VEHICLE REGISTRATION FEES

The California Vehicle Code imposes fees for the registration of both commercialand passenger vehicles.

On commercial and passenger vehicles alike, a general registration fee of $8 isnow payable. This will drop to $7 on and after January 1, 1960.549

Weight fees are also payable on commercial vehicles. These presently vary from

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$48 on an electric vehicle having an unladen weight of less than 6,000 pounds, to$267 on other specified vehicles, including vehicles with three or more axles.550On and after January 1, 1960, these rates will be reduced to amounts varying froma minimum of $44 to a maximum of $244.551

The Vehicle Code in addition provides for the payment of a $3 fee for anoperator's or chauffeur's license until January 1, 1960, and one of $2.50thereafter.552

Exemptions similar to those in the Vehicle License Fee Law are granted.553

A penalty is added to any registration fee which is unpaid after February 5.554

Revenue is deposited in the Motor Vehicle Fund, and is appropriated therefromfor various administrative costs and to the Highway Users Tax Fund.555 Uponbecoming part of the latter, it is used for highway purposes in accordance with theCollier-Burns Highway Act of 1947.

The Vehicle Code was enacted in 1935556 as a codification of the 1923California Vehicle Act,557 the latter being part and parcel of a general highwayfinance plan consisting also of the 1923 fuel tax licensing law558 and the 1923motor vehicle transportation license tax law.559

The California Vehicle Act repealed an earlier Vehicle Act enacted in 1915,560which, among other things, had created the Department of Motor Vehicles. The1915 act had repealed a still earlier Motor Vehicle Act enacted in 1913,561 andthe latter, an act of 1905,562 which had levied a flat $2 motor vehicle licensingfee payable to the Secretary of State. The 1913 act provided for the payment ofregistration fees based on horsepower, and the 1915 act did likewise.

D. PRIVATE CAR TAX 563

This tax is levied annually by the State Board of Equalization upon privaterailroad cars operated on state railroads.564

The levy is made on or before the third Monday in August upon the basis of theassessed value of the cars, equalized with the average assessed value of tangiblepersonal property throughout the State for county tax purposes, at a rate equal tothe preceding year's average tax rate, which is determined by dividing the totalamount of all county, city, and district taxes in the State by the total assessedvalue of all property shown on all the county tax rolls.565

The tax imposed is in lieu of all other property taxes upon the cars taxed.566

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The tax must be paid to the State Board of Equalization; and if it is not paid on orbefore December 10 following the levy, a penalty for delinquency attaches.567Revenue from the private car tax is deposited in the State Treasury to the credit ofthe State General Fund.568

The Private Car Tax Law originated with the Private Car Tax Act of 1937, 569the latter being codified as the Private Car Tax Law in 1941.570

Regarding the reason for the passage of the act, the State Board of Equalizationstated in its biennial report for 1937-1938, at page 7:

"The passage of the Private Car Tax Act in 1937 was favored bythe Board as the administrator of the act, and the private carcompanies who pay the taxes because it simplified the entireprocedure. Prior to 1937 private cars were assessed in the samemanner as utility property, and it was necessary for the Board toassess the rolling equipment at hundreds of fixed locationsthroughout the State. From the taxpayer's standpoint, the old lawpresented many problems because of the large number of tax billsin small amounts received by the companies. Under the new law,the taxpayer receives only one bill and remits one check to theState treasury."

In People v. Keith Ry. Equipment Co. (1945) 161 P.2d 244, 70 C.A. 2d 339, theconstitutionality of the private car tax was sustained as a proper exercise of theLegislature's power under Section 14 of Article 13 of the State Constitution toclassify personal property for tax purposes.

E. INSURANCE COMPANY TAXES 571

(1) OCEAN MARINE INSURERS

Every insurer transacting an ocean marine insurance business in California mustpay an annual tax to the State equal to 5 percent of that proportion of itsunderwriting profit from such insurance written in the United States which itsgross premiums from such insurance written in California bears to its grosspremiums from such insurance written in the United States.572

The tax is in lieu of all other taxes and licenses, except real estate taxes and taxeson any other class of insurance written by the insurer.573

An annual report must be filed by the insurer, on or before April 1, with the

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Insurance Commissioner, and the latter computes the tax upon the averageunderwriting profit during the preceding three years.574 Thereafter, on or beforeJuly 1, the Insurance Commissioner files a report with the State Board of Equalization showing the tax which he has computed for each insurer.575 The board then, on or

before August 10, assesses and levies the tax, in respect to the next preceding calendar year, inthe amount computed by the Insurance Commissioner.576

The tax is due and payable to the State Controller on August 10 of the year oflevy;577 and if it is unpaid the following November 15, it becomes delinquentand a delinquency penalty attaches.578

All revenue derived from the tax is deposited in the State Treasury to the credit ofthe State General Fund.579

(2) OTHER INSURERS

Every insurer doing any non-ocean marine insurance business in California mustpay the State an annual tax on such business equal to 2.35 percent of its"base."580

In the case of an insurer not doing a title insurance business, the base is grosspremiums, less return premiums, other than premiums received for reinsuranceand ocean marine insurance.581

In the case of an insurer doing a title insurance business, the base is all incomeupon business done in California, with the exception of interest and dividends,real property rentals, and profits and income from investments.582 There is alsoexcluded from such base any income of the insurer derived from a trust business,if such income is taxed or included in the measure of any other tax imposed bythe State.583

The tax is in lieu of all other taxes and licenses, except real estate taxes, taxes onthe income from any trust business of a title insurance company, the tax on oceanmarine insurance, and fees and taxes on motor vehicles or their operation.584

A deduction may be taken with respect to taxes on real property owned by aninsurer on which its home or principal office is located.585

The provisions on the filing of reports, the assessment, levy, and payment oftaxes, and the disposition of the revenue therefrom which have been noted inrespect to insurers writing ocean marine insurance are also generally applicable toother types of insurers.

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(3) HISTORY

It was noted in the consideration of the general historical background of theCalifornia tax system that in 1862 legislation was enacted imposing a grossreceipts tax on foreign insurance companies doing business in California with lessthan $50,000 invested in property in this State. That tax evidently later becameobsolete.

Since at least as early as 1872, California also imposed a tax upon every foreigninsurance company doing business in California when under the law of the Stateor country in which it was organized a higher tax was imposed on Californiainsurance companies doing business in that State or country than on its owncompanies.586 This was the so-called "retaliatory tax," and it was equal inamount to the tax imposed by the other state or country.

In 1905 an annual gross premiums tax was being imposed on foreign insurancecompanies doing business in California.587 In the case of companies other thanlife insurance companies, the tax was equal to 2 percent of the gross premiumsreceived on business done in California, less return premiums, reinsurance incompanies authorized to do business in California, and losses paid on businessdone in California. The tax on life insurance companies was equal to 1 percent ofthe gross premiums received on business done in this State.

The 1905 gross premiums tax on insurance companies was, on therecommendation of the 1905 Commission on Revenue and Taxation, retained as asource of state revenue when the 1910 revision of the California tax systemoccurred.588 It was expanded, however, to include domestic as well as foreigncompanies, and the rate was fixed at 1.5 percent for all types of companies, with aprovision for a retaliatory tax. Further, the tax was to be in lieu of all other taxes,other than those on real estate. However, a deduction could be taken against thetax for real estate taxes paid.

The rate was increased by the Legislature from time to time, until it became 2.6percent in 1921.589

In 1930 Section 18 was added to Article 13 of the State Constitution to providefor a tax on ocean marine insurers to be in lieu of all other taxes except those onreal estate.

In 1933, as part of the Riley-Stewart Plan, Section 14 of Article 13 of the StateConstitution was amended in part to fix the gross premiums tax rate on insurersother than ocean marine insurers at 2.6 percent, to incorporate the general

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substance of Section 18, to establish the tax rate on ocean marine insurers at 5percent, and to repeal Section 18.

In Connecticut General Life Ins. Co. v. Johnson (1937) 58 S.Ct. 436, 303 U.S. 77,82 L.Ed. 673, the United States Supreme Court held the gross premiumsinsurance tax unconstitutional on grounds of due process, insofar as it applied to aforeign insurance company authorized to do business in California in respect topremiums received in another state on reinsurance contracts there executed withother corporations licensed to do business in California. Until the decision, thepractice in such type of situation had evidently been to allow the reinsurancededuction to be taken by the reinsured companies, and to include the reinsurancepremiums in the measure of the tax payable by the reinsurer.

As a consequence of the decision, Section 143/4 was added to Article 13 of theState Constitution in 1938 to disallow any deduction for reinsurance. It wasbelieved that the change "would correct the situation by placing the obligation topay the gross premiums tax on the company which does the business in this Statewithout allowing any deductions for reinsurance premiums paid to othercompanies."590 In 1942 Section 144/5 was added to Article 13 to correctinequalities relating to the real estate tax deduction.591 The section provided asfollows: for the elimination after 5 years (i. e., after 1946) of any deduction fortaxes on any real estate not used for operational purposes, the deduction in themeantime to be allowed on a diminishing percentage basis; for the restriction ofthe real estate deduction after 6 years to taxes on real estate on which was locatedthe insurer's principal or home office; and for a tax on insurers other than oceanmarine insurers at a diminishing rate, commencing at 2.55 percent in 1943, andfinally (after 1946) equal to 2.35 percent.

Various clarifying changes were made in Section 14 4/5 by an amendment in1949; and at the same time Section 14 was amended by the removal of theinsurance tax provisions therein, and Section 14¾, was repealed.

In 1941 the insurance tax provisions in the Political Code were codified in theRevenue and Taxation Code,592 and the latter has since been amended to reflectthe constitutional changes on the subject.

F. INHERITANCE AND GIFT TAXES

(1) INHERITANCE TAX LAW593

(a) Outline

This law imposes a tax on the right to inherit or otherwise succeed to or receive a

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decedent's property,594 at progressive rates based on the value of the propertyreceived and the relationship between the decedent and the beneficiary,distributee, or other transferee.595 it also imposes an estate or transfer tax whereeither no inheritance tax is imposed or the inheritance tax imposed is less than themaximum credit for state death taxes allowed under the Federal estate taxlaw.596

The inheritance tax is applicable not only in respect to transfers of propertyoccurring by will or under the laws of succession, but also to various types ofinter vivos transfers.597 These include transfers made in contemplation of deathor with the intention that they take effect in possession or enjoyment at or afterthe decedent's death. Taxable transfers may also occur on the death of a jointtenant or person insured under a life insurance policy,598 or where a gift is madeof a power of appointment.599

An exclusion is allowed with regard to community property going to a spouse,600and several exemptions are permitted.601 The latter include a "specificexemption," which varies in accordance with relationship, a "marital exemption,"an exemption of property previously taxed in an estate, an exemption of propertygiven to a charitable organization, and an exemption of intangible property left bya nonresident decedent.

The general basis of valuation is the market value of property at the date ofdeath.602 Specified deductions from such value may, however, be made beforethe application of the rates.603

Where a particular transfer of property is subject also to the tax imposed by theGift Tax Law, a gift tax credit is allowed against the inheritance tax otherwisepayable.604

The personal representative of an estate and the transferee are both liable forpayment of the tax.605 The tax is due and payable at the date of the decedent'sdeath, and is ordinarily delinquent two years later.606 It is payable to the countytreasurer.607

The State Controller, through the Inheritance Tax Department, is invested withthe general administration and enforcement of the inheritance tax.608 Heappoints one or more inheritance tax appraisers for each county,609 and a personso appointed is, in turn, appointed by the superior court to compute the tax in aparticular estate.

All revenue from the inheritance tax, after the payment of refunds and thededuction of statutory commissions payable to the county treasurers, is deposited

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in the State Treasury to the credit of the State General Fund.

(b) History

The first inheritance tax law in California was enacted in 1853.610 It imposed atax on a nonresident alien heir at the rate of 10 percent of the value of theproperty received by him, and a tax on any other heir at the rate of 2.5 percent ofthe value of the property which he received. The tax was short-lived, however, thelaw imposing it being repealed in 1854.611

The next inheritance tax law was enacted in 1893.612 This imposed a tax oncollateral, as distinguished from direct, relatives of a decedent to whom propertywas transferred at the decedent's death either by will or the law of intestacy, orinter vivos in contemplation of death or with the intention that it becomeeffective in possession or enjoyment at or after the decedent's death.

The 1893 tax was repealed in 1905 by a law which imposed a tax on collateral aswell as direct relatives.613 The general structure of this law has survived to thepresent day, notwithstanding several intervening revisions.

The 1905 law was repealed in 1911 with the enactment of a new inheritance taxlaw.614 The new law was substantially the same as the 1905 law.

In 1913 the 1911 law was superseded by a new inheritance tax law of a generallysimilar nature.615 By separate enactment in the same year the Inheritance TaxDepartment was created.616

In 1917, 1921, and 1935 other inheritance tax laws were enacted, each repealingits immediate predecessor, but nevertheless retaining most of the substance of thepreceding law.617

The 1935 law was in 1943 codified in the Revenue and Taxation Code.618

(2) Gift TAX LAW 619

This law imposes a tax on the inter vivos transfer of property by gift, at graduatedrates based on the value of the property transferred and the relationship betweenthe donor and the donee.620

Several exemptions are allowed,621 including a "specific exemption," whichvaries in accordance with relationship, an exemption of property given to acharitable organization, and an exemption of intangibles. Allowable also is a$4,000 per donee "annual exemption" in respect to gifts of present interests in

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property.

An exclusion is allowed in the case of a gift of community property to aspouse.622

The general basis of valuation is the market value of the property given at thedate of the gift.623

A return must be filed by the donor with the State Controller on or before April15 of the year following the close of the calendar year in which the gift ismade.624

Both the donor and the donee are personally liable for the tax, the donor,however, being primarily liable.625

The law is administered by the State Controller through the Inheritance TaxDepartment.626

The revenue from the gift tax is deposited in the State Treasury to the credit ofthe Gift Tax Fund, and is appropriated from the latter for the payment of refundsand to the State General Fund.627

The Gift Tax Law codified in 1943628 the Gift Tax Act of 1939.629 The reasonfor the enactment of the 1939 law was to prevent the avoidance of the inheritancetax through the making of inter vivos gifts.

At the time of the enactment of the 1939 law there was considerable conformancebetween its provisions and those of the then Federal gift tax law. Changes madein the Federal law, however, in the intervening years have considerably reducedthe points or similarity between the two laws.

It should also be noted that the rate and specific exemption provisions of theCalifornia inheritance and gift tax laws are, and have always been, the same.

G. PERSONAL INCOME TAX 630

(1) OUTLINE

The Personal Income Tax Law imposes a tax on the taxable income ofindividuals, estates, and trusts, at rates ranging from 1 percent on taxable incomeof not more than $5,000 to 6 percent on any portion of taxable income in excessof $25,000.631

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"Taxable income", in the case of an individual, is gross income less variousallowed exclusions and deductions.632 Personal and dependency exemptions forindividuals are allowable as deductions.633

Detailed special provisions are included relative to estates and trusts and personsinvolved therein,634 and with respect to partnerships.635

Returns must be filed with and taxes paid to the Franchise Tax Boardannually.636

The board is charged with the administration of the law.637

Revenue received is deposited in the Personal Income Tax Fund, and isappropriated therefrom for the making of refunds or transfer to the State GeneralFund.

(2) HISTORY

The Personal Income Tax Law originated with the Personal Income Tax Act of1935.638

It has been said that the 1935 law "must be looked upon in part as a product of thedepression. The increasing need for revenues finally compelled recourse tovarious new levies of which the income tax was one."639

The possibility of an income tax in California was conceived at least as early as1879, for in the 1879 Constitution a provision was incorporated authorizing theLegislature to impose such a tax.640

The adoption of an income tax was suggested by the State Board of Equalizationin 1913,641 and an income tax was recommended as an alternative to thepersonal property tax by both the 1915 State Tax Commission642 and the 1927California Tax Commission.643

A personal income tax bill was enacted by the Legislature at its 1933 Session,644but it was pocket-vetoed by the Governor.

At the 1935 Session a Special Joint Committee on Revenue and Taxationrecommended that a personal income tax be imposed.645

The Personal Income Tax Act of 1935 was patterned generally after the portionsof the then Federal law relating to personal income taxation. It prescribed a taxrate which was graduated from 1 percent on net income of not more than $5,000

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to 15 percent on net income of excess of $250,000. It provided also for theadministration of the law by the Bank and Corporation Franchise TaxCommissioner, who was the predecessor of the present Franchise Tax Board.646

The Personal Income Tax Act of 1935 was in 1941 codified as the PersonalIncome Tax Law.647

In 1943 the permanent maximum tax rate was reduced to 6 percent on the amountof income over $25,000.648

Also in 1943, the tax rates were reduced for taxable years beginning afterDecember 31, 1942, and before January 1, 1945, to a minimum of I percent onnet income of $10,000 or less and a maximum of 6 percent on any amount inexcess of $30,000, and the personal exemptions were increased.649 Ratereductions and personal exemption increases were continued by subsequentlegislation for years commencing before January 1, 1949.650

At the recent 1955 Session, the Personal Income Tax Law was revisedconsiderably in order to bring many of its provisions into conformity with someof the provisions on the same subject in the Federal Internal Revenue Code of1954.651

H. BANK AND CORPORATION TAXES 652

(1) OUTLINE

The Bank and Corporation Tax Law in effect imposes three types of taxes. Thefirst (known as the "bank tax") is a tax on banks located within the State, leviedaccording to or measured by their net income;653 the second (known as the"corporation franchise tax"), a tax on other financial corporations and on generalcorporations doing business in California for the privilege of exercising theircorporate franchises here, also levied according to or measured by netincome;654 and the third (known as the "corporation income tax"), a tax on thenet income of corporations doing an interstate business derived from sourceswithin California.655

The franchise tax rate on general corporations is 4 percent of net income, with aminimum tax of $25.656

The rate of the tax on banks and other financial corporations is a percentage equalto the average percentage of the total amount of net income of all generalcorporations, other than public utilities, for the next preceding year payable asfranchise taxes and personal property taxes by all such general corporations.657

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The maximum, however, is limited to 8 percent of net income.

The rate of the corporation income tax is 4 percent of taxable net income.658

The bank tax is in lieu of all other taxes on or in respect to banks, except taxes ontheir real estate and, when permitted by Congress as to national banks, motorvehicle registration and license fees.659 I A financial corporation may offsetagainst the tax payable by it any amounts paid the State or any of its subdivisionsas a personal property-tax or motor vehicle "in lieu tax," or as a license fee tocarry on business as a personal property broker or money lender.660

Numerous types of general corporations are exempt from the taxes imposed,661but most of these are liable for taxes on their so-called "unrelated businessincome" in excess of $1,000.662

Returns must be filed with and taxes paid to the Franchise Tax Boardannually.663

The board is charged with the administration of the law.664

All revenue received is deposited in the State Treasury to the credit of the Bankand Corporation Tax Fund, and is appropriated from the latter for payment ofrefunds or transfer to the State General Fund.665

(2) HISTORY

The Bank and Corporation Tax Law originated in 1929666 with the Bank andCorporation Franchise Tax Act. The events and reasons prompting that enactmenthave previously been noted in the consideration of the general historicalbackground of the California taxing system. It might be additionally observed thatinsofar as general corporations were concerned, a substitute for the 1910corporate franchise tax was also considered desirable in view of difficulties in theadministration of the tax and dissatisfaction with it.667

Some of the provisions of the 1929 law appear to have been modeled after thosein the Federal Revenue Act of 1928.

The 1929 law originally permitted a tax offset for all taxpayers. In the case of abank, the offset was allowable in the amount of 10 percent of the bank's realestate taxes, up to 75 percent of the baa tax; and as to any other taxpayer, theoffset was 10 percent of real and personal property taxes, up to 75 percent of thefranchise tax. An allowance of an offset for personal property taxes was permittedunder the terms of the Section 16 which was added to Article 13 of the State

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Constitution in 1928. This was recommended by the 1927 California TaxCommission as a temporary expedient, with the idea ultimately of eliminating thepersonal property tax, but safeguarding local revenue during the transitionalperiod leading up to such elimination.668 The Legislature, however, went beyondsuch recommendation.In 1933 the California Tax Research Bureau (an agency in the State Board ofEqualization, which, as has been noted, was created in 1931 on the apparentrecommendation of the 1929 Joint Legislative Committee on Taxation) reportedthat the offset permitted by the 1929 law discriminated against ordinarycorporations, and suggested that as a solution it be changed to what it is today.669This was acted on in 1933.

In 1933 the Legislature also enacted a law imposing a tax on every Massachusettsor business trust doing business in California for the privilege of doing suchbusiness, according to or measured by net income, and at the rate of 4 percent ofsuch income.670 The administrative provisions of the Bank and CorporationFranchise Tax Act were specifically incorporated by reference.

The Legislature in 1937 enacted the Corporation Income Tax Act -of 1937.671The tax on Massachusetts or business trusts became a part of it in 1939.672

In 1943 any amount payable under either the Bank and Corporation FranchiseTax Act or the Corporation Income Tax Act of 1937 was reduced to 85 percent ofthe amount ordinarily payable for a two-year period, and a part of the revenuecollected during that time was to be placed in a postwar employment reserve. Thereduction was continued for several years by subsequent legislation.673

The Bank and Corporation Franchise Tax Act and the Corporation Income TaxAct were together codified as the Bank and Corporation Tax Law in 1949.674

At the recent 1955 Session, the Bank and Corporation Tax Law was revisedconsiderably in order to bring many of its provisions into conformity with someof the provisions on the same subject in the Federal Internal Revenue Code of1954.675

I. ALCOHOLIC BEVERAGE TAXES 676

The Alcoholic Beverage Control Law imposes taxes on beer and wine and ondistilled spirits sold in California.677

The tax rate on beer is 62 cents for each barrel containing 31 gallons. On stillwines containing not more than 14 percent of absolute alcohol, the rate is onecent per wine gallon; and on still wines containing more than such percentage, the

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rate is 2 cents per wine gallon. On champagne and sparkling wine, exceptingsparkling hard cider, the rate is 30 cents per wine gallon; and on sparkling hardcider, the rate is 2 cents per wine gallon.

The rate on distilled spirits of proof strength or less is $1.50 per wine gallon; andon distilled spirits in excess of proof strength, $3 per wine gallon.

The beer and wine tax is payable by manufacturers, wine growers, and importers,and the tax on distilled spirits is payable by manufacturers, rectifiers andwholesalers.

Returns and payments of the taxes must be made monthly to the State Board ofEqualization,678 which is charged by law with their administration.679

Revenue from the taxes is deposited in the State Treasury to the credit of theAlcoholic Beverage Control Fund, and is appropriated for refunds and transfer tothe State General Fund.680

In the consideration of the general historical background of the California taxsystem, note was made of the enactment of the Alcoholic Beverage Control Actin 1935 and the events preceding it.

The act was changed in numerous respects, mostly in its administrativeprovisions, from time to time after 1935, and in 1953 was codified as theAlcoholic Beverage Control Act in Division 9 of the Business and ProfessionsCode.681

At the General Election held on November 2, 1954, Section 22 of Article 20 ofthe State Constitution was amended to transfer from the State Board ofEqualization to the Department of Alcoholic Beverage Control the board'sfunctions relative to licensing the manufacture, sale, and importation ofintoxicating liquor, retaining in the board, however, its taxing functions. Inrecognition of such transfer, the Legislature in 1955 recodified the taxingprovisions of the Alcoholic Beverage Control Act in Part 14 of Division 2 of theRevenue and Taxation Code.682

J. UNEMPLOYMENT AND DISABILITY COMPENSATION

INSURANCE TAXES 683

The Federal Unemployment Tax Act684 imposes a 3 percent payroll tax onemployers, but permits a credit against such tax up to 90, percent of it forcontributions paid under a state unemployment insurance law which has been

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approved by the Secretary of Labor.685 California has such a law, enacted,consistently with the federal law, for the purpose of stabilizing employment.686

The standard rate of contribution under the California law is 2.7 percent of wageswith respect to which contributions must be made.687 It is exactly equal to 90percent of the federal tax. It may, however, be reduced under an experience ormerit rating plan based on the employer's contribution and benefit experience.688

The employers' contributions are deposited in the Unemployment Fund, and areused primarily for the making of unemployment benefit payments.689

California also requires employees to contribute 1 percent of their wages up to$3,000 to a Disability Fund for use in making benefit payments to them in theevent of nonindustrial illness or injury.690

The Department of Employment administers the unemployment compensationand disability insurance provisions.691

The California unemployment compensation insurance law was enacted in1935,692 the disability insurance sections were added to it in 1946,693 and it wascodified in the Unemployment Insurance Code in 1953.694

K. HORSE RACING FEES

A racing track licensee must pay the California Horse Racing Board a feeconsisting in part of a percentage of the money handled in any pari-mutual pooloperated by him, computed at rates varying from 4 percent on any amount not inexcess of $10,000,000 to 6 percent on any amount over $20,000,000;695 and inpart of any money deducted as "breakage" (i. e., odd cents on each dollarexceeding a multiple of 5 cents) on any amount in excess of $27,000,000 handledin the pool.696

Various fees must also be paid to the board for licenses granted by it to horseowners, riders, and others.

Most of the horse racing revenue is deposited in the Fair and Exposition Fund,from which appropriations are made for the administration of the law, for fairsand expositions, for the California Polytechnical School, and for the University ofCalifornia.697 The balance is used for state colleges, wildlife restoration, andgeneral purposes.698

The present horse racing law699 is based on a 1933 act700 which was codified in1941.701

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ENDNOTES

1. United States Constitution: Article 1, § 8, cl. 3-commerce clause: Art. 1, § 10,el. 1-contract clause; Art. 1, § 10, el. 2-import-export clause: Art. 1, § 10, cl.3-tonnage duty clause; Art. 1, § 10, cl. 3-interstate compacts clause; Art. 4, §1-full faith and credit clause; Art. 4, § 2, cl. 1-privileges and immunities clause;Amend. 14, § 1-due process and equal protection clauses; Amend. 21, §2-intoxicating liquor.

2. California Constitution: a. 1879 Constitution-Current Provisions: Article 1, §11-laws of general nature to operate uniformly; Art. 1, § 13--due process; Art. 1, §16-prohibition against law impairing obligation of contracts; Art. 1, §21-prohibition against granting special privileges and Immunities; Art. 4, §I-effective date of tax levy bill; Art. 4, § 25, Tenth--prohibition against special orlocal law for assessment or collection of taxes; Art. 4, § 25,Thirteenth-prohibition against special or local law extending time for collectionof taxes; Art. 4, § 25, Sixteenth-prohibition against special or local legislationreleasing or extinguishing debt or liability to State or municipal corporation; Art.4, § 25, Twentieth-prohibition against special or local law exempting propertyfrom taxation; Art. 4, § 25, Thirty-third-prohibition against special or local lawwhere general law applicable; Art. 4, § 25a-horse racing and betting; Art. 4, §31-prohibition against making gift of public money for private purpose; Art. 4, §3lb-cessation of property tax liens; Art. 4, § 34a-limitation on appropriations forState purposes from state property tax revenue to 25% of total appropriations;Art. 6, § 4-appellate jurisdiction in tax cases; Art. 9, 6-school district taxes; Art.9, 10-tax exemption of property of Stanford University; Art. 9, § 11-taxexemption of property of California School of Mechanical Arts ; Art. 9, § 12-taxexemption of property of California Academy of Sciences; Art. 9, § 13-taxexemption of property of Cogswell Polytechnical College; Art. 9, § 15--taxexemption of Henry E. Huntington Library and Art Gallery; Art. 11, § 12-taxationfor local purposes, and requirement for assessment of property for tax purposes atfull cash value; Art. 11, § 13-delegation of authority to levy local taxes; Art. 11, §20-legislative authority to limit amount of local property taxes; Art. 13, §1-general provisions on property subject to and exempt from tax, and assessmentand equalization of taxable publicly-owned property; Art. 13, § 1a-general collegeproperty tax exemption; Art 13, § lb--cemetery property tax exemption; Art. 13, §1c-""welfare" property tax exemption; Art. 13, § 1.25-veterans' property taxexemption; Art. 13, § 1.5-church property tax exemption; Art. 13, § 1.5a-orphanasylum property tax exemption; Art. 13, § 13/4-tax exemption of bonds issued byState, counties, cities and districts; Art. 13, § 2-separate assessment of land andimprovements; Art. 13, § 3-assessment of sectionized and nonsectionized land;Art. 13, § 4-property tax exemption of ships; Art. 13, § 6-prohibition against

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contract surrendering or suspending power to tax; Art. 13, § 7-payment ofproperty taxes in installments; Art. 13, § 8-annual property tax statements; Art.13, § 9-State and county boards of equalization; Art. 13, § 9a-taxes on unsecuredproperty; Art. 13, § 10-property tax assessment situs; Art. 13, §101/2-householder's property tax exemption; Art. 13, § 11-income taxauthorization; Art. 13, § 123/4-property tax exemption of certain trees and vines;Art. 13, § 13-Legislature authorized to Pass all laws necessary to carry outProvisions of article; Art. 13, § 14-assessment of public utility property by StateBoard of Equalization, taxation generally of public utilities, taxation of personalproperty; Art. 13, § 144/5-taxation of insurance companies; Art. 13, §15---taxation and apportionment of revenue by State in event of deficiencyresulting from limitation on local property taxes pursuant to Art. 11, § 20, andrecovery of illegally collected state taxes Art. 13, § 16-bank and generalcorporation taxes; Art. 13, § 19-taxation of property in community redevelopmentprojects; Art. 20, § 19-prohibition against allowance of tax exemption in case ofsubversive; Art. 20, § 22-taxation of intoxicating liquor; Art. 26-use of motorvehicle and gasoline tax revenue

b. 1879 Constitution-Former Provisions: Article 4, § 22-state property tax forPanama-Pacific International Exposition; Art. 13, § 1.6-exemption of property of'San Francisco Bay Exposition; Art. 13, § 4-taxation of indebtedness security orevidence; Art. 13, § 5--Prohibition against contract to pay tax on borrowedmoney; Art. 13, § 12-poll tax; Art. 13, § 121/2taxation of intangibles; Art. 13, §14 (1910-1933)-taxation of public utilities, insurance companies, bank shares,and franchises; Art. 13, § 14 (1933-1949)-taxation of insurance companies; Art.13, § 14.75-taxation of insurance companies; Art. 13, § 18-taxation of oceanmarine insurers.

c. 1849 Constitution: Article 1, § 8-due process; Art. 1, § 11-laws of generalnature to operate uniformly; Art. 1, § 16-probibition against law impairingobligation of contracts; Art. 6, § 4-appellate jurisdiction in tax cases; Art. 6, §6-original jurisdiction in tax cases; Art. 11, § 13-taxation to be equal and uniform,all property to be taxed in proportion to value, and assessors and collectors to beelected by districts, counties or towns in which property situated.

The text of the 1849 Constitution is set forth In 3 West's Annotated CaliforniaConstitution (19,54), p. 699 et seq.

3. Stats.1939, c. 154, p. 1274, operative February 1, 1941, as part of the 1929California Code Commission's codification program. The commission wascreated by Stats.1929, c. 750, p. 1427, and abolished by Stats.1953, c. 1445, P.3036.As used here and hereafter, '"Stats." means the official statutes of the State of

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California, unless otherwise indicated.4. Stats.1941, c. 36, P. 532, operative July 1, 1943, as part of the 1929 CaliforniaCode Commission's codification program. Codified the Retail Sales Tax Act of1933 (Stats.1933, c. 1020, p. 2599, as amended) and the Use Tax Act of 1935(Stats.1935, c. 361, p. 1297, as amended).

5. Stats.1955, c. 1311, operative April 1, 1956. Unlike other parts of Division 2,this part does not provide revenue for the State Government, but was drafted toauthorize an additional source of revenue, under standard conditions, for localgovernmental units.

6. Stats.1941, c. 37, p. 558, operative July 1, 1943, as part of the 1929 CaliforniaCode Comm issi on's codification program. Codified the Motor Vehicle FuelLicense Tax Act (Stats.1923, c. 267, p. 571, as amended).

7. Stats.1941, c. .98, p. 578, operative July 1, 1943, as part of the 1929 Callfornia CodeCommission's codification program. Codified the Use Fuel Tax Act of 1937 (Stats.1937, c. 352,p. 763, as amended).

8. Stats.1941, C. 39, p. 590, operative July 1, 1943, as part of the 1929 CaliforniaCode Commission's codification program. Codified Stats.1933, c. 339, p. 928, asamended.

9. Stats.1941, c. 40, p. 605, operative July 1, 1943, as part of the 1929 CaliforniaCode Commission's codification program. Codified Stats.1935, C. 362, p. 1312,as amended.

10. Stats.1941, c. 41, p. 610, operative July 1, 1943, as part of the 1929 CaliforniaCode Commission's codification program. Codified the Private Car Tax Act of1937 (Stats.1937, c. 283, p. 621, as amended).

11. Stats.1941, c. 113, p. 1139, oeprative July 1, 1943, as part of the 19,21)California Code Commission's codification program. Codified various generallaws and Political Code sections. See, in this regard, Revenue and Taxation Code§ 50013.

12. Stats.1943, c. 658, p. 2297, operative July 1, 1945, as part of the 1929California Code Commission's codification program. Codified the InheritanceTax Act of 1935 (Stats.1935, c. 358, P. 1266, as amended).

13. Stats.1943, c. 658, p. 2297, operative July 1, 1945, as part of the 1929California Code Commission's codification program. Codified the Gift Tax Act of1939 (Stats.1939, c. 652, p. 2079, as amended).

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14. Stats.1943, c. 659, p. 2354, operative July 1, 1945, as part of the 1929California Code Commission's codification program. Codified the PersonalIncome Tax Act (Stats.1935, c. 329, p. 1090, as amended).

15. Stats.1949, c. 557, p. 961, operative July 1, 1951. Codified the Bank andCorporation Franchise Tax Act (Stats. 1929, c. 13, p. 19, as amended) and theCorporation Income Tax Act of 1937 (Stats.1937, c. 765, p. 2184, as amended).The codification was prepared by the California Franchise Tax Board, with thecooperation of the California Code Commission.

16. See Report of the Senate Interim Committee on State and Local Taxation,Part Four, "A Legal History of Property Taxation in California" (1953), pp. 15 and16, relating to the assessment and equalization of property taxes, found in Vol. 3of 1953 Appendix to Journal of the Senate.

17. Stats.1951, c. 655, p. 1832, effective September 22. 1951 as part of 1929California Code Commission's codification program

18. Stats.1055, c. 1842, effective September 7, 1955. Codified various provisionsof the Alcoholic Beverage Control Act formerly in Division 9 of the Business andProfessions Code. The codification was, in the main, drafted by the State Boardof Equalization and the Department of Alcoholic Beverage Control.

19. Sections 976-994, 2901-2903.

20. Sections 19485 and 19485.1.

21. Section 370 et seq.

22. Section 1038.

23. Section 1083.5.

24. Sections 18710-18715

25. Sections 1015-1019.

26. Section 588.

27. Section 2251.

28. Sections 3400-3433.

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29. Sections 5001-5011

30. Sections 420-432.6.

31. Sections 29120-2919-6.

32. Sections 43000-43233.

33. Sections 16000, 16100.

34. See note 5 supra.

35. Section 37101. Approximately 174 California cities presently have sales anduse taxes.

36. Section 16101. License fees are also imposed by Section 16430 of theBusiness and Professions Code on itinerant merchants who sell farm products andtransport such products by motor vehicle.

37. See Cal.Const. art. 11, § S.

38. See West Coast Advertising Co. v. City and County of San Francisco (1939)95 P.2d 138, 143, 14 C.2d 516, 521.

39. Section 6351 et seq.

40. For classifications and general information on the types of special districts(other than school districts), including statutory citations to the laws creatingthem, see Analysis of California District Laws (1954), prepared by Ralph N.Kleps, Legislative Counsel, for Assemblyman Earl W. Stanley and AssemblyInterim Committee on Municipal and County Government, and submitted to theCalifornia Legislature at its 1955 Regular Session. An earlier classification ofsuch districts, also with statutory citations, is included in the 1952 Report of theCalifornia Code Commission, at pp. 18-38.

41. State Board of Equalization's Feb. 1, 1935 Summary of Revenue Districts,prepared by its Valuation Division.

42. Id.

43. Id.

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44. The text of the 1849 Constitution Is set forth in 3 West's Annotated CaliforniaConstitution (1954), p. 699 et seq.

45. It Is to be noted that the adoption of the 1849 Constitution antedatedCalifornia's admission into the Union, that event occurring on September 9, 1850,the date that the Admission Act (Act of Congress, September 9, 1850, Ch. 50, 9U.S.Stats. 4.52, text also found in 3 West's Annotated California Constitution(1954), p. 745) became law.

46. See Fankhauser, A Financial History of California (1913), pp. 120-122.Hereafter this work will be referred to merely as Fankhauser.

47. Browne, Report of the Debates in the Convention of California on theFormation of the State Constitution (1850), p. 364 et seq.

48. Ibid., p. 375.

49. Stats.1850, c. 52, p. 135. Me legislation was enacted on March 30, 1850,which was prior to California's admission into the Union (see note 45, supra).

50. Ibid., c. 76, p. 190. This was to be collected from all able-bodied malecitizens between the ages of 18 and 45, other than those exempt by law or whowere members of a volunteer militia company.

51. Ibid., c. 97, p. 221.

52. Ibid., c. 143, p. 456.

53. Ibid., c. 130, p. 404.

54. See note 45, supra.

55. Stats.1951, c. 6, p. 153.

56. Id., § 74.

57. Stats.1851, c. 108, p. 424.

58. Ibid., c. 8, p. 165.

59. Stats.1852, c. 3, p. 18.

60. Ibid., c. 37, p. 84.

Page 66 of 99

61. Ibid., c. 36, p. 78. The purpose of the tax was to guard against an expandingclass of paupers and obtain funds for a marine hospital (see Fankhauser, p. 160).It was payable by the master of any ship bringing Immigrants into California whodid not otherwise give a bond for each passenger to indemnify the State for thepossible expense of caring for such passenger for a period of two years.

62. Ibid., c. 39, p. 90.

63. Stats.1853, c. 167, p. 233.

64. Stats.1854, c. 74, p. 103.

65. Stats.1857, c. 261, p. 325.

66. Ibid., c. 245, p. 304.

67. Stats.1861, c. 401, p. 419.

68. Ibid., c. 330, p. 315.

69. Stats.1862" c. 227, p. 243.

70. See Fankhauser, pp. 205-207.

71. The general revenue law of 1850 (Stats.1850, c. 52, §§ 20 and 21) firstprovided for such assessment, and the inception of such equalization was thegeneral revenue law of 1851 (Stats. 1851, c. 6, § 28).

72. See Fankhauser, pp. 186-187.

73. Id.

74. Id.

75. Id.

76. Stats.1869-70, c. 489, p. 714. The reason for the board was explained and itsexistence and constitutionality upheld in Savings & Loan Soc. v. Austin (1873)46 C. 415.

77. Stats.1869-70, c. 489, § &

Page 67 of 99

78. Id.

79. Id.

80. Id.

81. Ibid., § 10.

82. License tax provisions were placed in sections 3356-3387, provisions on theproperty tax in sections 3607-3830, and poll tax provisions in sections.3839-3862.

83. Section 18 of the code, as amended by an act (S.B. 514) approved April 1,1872, read P part as follows:

"No statute, law, or rule is continued In force because It is consistent with theprovisions of this Code on the same subject, but in all cases provided for by thisCode all statutes, laws, and rules heretofore in force in this State, whetherconsistent or not with the provisions of this Code, unless expressly continued inforce by it, are repealed and abrogated."

It was held in People v. Clunie (1886) 11 P. 775, 70 C. 504, that this languagerepealed the general revenue law of 1861. Not until 1939, however, was that lawspecifically repealed (Stats. 1939, C. 154, p. 1274).

84. The 1870 law creating the first State Board of Equalization, while notexpressly repealed by the adoption of the Political Code in 1872, was evidentlysuperseded by provisions on the same subject incorporated in sections 352 and3692-3705 (see Index to the Laws of California (1921), p. 96)

85. See Fankhauser, pp. 240-241.

86. Code Amendments 1875-76, c. 577, P. 11.

87. Article 13, § 1. The purpose was evidently in part to overcome the holding inPeople v. Hibernia Sav. & Loan Soc., and thereby reach moneylenders (seeFankhauser, pp. 263-264).

88. Id. The exemption of growing crops was one of the objectives of theWorkingmen's Party delegates to the Constitutional Convention (see Fankhauser,p. 258).

89. Id.

Page 68 of 99

90. Article 13, § 2. The purpose of the requirement as to the separate assessmentof land and improvements was said to be to '"break up the land monopoly and tocompel improvements on the land" (Fankhauser, p. 266).

91. Ibid., § 3.

92. Ibid., § 4. This, too, was evidently to nullify the decision in People v. HiberniaSav. & Loan Soc. (see Fankhauser, pp. 266-267).

93. Article 13, § 5.

94. Ibid., § 6.

95. Ibid., § 7. The objectives were to make it easier for a taxpayer to pay his taxesand to keep money in circulation, rather than locked up in a public treasury (seeFankhauser, p. 268).

96. Article 13, § 8.

97. Ibid., § 9.

98. Ibid., §10. The provision for the assessment of railroad property by the StateBoard of Equalization was prompted by difficulty that local assessors hadpreviously had in assessing such property and by virtual impossibility otherwiseof securing uniformity in the valuation thereof (see Fankhauser, p. 300).

99. Article 13, § 11.

100. Ibid., § 12. The primary reason given for the tax was that it would either helprid the State of Mongolians or make them contribute toward the maintenance ofgovernment (see Fankhauser, p. 267).

101. Article 4, § 25, tenth subdivision.

102. Ibid., thirteenth subdivision.

103. Ibid., twentieth subdivision.

104. Article 11, § 10.

105. Ibid., § 12. The section was based on a similar section in the MissouriConstitution, and was designed to give local government a measure of home rule

Page 69 of 99

in matters of local taxation (see Report of the Senate Interim Committee on Stateand Local Taxation, Part Three, "A Legal History of Property Taxation inCalifornia" (1955), pp. 43-44, relating to the levy and collection of property taxes.

106. See Fankhauser, p. 274.

107. Stats.1907, c. 334, pp. 614, 627, adding section 125 to the Political Code.

108. See Fankhauser, pp. 291-293.

109. Stats.1883, c. 40, p. 71, adding section 3670 to the Political Code.

110. Stats.1887, c. 180, p. 233.

111. Article 13, j 1.

112. Id.

113. Ibid., § 12¾.

114. Article 9, § 10.

115. Ibid., § 11.

116. Article 13, § 1%.

117. Ibid., § 13/4.

118. Article 9, 12.

119. Article 13, 101/2.

120. Article 9, § 13.

121. Stats.1893, c. 168, p. 193.

122. Stats.1903, c. 260, p. 359, adding section 622a to the Political Code.

123. Stats.1905, c. 133, p. 136, amending section 622a of the Political Code.

124. Stats.1903, c. 225, p. 259.

125.Stats.1905, c. 314, p. 341.

Page 70 of 99

126. Ibid., c. 486, p. 493.

127. Ibid., c. 612, p. 816.

128. Report of the Commission on Revenue and Taxation (1906), p. 31, found inVol. 2 of 1907 Appendix to Journals of Senate and Assembly. This document Ishereafter referred to as the 1906 Report.

129. Stats 1907 c 206 247

130. See Fankhauser, pp. 368-370.

131. Stats.1905, c. 334, p. 390. Governor George C. Pardee served on thecommission, along with Senators J. B. Curtin and M. L. Ward, Assemblymen H.S. G. McCartney and E. F. Treadwell, and Professor Carl C. Plehn of the University of California, an expert on taxation and finance.

132. See note 128, supra.

133.1906 Report, pp. 10-11.

134. The term '"Common property" is here and hereafter used broadly as meaningnonpublic utility property.

135. 1906 Report, pp. 81-82.

136. The commission also noted that the section had been copied from aprovision in the Missouri Constitution, and that it served no purpose and neverhad served any (1906 Report, p. 15).

137. 1906 Report, p. 15.

138. Stats.1907, Res. c. 27, p. 1353.

139. Fankhauser, p. 372; Stockwell, Studies in California State Taxation,1910-1935 (1939), p. 17.

140. Stats.1909, Res. c. 33 (Senate Constitutional Amendment No. 1), P. 1332.

141. Stats.1910, 2d Ex. Sess., Res. c. 2 (Assembly Concurrent Resolution No. 4).

142. Ibid., Res. c. I (Senate Constitutional Amendment No. 1).

Page 71 of 99

143. Stats.1911, c. 335, p. 530. For a complete history of this legislationthereafter, in respect to public utilities, banks and franchises, see Report of theSenate Interim Committee on State and Local Taxation, Part Four, "A LegalHistory of Property Taxation In California" (1953), pp. 112-128, relating to theassessment and equalization of property, found in Vol. 3 of 1953 Appendix toJournal of the Senate.

144. Stats.1911, c. 395, p. 713.

145. Stats.1913, c. 336, p. 680. The rePeal was evidently prompted by thesupposition that the tax was unconstitutional, in view of a decision of theCalifornia Supreme Court in H. K. Mulford Co. v. Curry (1912) 125 P. 236, 163C. 276.

146. Stats.1913, c. 595, p. 1067.

147. Stats.1913, c. 594, p. 1065, adding Section 445 to the Political Code.

148. Stats.1913, c. 326, p. 639.

149. Article 13, § Ia.

150. Ibid., § 4.

151. Ibid., § 12.

152. Ibid., § 1.

153. Stats.1915, c. 190, p. 422. This was after the reversal of the H. K. MulfordCo. case (see note 145, supra) In Albert Pick Co. v. Jordan (1914) 145 P. 506, 1690. 1, Ann-Cas.1916C, 1237, affirmed 37 S.Ct. 741, 244 U.S. 647, 61 L.Ed. 1370.The tax was reenacted partly to make up for the loss of revenue occasioned by therepeal of the poll tax In 1914 (see Stockwell, Studies In California Taxation,1910-1935, (1939), p. 125).

154. Stats.1915, c. 188, p. 397.

155. Ibid., c. 718, p. 1404.

156. Ibid., c. 194, p. 432.

157. The commission consisted of the following three members: Clyde L. Seavey,Chairman, E. A. Dickson and Lee C. Gates.

Page 72 of 99

158. Report of the State Tax Commission (1917). This report will hereafter bereferred to as the 1917 Report.

159. 191T Report, p. 9. In regard to public utility company rates, it should benoted that the 1905 commission recommended that the rates be fixed atpercentages equivalent to tax rates that might otherwise be levied on an advalorem basis (see 1906 Report, p. 93 et seq.).

160. 1917 Report, p. 123 et seq.

161. Final Report of the California Tax Commission (1929), p. 40.

162.Stats.1917, c. 729, p. 1402.

163. Ibid., c. 513, p. 646, and c. 687, p. 1275.

164. Ibid., c. 214, p. 336.

165. Ibid., c. 589, p. 880.

166. Article 13, § 11/2a.

167. Ibid., § 12.

168.Stats.1921, c. 821, p. 1500.

169. Stats.19923, c. 266, p. 517.

170. Ibid., c. 267, p. 571.

171. Ibid., c. 341, p. 706.

172. Ibid., c. 349, p. 721.

173. Article 13, § 12.

174. In re Heikich Terul (1921) 200 P. 954, 187 C. 20, 17 A.L.R. 630.

175. Article 13, § 9a.

176. Ibid., § 12½.

Page 73 of 99

177. See Arnold v. Hopkins (1928) 265 P. 223, 226, 203 C. 553, 559.

178. Stats.1925, c. 412, p. 833.

179. Stats.1927, C. 19, P. 17, adding sections 3664aa, 3670bb, and 3670cc to thePolitical Code.

180. See Stockwell, Studies In California State Taxation, 1910-1935 (1939), p.104. This work will hereafter be referred to as ""StockweIl."

181. Stats.1927, c. 843, p. 1708.

182. Stockwell, p. 105.

183. Id.

184. Stats.1927, c. 844, p. 1708. This was upheld on referendum at the GeneralElection of Nov. 6, 1928.

185. Stats.1925, c. 329, p. 550.

186. Cal.Const. Art. 13, 1 1b.

187. Stats.1925, c. 12, p. 11, amending section 3627 of the Political Code.

188. Stockwell, p. 136. The enactment of section 5219 was a consequence of theholding in McCulloch v. Maryland (1819) 17 U.S. 316, 4 Wheat. 316, 4 L.Ed.579.

189. Stats.1927, c. 223, p. 398, amend ing sections 3627 and 3627a of thePolitical Code; and see Stockwell, p. 136.

190. Arnold V. Hopkins (1928) 265 P. 223, 203 C. 553,

191. Article 13, § 123/1.

192. Perkins Mfg. Co. v. Jordan (1927) 254 P. 551, 200 C. 667.

193. Stats.1927, c. 221, p. 396.

194.Stockwell, p. 151 (note 13).

195. Stats.1927, c. 455, p. 781.

Page 74 of 99

196. The chairman was Air. Irving Martin, and Professor Robert Murray Haig ofColumbia University was its adviser and director of research.

197. This report was reprinted as Part Three of the Final Report of the CaliforniaTax Commission (1929), pp. 243-291.

198. This method was authorized by an amendment of Section 5219 in 191-96(Act of March 25, 1926). It should be noted in this regard that notwithstandingthe Invalidation by the California Supreme Court of the 1925 and 1927 laws onthe assessment and taxation of intangibles, the commission was of the view thatthe bank share tax might still be invalid as discriminatory against national banksin view of the provisions in Section 1 of Article 13 of the State Constitutionexempting real estate mortgages from taxation and Permitting a deduction ofdebts from solvent credits, that the people, however, would not agree to theelimination of those provisions, and that the best alternative for remedying thesituation was the "fourth method" (Final Report of the California TaxCommission (1929), pp. 260-261).

199. See Stats.1929, p. lxxxiii.

200. Senate & Assembly Journals (1928), pp. 15-17.

201. Stats.1928, Ex.Sess.Res. c. I (Assembly Constitutional Amendment No. 1),found in Stats.1929, p. lxxxvii.

202. Stats.1929, c. 13, p. 19, the Bank and Corporation Franchise Tax Act; Ibid.,c. 14, p. 35, amending section 3627a and repealing section 3627b of the PoliticalCode, taxing intangibles.

203. Final Report of the California Tax Commission (1929). This document ishereafter referred to as the 1929 Report.

204. Ibid., p. xxi.

205. Id.

206. Ibid., pp. xxii-xxiv.

207. Stats.1929, Res. c. 35 (Assembly Concurrent Resolution No. 20), p. 2173.

208. The committee consisted of 8 members of the Legislature, its chairman wasSpeaker Edgar C. Levey, and assisting It was a technical staff headed by Mr.

Page 75 of 99

Edward Glass.

209. Report of Joint Legislative Committee on Taxation (1931), found In Vol. 5of 1931 Appendix to Journals of Senate & Assembly.

210. Ibid., p. 34 et seq.

211. Stats.1931, c. 623, p. 1348.

212. Ibid., Res. c. 98, p. 3160.

213. Summary Report of the California Tax Research Bureau (1932), found inVol. 3 of 1933 Appendix to Journals of Senate & Assembly,

214. Report of the California Tax Research Bureau (1933).215.Stats.1933, c. 954, p. 2482.

216. Article 4, 25.75.

217. Article 4, 31b.

218. 1933 Journal of the Senate, p. 2114.

219. Stats.1933, Res. c. 63 (Senate Constitutional Amendment No. 30), p. 3072.

220. Stats.1933, c. 1020, p. 2599.

221. Stockwell, pp. 202-203.

222. Stats.1933, c. 211, p. 8\708.

223. Ibid., c. 339, p. 928.

224. Ibid., 1933, c. 436, p. 1127, and c. 769, p. 2046.

225. Article 4, § 25a.

226. Stats.1933, c. 51, p. 340, and c. 178, p. 625. Federal authorization came withthe adoption of the 21st Amendment late in 1933.

227. Stats.1935, c. 330, p. 1123.

228. Ibid., c. 329, p. 1090.

Page 76 of 99

229. Ibid., c. 358, p. 1266.

230. Ibid., c. 361, p. 1297.

231. Ibid., c. 352, p. 1226.

232.Ibid., c. 362, p. 1312.

233. Ibid., c. 834, p. 2251, amending section 3627a of the Political Code.

234. Ibid., c. 51, p. 384, and c. 849, p. 2273.

235.Stats.1937, c. 283, p. 62L

236. Ibid., c. 352, p. 763.

237.Ibid., c. 765, p. 2184.

238.Stats.1939, c. 652, p. 2079.

239.Ibid., c- 876, p. 2462.

240. Const. Art. 13, § le.

241. Ibid., Art. 13, § 12.

242. Ibid., Article 20, § 19.

243. Stats.1953, c. 1503, p. 3114.

244. Stats.1953, c. 1311, operative April 1, 1956, adding Part 1.5 to Division 2 ofthe Revenue and Taxation Code.

245. Except as otherwise indicated, the statements following relate primarily tothe county general property tax. Most, however, have equal application to theproperty taxes of cities and districts.

246. The tax Imposed by the Private Car Tax Law (R. & T.C. §§ 11201-11752) istoday the only property tax imposed for state governmental purposes.

"R. & T.C." Is used here and hereafter as an abbreviation for the Revenue andTaxation Code.

Page 77 of 99

247. Article 13, 11.

248. Id.

249. Id. As an exception, land and improvements of a county or municipalcorporation which are taxable when acquired remain taxable thereafter.

250. Art 13, § 1¼.

251. Ibid., § 10.5.

252. Ibid., § 1.5.

253. Ibid., § 1b.

254. Ibid., § 1.

255. Ibid., § la.

256. Ibid., § 1.

257. Article 9, § 10-Stanford University; Ibid., § 11-California School ofMechanical Arts; Ibid., § 12-California Academy of Sciences; Ibid., I13-Cogswell Polytechnical College; Ibid., § 15-Henry E. Huntington Library andArt Gallery; R. & T.C. § 213-property used for exhibition or exposition purposes.

258. Article 13, § 1.5a.

259. Article 13, § 1c; R. & T.C. §§ 214-214.7.

260. Article 13, § 12%.

261. Ibid., § 4.

262. Ibid., § 1¾.

263. Ibid., § 14; R. & T.C. §§ 111-113, 212. 2153; Roehm v. County of Orange(1948) 196 P.2d 550, 555-556, 32 C.2d 280, 288.

264. A tax on real property is generally a lien on such property (11. & T.C. §2187); a tax on personal property, however, is not usually a lien thereon, but maybe on the real property of the owner (R. & T.C. § 2189; Fresno County v.

Page 78 of 99

Commodity Credit Corp. (C.C.A. 1940) 112 F.2d 639, certiorari denied 61 S.Ct.61, 311 U.S. 686, 35 L.Ed. 443)

265. Const. Art. 20, § 5.

266. R. & T.C. § 2151; Gov.C. § 29120.

267. Const. Art. 13, § 8; R. & T.C. § 441 et seq.

268. R. & T.C. § 826 et seq. The assessment of public utility and other prop. ertyby the State Board of Equalization is provided for by Section 14 of Art. 13 of theState Constitution. Such property will frequently hereafter be referred to as"'state-assessed property."

269. R. & T.C. § 255.

270. Ibid., § 254.5.

271. Ibid., § 32.

272. Ibid., § 405.

273. Ibid., §§ 751 and 753.

274. Article 11, § 12.

275. Article 13, § 14.

276. Id.

277. Rittersbacber v. Board of Supervisors of Los Angeles County (1934) 32 P.2d135, 220 C. 535, certiorari denied 55 S.Ct. 107, 293 U.S. 592, 79 L.Ed. 686.

278. R. & T.C. §§ 109, 616.

279. Ibid., §§ 109, 601-616.

280.Ibid., § 617.

281. Ibid., §§ 109, 756. Property on the board roll is also part of the ""securedroll," as is property on the local roll the taxes on which are a lien on real propertysufficient, In the opinion Of the assessor, to secure the payment of the taxes, Thelocal roll also consists of ""unsecured property," which is property the taxes on

Page 79 of 99

which are not such a lien. Such property makes up the "unsecured roll."

282. Article 13, 1 14; R. & T.C. 1 758.

283. R. & T.C. § 1603.

284. Ibid., §§ 1605 and 1606;Wells, Fargo & Co. v. State Board of Equalization(1880) 56 C. 194, 6 P.C.L.J. 358.

285. R. & T.C. § 1614.

286. R. & T.C. §§ 1646-1651, 2904.

287. Ibid., § 1831. The board may equalize only by increasing or lowering theentire assessment roll of a county; It may not raise or lower any individualassessment (Wells, Fargo & Co. v. State Board of Equalization (1880) 56 C. 194,6 P.C.L.J. 358).

288. R. & T.C. § 1833.

289. Ibid., § 1834.

290. See: Report of the Senate Interim Committee on State and Local Taxation,Part Six, '"Property Assessments and Equalization in California" (1953), PI).18-20, found in 1953 Supplement Appendix to Journal of the Senate; Lee, StateEqualization of Local Assessments (1953), p. 34 et seq., published by Bureau ofPublic Administration of University of California; and Davisson and Schmelzle,Equalization of Property Tax Assessments in California (1950), Vol. III, No. 3,National Tax Journal, p. 227 et seq.

291.R. & T.C. § 1831.

292.Ibid., § 1832.

293.Ibid., § 1833.

294.Ibid., § 1834.

295.Ibid., § 1836.

296. Ibid., § 1837.

297. Ibid., § 753.

Page 80 of 99

298. Ibid., § 754.

299. Ibid., § 755.

300. Ibid., § 756.

301. Ibid., § 757.

302. Ibid., § 758.

303. Ibid., §§ 2001-2005.

304. Stats.1951, c. 1554, p. 3549; Stats. 1953, c. 362, p. 1632; and Stats.1955, c.256.

305. R. & T.C. § 2151 ; Gov.C. § 29120.

306. Const. Art. 13, § 9a; R. & T.C. 2905; Gov.C. § 29124.

307. Const. Art. 13, § 14; R. & T.C. 2153.

308. R. & T.C. § 2152.

309. Ibid., § 2601.

310. Ibid., §§ 2194-2195.

311. Ibid., §§ 2605, 2701.

312. R. & T.C. §§ 2606, 2702. The latter was recently amended to change thedate from January 20 (Stats.1955, c. 384).

313. R. & T.C. § 2605.

314. Ibid., § 2606.

315. Ibid., § 2700.

316. Ibid., §§ 2701, 2702.

317. Ibid., §§ 2617, 2704.

318. Ibid., §§ 2618, 2705.

Page 81 of 99

319. Ibid., §§ 2624, 2707.

320. Ibid., §§ 2851-2862, 4371-4376.

321. Ibid., § 3351.

322. Ibid., § 3352.

323. Ibid., §§ 3353-3355.

324.Ibid., § 3357.

325.Ibid., § 3358.

326.Ibid., §§ 3436, 3439.

327. Ibid., § 126.

328. Ibid., § 3511.

329.Ibid., § 127.

330. Ibid., §§ 3534-3556.

331. Ibid., §§ 3651-3661.

332. Ibid., §§ 3901-3913.

333. Ibid., §§ 3691-3694.

334. Ibid., § 3696.

335. Ibid., § 3697.

336. Ibid., § 3701.

337. Ibid., §§ 3702-3704.

338. Ibid., §§ 3706,--3707.

339. Ibid., § 3712.

Page 82 of 99

340. Ibid., §§ 3695, 3712.

341. Ibid., §§ 3791-3814.

342. Ibid., § 4101.

343. Ibid., §§ 4102-4103.

344. Ibid., §§ 4216-4226.

345. Ibid., §§ 175-177, 3552.38, 3591-3617, 3618-3638, 3727, 3809-3810,3950-3972.

346. Report of the Senate Interim Committee on State and Local Taxation, PartThree, "A Legal History of Property Taxation in California," (1955), pp. 263-265,relating to the levy and collection of property taxes.

347.R. & T.C. § 2901.

348. Ibid., § 2922.

349. Ibid., § 2914.

350. Ibid., §§ 3002-3005.

351. Ibid., §§ 4801-5143.

352. Ibid., §§ 4651-4716.

353. Stats.1850, c. 52, p. 135, enacted March 30, 1850.

354. Article 11, § 13.

355. Stats.1850, c. 52, § 5.

356. Ibid., § 49.

357. Ibid., § 50.

358. Ibid., §§ 20, 23.

359. Ibid., § 29.

Page 83 of 99

360. Ibid., §§ 30, 67.

361. Ibid., §§ 31, 37.

362. Ibid., § 38,

363. Ibid., §§ 42 arid 43.

364. Ibid., § 46.

365. Ibid., § 47.

366. Ibid., § 48.

367. Ibid., § 40.368. Stats.1851, c. 6, P. 153.

369. Stats.1852, c. 3, p. 18.

370. Stats.1853, c. 167, p. 233.

371. Stats.1854, c. 74, p. 103.

372. Stats.1857, c. 261, p. 325.

373. Stats.1861, c. 401, p. 419.

374. Stats.1939, c. 154, p. 1274" effective February 1, 1951.

375. Section 16.

376. Id.

377. Section 28.

378. Section 55.

379. Section 34.

380. Section 42.

381. Section 37.

Page 84 of 99

382. Section 40.

383. Section 41.

384. Section 5.

385. Article 10, § 13.

386. Ibid., § 46.

387. Ibid., §§ 32-34.

388. Section 3.

389. Section 8.390. Section 33.

391. Section 14.

392. Section 22.

393. Stats.1859, c. 315, p. 343.

394. Section 4.

395. Section 13.

396. Id.

397. Section 25.

398. Sections 36-45.

399. Section 44.

400. Sections 44. 45.

401. Stats.1867-8. c. 503, p. 674.

402. Section 3607.

403. Section 3627.

Page 85 of 99

404. Section 3617.

405.Sections 3717, 3718.

406. Section 3628.

407. Section 3672.

408. 'Section 3692.

409. Section 9714.

410. Section 3764.

411.Section 3768.

412. Section-, 3776, 3777.

413. Section 3779.

414. Sections 3779-3780.

415. Section 3785.

416. Stats.1873-4, c. 392, p. 143, amending section 3773 of the Political Code.

417. Stats.1880, c. 31, p. 5.

418. Stats.18S1, c. 53, p. 56.

419. Stats.1891, c. 230, p. 438, amending section 3746 of the Political Code.

420. Code Am.1873-74, c. 392, p. 143, amending section 3780 of the Politicalcode.

421. Code Am.1875-76, c. 9, P. 62, also amending section 3780, supra.

422. Stats.1885, C. 108, p. 90, amending 424. Id., pp. 341-343. section 3785 ofthe Political Code.

423. Fankhauser, p. 341.

425. Stats.1895, c. 218, p. 308, amending various sections of the Political Code.

Page 86 of 99

426. See Report of the Senate Interim Committee on State and Local Taxation,Part Six, "'Property Assessments and Equalization in California" (1953), p. 10,also found in 1953 Supplement Appendix to Journal of the Senate.

427. See Davisson and Schmelzle, Equalization of Property Tax Assessments inCalifornia (1950), Vol. III, No. 3, National Tax Journal, pp. 222-223.

428. Id., pp. 223-224.

429. Id., p. 225.

430. Stats.1913, c. 299, p. 556, amending section 3771 of the Political Code.

431. Stats.1949, c. 243, p. 466, repealing sections 3476 to 3481 of the Revenueand Taxation Code.

432. Stats.1938, Ex.Sess. c. 23, p. 110, adding sections 3857 to 3859.20 to thePolitical Code, now in sections 3591 to 3617 of the Revenue and Taxation Code.

433. Stats.1940, First Ex.Sess., c. 47.

434. See Gartner v. Roth (1945) 157 P.2d 361, 363, 26 C.2d 184, 188.

435. Stats.1943, c. 932, p. 2804; Stats. 1945, c. 700, p, 1384.

436. Stats.1947, C. 606, P. 1615.

437. Stats.1941, c. 293, p. 1436, adding sections 3618 to 3637 to the Revenue andTaxation Code.

438. Stats.1943, c. 897, p. 2743, adding sections 3950 to 3972 to the Revenue andTaxation Code.

439. See, for example, Stats.1933, c. 100, p. 555, and Stats.1933, c. 591, p. 1520.

440. Stats.1931, c. 433, p. 986, adding section 3817a to the Political Code, nowcodifled in sections 4216 to 4226 of the Revenue and Taxation Code.

441. Stats.1933, c. 1018, p. 2594, adding section 3817c to the Political Code.

442. Stats.1934, Ex.Sess., c. 6, adding section 38171 to the Political Code.

Page 87 of 99

443. Stats.1955, c. 381, repealing the provisions of sections 3817c and 3817i ofthe Political Code which were in 1939, codified in sections 4256 to 4306 of theRevenue and Taxation Code.

444. R. & T.C., Div. 2, Part 1, §§ 6001-7176.

445. R. & T.C. § 6051.

446. Ibid., § 6201.

447. Ibid., § 6007.

448. Ibid., § 6019.

449. Ibid., § 6051.

450. Ibid., § 6201.

451. Ibid., §§ 6351-6368.

452. Ibid., 6381-6387.

453. Ibid., 6401 and 6402.

454. Western Lithograph Co. v. State Board of Equalization (1938) 78 P.2d 731,734-735, 11 C.2d 156, 162, 117 A.L.R. 838.

455. R. & T.C. § 6052.

456. Ibid., § 6202.

457. Ibid., § 6203.

458. Ibid., § 6204.

459. Ibid., § 6451-6452.

460. Ibid., § 7051.

461. Ibid., §§ 7101-7102.

462. Stats.1933, c. 1020, p. 2599.

Page 88 of 99

463. Stats.1935, c. 361, p. 1297.

464. Stats.1941, c. 36, p. 532.

465. Stockwell, pp. 201-203; Report of the Senate Interim Committee on Stateand Local Taxation, Part Three, "State and Local Taxes in California: AComparative Analysis" (1951), p. 35

466. Chicago Bridge & Iron Co. v. Johnson (1941) 119 P.2d 945, 947, 19 C.2d162, 165.

467. Stockwell, p. 215. 468. Section 3.

469. 1935 Journal of the Senate, p. 2026.

470. Stats.1935, c. 355, p. 1252.

471. Id.

472. Ibid., 1935, c. 357, p. 1256.

473. Stats.1943, c. 357, p. 1581, and c. 1004, p. 2918.

474. Stats.1948, c. 12, p. 15.

475. Stats.1947, c. 780, p. 1865.

476. Stats.1955, c. 1311, operative April 1, 1956, adding Part 1.5, consisting ofsections 7200-7207, to Division of the Revenue and Taxation Code.

477. See Report of the Senate Interim Committee on State and Local Taxation,Part Two, "'State and Local Sales and Use Taxes in California" (1953), p. 32,found in Vol. 3 of 1953 Appendix to Journal of the Senate; and Report of theAssembly Interim Committee on Revenue and Taxation, '"Report ofSubcommittee Studying Property Tax Exemptions, Personal Property TaxAdministration and Local Sales Taxes" (1955), pp. 7-10.

478. R. & T.C., Div. 2, Part 2, §§ 7301-8403.

479. R. & T.C. § 7351.

480. Ibid., § 7304.

Page 89 of 99

481. Ibid., § 7305.

482. Ibid., § 7351, as amended by Stats.1955, c. 4.

483. Ibid., § 7401.

484. Ibid., § 8101.

485. Ibid., § 7651.

486. Ibid., § 8251.

487. Ibid., §§ 7851-7935, 8251.

488. Ibid., § 8351.

489. Ibid., §§ 8352-8353. The Highway Users Tax Fund is provided for in section2100 of the Streets and Highways Code, having been created in 1947 as part ofthe Collier-Burns Highway Act of 1947 (Stats.1947, First Ex.Sess., c. 11). Thefund consists of the revenue derived from various highway users taxes, and isappropriated and allocated for public street and highway purposes.

490. Ibid., § 8352.

491. Stats.1923, c. 267, p. 571.

492. Stockwell, pp. 92-93.

493. Section 3.

494. Id.

495. Ibid., § 4.

496. Ibid., §13.

497. Stats.1927, c. 795, p. 1565.

498. Stats.1933, c. 631, p. 1631.

499. Stats.1931, c. 85, p. 105.

500. Stats.1937, c. 776, p. 2217.

Page 90 of 99

501. See note 489, supra.

502. Stats.1953, c. 1200, p. 2715.

503. Stats.1955, C. 4.

504. Stats.1941, c. 37, p. 558, effective July 1, 1943.

505. R. & T.C., Div. 2, Part 3, §§ 8601-9354.

506. R. & T.C. § 8651.

507. Ibid., § 8604

508. Ibid., § 8607

509. Ibid., § 8651.

510. Ibid., §§ 8652-8653.

511. Ibid., § 8751-8753.

512. Ibid., § 9251.

513. Ibid., § 9301.

514. Ibid., § 9302. See, also, note 489, supra.

515. Stats.1937, c. 352, p. 763. The law was evidently enacted because of theIncreasing use of diesel engines in motor vehicles in the middle 1930's (seeReport of the Senate Interim Committee on State and Local Taxation, Part Three,"State and Local Taxes in California: A Comparative Analysis" (1951), p. 403).

516. See note 489, supra.

517. Stats.1953, c. 1200, p. 2715.

518. Stats.1955, c. 4.

519. Stats.1941, c. 38, p. 578, effective July 1, 1943.

520. R. & T.C., Div. 2, Part 4, §§ 9601-10501.

Page 91 of 99

521. R. &T.C.§9651.

522. Ibid., §§ 9603, 9653.

523. In re Bush (1936) 56 P.2d 511, 6 C.2d 43.

524. R. & T.C. § 9603.

525. Ibid., § 9654.

526. Ibid., §§ 9851-9852.

527. Ibid., § 10401.

528. Ibid., §§ 10050-10126, 10401.

529. Ibid., §§ 9726-9780.

530. Ibid., §§ 10451-10456.

531. The codification occurred In 1941 when the 1933 law was placed in Part 4 ofDivision 2 of the Revenue and Taxation Code by Stats.1041, c. 39, p. 590.

532. See Stats.1937, c. 679, p. 1931.

533. See Stockwell, pp. 105-106.

534. R. & T. C., Div. 2, Part 5, §§ 10701-1005.5.

535. R. & T.C. § 10751.

536. Ibid., §§ 10752-10753.2.

537. Ibid., § 10758.

538. Ibid., §§ 10781-10786.

539. Ibid., § 10854.

540. Ibid., § 10951.

541. Ibid., §§ 11001-11005; City of Los Angeles v. Riley (1936) 59 P.2d 137, 6

Page 92 of 99

C.2d 621; County of Los Angeles v. Riley (1936) 59 P.2d 139, 6 C.2d 625, 106A.L.R. 903.

542. R. & T.C. §§ 11003.1-11003.4.

543. Stats.1941, c. 40, p. 605, in effect July 1, 1943.

544. Stockwell, pp. 109-110.

545. 1929 Report, p. xxiv.

546. 1935 Journal of the Senate, p. 2027.

547. Stats.1948, c. 26, p. 129.

548. Ingels v. Riley (1936) 53 P.2d 939, 5 C.2d 154, 103 A.L.R. 1.

549. Veh.C. § 370, as amended by Stats. 1955, c. 4.

550. Veh.C. § 372, as amended by Stats. 1955, c. 4.

551. Veh.C. § 372.1, as amended by Stats. 1955, c. 4.

552. Veh.C. § 381" as amended by Stats. 1955, c. 4.

553. Veh.C. §§ 374-374.4.

554. Ibid., § 378.

555. Ibid., § 781.

556. Stats.1935, c. 27, p. 93.

557. Stats.1923, c. 266, p. 517.

558. Stats.1923, c. 267, p. 571.

559. Stats.1923, c. 341, p. 706.

560. Stats.1915, c. 188, p. 397.

561. Stats.1913, c. 326, p. 639.

Page 93 of 99

562. Stats.1905, c. 612, p. 817.

563. R. & T.C., Div. 2, Part 6, §§ 11201-11752.

564. R. & T.C. §§ 11251, 11401.

565. Ibid., § 11401, 11403.

566. Ibid., § 11252.

567. Ibid., § 11405.

568. Ibid., § 11701.

569. Stats.1937, c. 283, p. 621.

570. Stats.1941, c. 41, p. 610, in effect July 1, 1943.571. R. & T.C., Div. 2, Part 7, §§ 12001-13113,

572. Const. art. 13, § 14 4/5; R. & T.C. § 12101.

573. Const. art. 13, § 14.80; R. & T.C. § 12102.

574. R. & T.C. §§ 12126-12154.

575. Ibid., § 12402.

576. Ibid., § 12431.

577. Ibid., §§ 12622, 12624.

578. Ibid., § 12623.

579. Ibid., § 12624.

580. Const. art. 13, § 14.80;; R. & T.C. 12251.

581. Const. art. 13, § 14.80 ; 11. & T.C. 12252.

582. Const. art. 13, § 14.80;; R. & T.C. § 12253.

583. Const. art. 13, § 14.80; R. & T.C. 12255.

Page 94 of 99

584. Const. art. 13, § 14.80; R. & T.C. § 12263.

585. Const. art. 13, § 14.80; R. & T.C. § 12258.

586. Section 622 of the Political Code.

587. Stats.1005, c. 133, p. 136. As has been noted, the tax was first imposed in1903, but not on life insurance companies. It was extended in 1905 to cover thosecompanies as well.

588. Const. art 13, 1 14, as adopted In 1910; Stats.1911, c. 335, p. 530, later inpart codified In section 3664b of the Political Code by Stats.1917, c. 214, p. 336.

589. Stats.1921, c. 22, p. 20.

590. See page 14 of Part 1 of the ballot pamphlet issued in connection with theGeneral Election of November 8, 1938.

591. See pages 12 and 13 of Part I of the ballot pamphlet issued In connectionwith the General Election of November 3, 1942.

592. Stats.1941, c. 113, D. 1139, in effect July. 1, 1943.

593. P. A T.C., Div. 2, Part 8, §§ 13301-14901.

594. Estate of Bloom (1931) 2 P.2d 753, 213 c. 575.

595. R. & T.C. §§ 13401-13407.

596. Ibid., §§ 13441-13442.

597. Ibid., §§ 13641-13647.

598. Ibid., §§ 13671-13671.5,13721-13724.

599. Ibid., §§ 13691-13698.

600. Ibid., §§ 13551-13556.

601. Ibid., §§ 13801-13873.

602. Ibid., § 13951.

Page 95 of 99

603. Ibid., §§ 13981-13990.

604. Ibid., §§ 14051-14059.

605. Ibid., § 14101.

606. Ibid., §§ 14102-14103.

607. Ibid., § 14104.

608. Ibid., §§ 14731-14740.

609. Ibid., §§ 14771-14774.

610. Stats.1853, C. 167, p. 233, Art. 5.

611. Stats.1854, c. 74, p. 103.

612. Stats.1893, C. 168, P. 193.

613. Stats.1905, c. 314, p. 341. One authority states in effect that this law wasbased on the Wisconsin law of 1903 (Stockwell, p. 49); another Indicates that Itwas modeled after a New York law (McDougald v. Lilienthal (1917) 164 P. 387,174 C, 698, L. R.A. 1917F, 267).

614.Stats.1911, c. 395, P. 713.

615. Stats.1913, c. 595, p. 1066.

616. Stats.1913, c. 594, p. 1065, adding section 445 to the Political Code.

617. Stats.1917, c. 589, p. 880; Stats. 1921, c. 821, p. 1500; Stats.1935, c. 358, p.1266.

618. Stats.1943, c. ON, p. 2297, In effect July 1, 1945.

619. R. & T.C., Div. 2, Part 9, §§ 15101-16652.

620. R. & T.C. §§ 15201-15208.

621. Ibid., §§ 15401-15451.

622. Ibid., §§ 15301-15306.

Page 96 of 99

623. Ibid., § 15551.

624. Ibid., § 15651.

625. Ibid., § 1590L.

626. Ibid., § 16501.

627. Ibid., §§ 16651-16652.

628. Stats.1943, c. 658, p. 2297, In effect July 1, 1945.

629. Stats.1939, c. 652, p. 2079.

630. R. & T.C., Div. 2, Part 10, §§ 17001-19500.

631. R. & T.C. § 17041.632. Ibid., §§ 17131-17265.

633. Ibid., § 17181.

634. Ibid., §§ 17731-17837.

635. Ibid., §§ 17851-17932.

636. Ibid., §§ 18432, 18551.

637. Ibid., § 19251.

638. Stats.1935, c. 329, p. 1090.

639. Stockwell, p. 235.

640.Article 13, § 11.

641. Report of the State Board of Equalization for 1913-1914, p. 50 et seq.

642. 1917 Report, pp. 110-115.

643. 1929 Report, pp. 98-100.

644. Assembly Bill No. 2429.

Page 97 of 99

645. Journal of the Senate (1935), p.2026.

646. See Stats.1949, c. 1188, p. 2108.

647. Stats.1943, c. 659, p. 2354, in effect July 1, 1945.

648. Stats.1943, c. 354, p. 1568, known as the "'Ward Act."

649. Ibid.

650. Stats.1948, c. 11, p. 15.

651. Stats.1955, c. 939.

652. R. & T.C., Div. 2, Part 10, §§ 23001-26481.

653. R. & T.C. § 23181.654. Ibid, §§ 23151, 23183.

655. Ibid., § 23501.

656. Ibid., §§ 23151, 23153.

657. Ibid., §§ 23186-23186a.

658. Ibid., § 23501.

659. Calif.Const. art. 13, § 16; R. & T.C. § 23182.

660. R. & T.C, 123184.

661. Ibid., § 23701 et seq.

662. Ibid., § 23731 et seq.

663. Ibid., §§ 25401, 25555.

664. Ibid., § 26422.

665. Ibid., § 2648L

666. Stats.1929, c. 13, p. 19.

Page 98 of 99

667. See Stockwell, pp. 129-13L

668. 1929 Report, pp. 276, 301.

669. Report of the California Tax Re search Bureau (1933), p. 78 et seq.

670. Stats-1933, c. 211, p. 708.

671. Stats.1937, c. 765" p. 2184.

672. Stats.1939, c. 1049, p. 2902.

673. Stats.1948, c. 12, p. 15, was the last.

674. Stats.1949, c. 557, p. 961.

675. Stats.1955, c. 938.676. R. & T.C., Div. 2, Part 14" §§ 32001-50018.

677. R. & T.C. §§ 32151, 32201.

678. Ibid., § 32251.

679. Calif.COnst. art. 20, § 22; R. & T.C. 1 32451.

680. R. & T.C. §§ 32501-32502.

681. Stats.1953, c. 152, p. 954.

682. Stats.1955, c. 1842.

683. Unemployment Insurance Code, §§ 976-994,2901-2903.

684. Internal Revenue Code of 1954, § 3301 et seq.

685. Ibid., § 3302.

686. Unemployment Insurance Code, § 101.

687. Ibid., § 978.

688. Ibid., §§ 978-983.

Page 99 of 99

689. Ibid., §§ 1521-1537.

690. Ibid., §§ 984-985, 2901-2903.

691. Ibid., § 301.

692. Stats.1935, c. 352, p. 1226.

693. Stats.1946, First Ex.Sess., c. 81.

694. Stats.1953, c. 308, p. 1457.

695. Bus. & Prof.C. § 19,185.

696. Ibid., § 19485.1.

697. Ibid, § 19620 et seq.698. Ibid., §§ 19620.1, 19627.

699. Ibid., § 19400 et seq

700. Stats.1933, c. 769, p. 2046 (ratified by State Const. Art. 4, § 25a).

701. Stats.1941, c. 47, p. 659.

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