Professional Documents
Culture Documents
By
J. GOULD
Analysis
[Reprinted with Permission (59 West's Annotated California Codes 1-77 (1956))]
1. Present Composition
A. 1849-1879
B. 1879-1910
C. 1910-1933
D. 1933-Present
3. Major Taxes
(1) Outline
(c) Levy
(d) Collection
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i. Secured Property Taxes
(e) Miscellaneous
(2) History
(3) History
(a) Outline
Page 2 of 99
(b) History
(1) Outline
(2) History
(1) Outline
(2) History
1. PRESENT COMPOSITION
The system has been shaped partly by numerous constitutional requirements and
limitations, both federal1 and state.2
In the Revenue and Taxation Code are most of the major components of the
system. Enacted in 1939,3 it now consists primarily of three divisions. The first
embraces provisions of the general property tax, currently the principal source of
revenue for California's counties and cities; the second contains, for the most part,
the texts of laws imposing privilege taxes from which the State Government
today derives the greatest percentage of its revenue; and the third, titled Division
30, lists and cites various repealed tax laws which either have been codified in the
Revenue and Taxation Code or been considered obsolete. Immediately preceding
Division 1, grouped under the heading "General Provisions," are also sections of
general 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 since
been added piecemeal. Part 1-the Sales and Use Tax Law-was added in 1941;4
Part 1.5-the BradleyBurns Uniform Local Sales and Use Tax Law-in 1955;5 Part
2-the Motor Vehicle Fuel License Tax Law-in 1941;6 Part 3-the Use Fuel Tax
Law-in 1941;7 Part 4-the Motor Vehicle Transportation License Tax Law-in
1941;8 Part 5-the Vehicle License Fee Law-in 1941;9 Part 6-the Private Car Tax
Law-in 1941;10 Part 7- the Insurance Company Tax Law-in 1941;11 Part 8-the
Inheritance Tax Law-in 1943;12 Part 9-the Gift Tax Law-in 1943;13 Part 10-the
Personal Income Tax Law-in 1943;14 Part 11-the Bank and Corporation Tax
Law-in 1949;15 Part 12-containing property tax provisions most of which are
today apparently either obsolete or inoperative16--in 1951;17 and Part 14-the
Alcoholic Beverage Tax Law-in 1955.18
Other important sources of revenue for state purposes are levies made by the
Unemployment Insurance Code19 for unemployment and disability compensation
insurance, horse race licensing and parimutuel fees imposed by the Business and
Professions Code,20 and vehicle registration and license fees imposed by the
Vehicle Code.21
Cities are also authorized by the Government Code32 to impose property taxes.
Pursuant to the Business and Professions Code,33 counties and cities may license
businesses for purposes of regulation, in the exercise of their police powers.
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Revenue and Taxation Code to impose sales and use taxes.34 Cities are now
authorized by the Government Code35 to impose such taxes.
Under the Business and Professions Code36 counties may license itinerant
peddlers for revenue.
In the case of a city which has been chartered in accordance with the State
Constitution37 taxation is ordinarily a matter of strictly local concern,38 and to
the extent that it is, state laws on the subject do not apply, unless the city provides
otherwise.
Also included in California's taxing system are numerous types of special district
taxes and assessments imposed or levied on property on a special benefit or ad
valorem basis to provide facilities or services for persons or property within the
districts. The provisions authorizing them are found scattered throughout the
law.40
The administration of the state's taxes is not centralized in any one agency or
official, but is vested in several. Principal among these are the State Board of
Equalization, which alone administers the Sales and Use Tax Law, the Use Fuel
Tax Law, the Private Car Tax Law, the Alcoholic Beverage Control Law, and the
Itinerant Merchants Law, which shares with the State Controller the
administration of the Motor Vehicle Fuel License Tax Law and the Motor Vehicle
Transportation License Tax Law, and which shares with the Department of
Insurance the administration of the Insurance Company Tax Law; the State
Controller, who, in addition to sharing with the State Board of Equalization the
administration of the laws mentioned, is charged with the general administration
of the Inheritance Tax Law and the Gift Tax Law; the Franchise Tax Board,
which administers the Personal Income Tax Law and the Bank and Corporation
Tax Law; the Department of Motor Vehicles, which administers the Vehicle
License Fee Law and the provisions of the Vehicle Code imposing license and
registration fees; the Department of Insurance, which, as stated, shares the
administration of the Insurance Company Tax Law with the State Board of
Equalization; the Department of Employment, which administers the
unemployment and disability compensation insurance provisions of the
Unemployment Insurance Code; and the California Horse Racing Board, which
administers the horse race licensing and pari-mutuel fee provisions of the
Business and Professions Code.
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In addition to the State, California's taxing jurisdictions presently include 58
counties, 316 cities,41 1,898 school districts,42 and at least 2,590 other types of
special taxing and assessing districts.43
A.1849 - 1879
Until 1910 the principal source of revenue for both state and local governmental
purposes in California was the general property tax.
The basis of the tax was originally contained in Section 13 of Article 11 of the
1849 Constitution,44 which read:
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sales of property at public auction52 were additionally imposed at the 1850
session. Counties were also authorized to levy license taxes on merchants,
peddlers, insurance companies, and other occupations and businesses.53
A new general revenue law was enacted in 1851,55 this imposing or providing for
property, poll, and business and occupation license taxes. Any provisions to the
contrary in the 1850 general revenue law were repealed.56 Also in 1851, the 1850
foreign miners' license tax was repealed57 and a gaming license tax imposed.58
The 1851 general revenue law was in 1852 superseded by still another general
revenue 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 the
Legislature also imposed license taxes on foreign miners,60 passenger
commutation,61 and various types of businesses and occupations.62
In 1853 yet another general revenue law was enacted.63 This repealed the 1852
general revenue law, but continued the property and poll taxes. It also imposed
business and occupational license taxes and an inheritance tax.
A new general revenue law was enacted in 1854.64 It repealed the 1853 law, but
imposed or provided for substantially the same taxes, -with the exception of the
inheritance tax, for which it made no provision.
In 1857 the Legislature enacted a general revenue law65 which repealed most of
the property tax provisions of the 1854 law but reenacted the substance of many
of them. A stamp tax on insurance policies and various kinds of commercial
instruments was also imposed in 1857.66
In 1861 another major revenue law was enacted.67 This repealed and superseded
the 1854 and 1857 general laws, but imposed or provided for substantially the
same 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 insurance
companies 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 authorized
the levy of special taxes for specific purposes by particular counties.70
Prior to 1870, county officials assessed and equalized property for both state and
county property tax purposes.71 There was no central control or supervision of
their efforts in these respects, however, and, as a consequence, inequalities in
assessment and equalization practices developed which frequently caused
variances among the counties in valuations of the same types of property.72 Local
assessment and equalization also enabled local officials to maintain the good will
of their taxpayers by keeping assessments low so that the state tax would not be
too burdensome.73 The result was such that it was believed by many that local
assessors were generally disregarding the requirement in Section 13 of Article 11
of the State Constitution that taxation should "be equal and uniform, throughout
the State."74
The board consisted of the State Controller and two other members appointed by
the Governor. It was required to examine local assessments to determine whether
they were "equal and uniform, according to location, soil and improvements,
productions and manufactures."77 Upon completing the examination it could, at
any time prior to final action by the local boards of equalization on their
assessment rolls, equalize local assessments "by adding to or deducting from the
valuation of taxable property in any county or counties, such percentage as will
produce, relatively, equal and uniform valuations between the several counties of
the State. * * *"78 The percentage added or subtracted in any case was to be
entered on the board's records, and a certified copy of the entry was to be sent to
the local board affected before that board -finally acted on its roll.79 A change in
its roll was then to be made accordingly by the local board.80 The state board was
also to frame rules for the guidance of the local boards in making the additions or
subtractions.81
In 1872 a Political Code was adopted, and in it were incorporated the state's
revenue laws.82 Commenting on the effect of the code in this connection,
William C. Fankhauser stated in his "A Financial History of California" (1913), at
p. 232:
"The adoption of the political code repealed all the old revenue
laws. The new law was in part based on the laws repealed, in part
on the decisions of the supreme court of California, in part on the
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previous recommendations and suggestions of the state board of
equalization, state controllers Watt and Green, and in part on
public opinion."83
The Political Code continued the existence of the State Board of Equalization,84
with, 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 the
code, which authorized the board to raise or lower assessments, was
unconstitutional on the ground that it purported to give the board a function
which had been vested in local assessors by the provision in Section 13 of Article
11 of the 1849 Constitution for the election of assessors by voters in the counties
or districts where assessable property was located. In the same case, the court
construed Section 3696, which authorized the board to calculate the state property
tax rate, after allowing for collection costs and delinquencies, as making an
unlawful delegation of legislative power.
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 secured
by mortgages, were not "property" for purposes of taxation.
B. 1879 - 1910
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Government had sectionized, and, in accordance with law, the assessment in
small tracts of land not sectionized by the United States;91 it provided for the
taxation of mortgages and deeds of trust;92 it prohibited and made null and void
any contract by which a debtor obligated himself to pay any tax on borrowed
money or on any mortgage or deed of trust;93 it prohibited the surrender or
suspension by the State of the power to tax;94 it authorized the Legislature to
provide by law for the payment of taxes on real property in installments;95 it
directed the Legislature to require taxpayers to furnish the county assessor annual
statements showing all property owned by them or in their possession at 12
o'clock noon on the first Monday of March;96 it created a new State Board of
Equalization and new county boards of equalization;97 it required that all
property, other than the franchises, roadways, roadbeds, rails, and rolling stock of
railroads operated in more than one county, be assessed locally where situated,
and that such excepted railroad property be assessed by the State Board of
Equalization and the value determined by it be apportioned locally in proportion
to the miles of railway in each locality;98 it authorized the levy of income taxes
on persons and businesses;99 it directed the Legislature to provide for the levy of
a poll tax of not less than $2 on male inhabitants over 21 and under 60, for state
school fund purposes;100 it prohibited any local or special legislation for the
assessment or collection of taxes,101 the extension of time for the collection of
taxes,102 and the exemption of property from taxation;103 it prohibited the
release of any county, city, or other local subdivision, or any inhabitant of any
such subdivision, from its or his proportional share of taxes levied for state
purposes;104 and it prohibited the Legislature from imposing taxes for local
purposes, at the same time authorizing it to enact general laws vesting in local
authorities the power to assess and collect taxes for such purposes.105 It was
believed by many that these new revenue provisions would, in general, "secure a
more equitable distribution of the burden of taxation. * * * "106
The new State Board of Equalization was to consist of the State Controller, acting
ex officio, and one member elected f or a four-y ear term in and representing each
of the several congressional districts in California, of which there were four in
1879. It was expressly required to equalize the valuation "of the taxable property
of the several counties in the State for the purposes of taxation." Each county
board of supervisors was to constitute the county's board of equalization, and as
such equalize the value of property in the county for tax purposes. Further, it was
generally provided (Article 13, § 9):
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assessment roll, or any assessment contained therein, so as to
equalize the assessment of the property contained in said
assessment roll, and make the assessment conform to the true
value in money of the property contained in said roll." Insofar as
the State Board of Equalization was concerned, this language had
the effect of precluding the possibility of a repetition of a court
holding like that in Houghton v. Austin, supra.
From 1880 to 1883, taxes on railroad property assessed by the State Board of
Equalization were collected locally, along with all other property taxes, both state
and local. This proved unsatisfactory, however, because of resistance by the
railroads to the payment of their taxes, and the consequent acceptance by many
counties in need of revenue for amounts less than the sums legally payable.108
As a result, the law was amended in 1883 to require the State Controller to collect
all taxes, both state and local, on railroad property assessed by the board.109
Between 1879 and 1910, the 1879 Constitution was amended from time to time to
provide 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 of
specified fruit and nut-bearing trees;113 exemptions in 1900 of the property of
Stanford University,114 the California School of Fine Arts,115 and of
churches;116 an exemption in 1902 of state, county, and district bonds;117
exemptions in 1904 of the California Academy of Sciences118 and the personal
property of householders up to $100;119 and an exemption in 1906 of Cogswell
Polytechnical College.120
In 1905 the 1893 inheritance tax law was repealed and superseded by another law
which imposed a direct as well as a collateral inheritance tax.125
In addition, the year 1905 marked the commencement of the payment of fees for
the registration of motor vehicles.127 These fees, the general property tax, the
inheritance tax, the corporation license tax, the poll tax, and the foreign insurance
company tax comprised the principal sources of the State Government's taxing
revenue in 1905, the general property tax alone accounting for 80 percent of the
State's total revenue.128
In 1906, Section 5 of Article 13 of the State Constitution was repealed. This was
the section which prohibited and made null and void any contract by which a
debtor obligated himself to pay a tax on money borrowed or on any mortgage or
deed 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 business
and financial structure, and under the circumstances the existing tax system, in
which 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 with
them a growth in business and industry, inequities and inequalities of such
character developed as to suggest a need for study, investigation, and change.130
This culminated in the creation by the Legislature in 1905 of a Commission on
Revenue and Taxation, consisting of the Governor, as chairman, an expert in
taxation to be appointed by him, and two members from each of the two houses
of the Legislature, whose function was to investigate the system of revenue and
taxation then in force and recommend a plan for its revision and reform.131 The
commission made an exhaustive study and examination of such system, and in
December of 1906 submitted its final report to the Legislature.132
The commission found, in general, that the system had become antiquated; that it
was full of inequalities, placing an undue burden on farmers, as contrasted with
persons engaged in industry, farmers paying taxes equivalent to 10 percent of
their income, whereas those in industry paid taxes amounting to only 2 percent of
theirs; that the general property tax had become in fact a real estate tax, only 15
to 18 percent of all property taxes being levied on personal property; that moneys
and credits escaped taxation almost entirely; that national banks paid no taxes at
all, except on their real estate, of which they owned little, with a resulting
discrimination against the state's commercial banks; that "equalization" did not
and, 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 distributed
inequitably among the State's local divisions; that it was impossible to adjust the
tax burden equitably among the different classes of corporations; and that the
current 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 that
the sources of state and local revenue be separated; that the general property tax
on common property134 be abandoned as a source of revenue for state
governmental purposes; that the counties and cities have a generally exclusive
right 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 to
derive revenue for its purposes from the existing inheritance tax, corporation
license tax, poll tax, insurance company tax (expanded to apply also to domestic
insurance companies), and motor vehicle registration fees, and, in addition, from
new taxes on the operative property of public utilities (measured by their gross
receipts and imposed at varying rates for different classes of corporations), on the
shares of the capital stock of banks, and on the assessed value (as determined by
the 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 and
annoyance of the vain attempt to equalize between the different counties," that it
would thereby "place each tax in the hands of that branch of the government
which is best adapted to administer it;" and that the "different taxing districts
could each have practical 'home rule' in matters relating to taxation."135
At its 1907 Session the State Legislature proposed that the Constitution be
amended along the lines suggested by the commission.138 This proposal was
submitted to a vote of the people in 1908, but failed to carry. These reasons have
been given for such failure:139 no provision was made for a possible deficit in
state revenue without again amending the Constitution; public utility corporations
were not made clearly liable for their share of the past indebtedness of counties
and cities; if a state tax on property were found necessary, the property of
corporations taxed for state purposes would have been exempt therefrom; and no
provision was made for varying the rates imposed on corporations.
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State should reimburse each county sustaining loss as a result of the withdrawal
of railroad property from local taxation, for the net loss sustained; and a provision
that the Legislature should provide for reimbursing districts from county general
funds for loss occasioned the districts by the withdrawal of property from local
taxation.
Before the 1909 proposal was submitted to a vote of the people, Governor Gillett
called a special session of the Legislature for October 3, 1910, to modify the
proposal to the extent of making certain the period for which the gross receipts of
public utilities and the gross premiums of insurance companies were to be
computed. The Legislature convened in accordance with such call, rescinded and
annulled the 1909 proposal,141 and adopted a new proposal incorporating the
modifications requested.142 This proposal was submitted to and acted on
favorably 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 of
Section 1 of Article 13 and the repeal of Section 4 thereof, to eliminate the
taxation of mortgages and deeds of trust on land given as security for the payment
of 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, providing
for the Panama-Pacific International Exposition, and the levy of a property tax to
finance it.
The year 1911 also saw the repeal of the 1905 inheritance tax law and the
enactment of a new one to replace it.144
In 1913 the 1905 corporation license tax was repealed .1145 The 1911
inheritance tax law was repealed and replaced by another in 1913.146 This new
law was in the same year supplemented by legislation which created the
Inheritance Tax Department.147 In addition, the 1905 motor vehicle registration
fee law was superseded in 1913 by the enactment of California's first true motor
vehicle law.148
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 the
first oil and gas charges and assessments were imposed.155
The commission concluded in the report that the 1910 revision of the State's tax
system was an improvement over the old system, but that it had not resulted in
equality in the tax burden either as between utilities and individuals or as between
utilities, that it had not tended to correct the evil of county undervaluation, that it
had not lightened the burden on real property, that the provision for a two-thirds
vote of each branch of the Legislature to increase the rates on the gross receipts of
utilities was prohibitive, and that the tax system in respect to the gross receipts
tax had become complicated by the necessity of first having to determine rates
according to the value of property before determining rates upon gross
receipts.159
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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 an
amount more than 5 percent in excess of the amount produced by the preceding
year's levy. It never became operative, however, since it was defeated on
referendum at the General Election of November 5, 1918.
The privilege taxes on the harvesting of kelp and on fish canning were first
imposed in 1917.163 In the same year the Legislature revised and codified as part
of the Political Code the Comprehensive Tax Act of 1911,164 repealed the 1913
inheritance tax law, and enacted another inheritance tax law.165
1921 witnessed the repeal of the 1917 inheritance tax law and the adoption of a
new law of the same general type.168
Three measures relating to motor vehicles were enacted in 1923: new motor
vehicle act, known as the California Vehicle Act;169 motor vehicle fuel tax
act;170 and a motor vehicle transportation license tax act.171 In the same year an
agricultural mineral products tax was imposed.172
In 1924 the Constitution was amended to provide for the levy of an annual
educational poll tax on all male inhabitants between the ages of 21 and 50, with
certain exceptions.173 This was evidently the result of a decision of the
California Supreme Court in 1921,174 to the effect that the 1920 poll tax
amendment was invalid in respect to Japanese aliens. An initiative act adopted at
the General Election in 1924 imposed a tax on the gross receipts from fees
charged for admission to boxing and wrestling matches. Also in 1924, the
Constitution was amended to provide that the tax rate on unsecured personal
property for any current year should be based on the real property tax rate for the
preceding tax year.175
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The 1923 motor vehicle transportation license tax act was in 1925 repealed and
superseded by another substantially similar law.178
The Legislature in 1925185 enacted a bill to impose license and other fees on
persons manufacturing or selling oleomargarine, but the bill was disapproved on
referendum at the General Election of November 2, 1926. A constitutional
exemption of cemetery property was, however, approved at that election.186
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The constitutional provision exempting fruit and nut-bearing trees and grape
vines was in 1926 amplified to cover specified immature forest trees.191
In March of 1927 the California Supreme Court held that in respect to foreign
corporations, the 1915 corporation license tax was violative of the Federal
Commerce, Due Process, and Equal Protection Clauses, in that it was predicated
solely upon the authorized capital stock of the corporation, and was in no wise
related to the amount of property owned, capital employed, or business done
within California.192 Shortly thereafter, in the same year, the Legislature
repealed most of the provisions of the 1915 corporation license tax law,193
apparently on the recommendation of the State Board of Equalization, which felt
that it would be inequitable to subject only domestic corporations to the tax.194
Section 16 provided that all banks should pay an annual tax "according to or
measured by their net income," at the rate of 4 percent of such income, to be in
lieu 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 its
houses, provide by law for any other form of taxation respecting national banks
permitted by Congress; that financial and general corporations subject to the tax
on corporate franchises should pay in lieu of that tax an annual tax for the
privilege of exercising their corporatefranchises in California, according to or
measured by their net income, at the rate of 4 percent of such income, subject to
an offset, as provided by the Legislature, up to 90 percent of the tax, for personal
property taxes paid, and subject also to an annual minimum tax of $25; that the
Legislature, on a two-thirds vote of its members, might provide for any other
method 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 and
general corporation tax rates or the percentage of the property tax offset; and that
taxable intangibles should be taxed at the rate of 3/10 of 1 percent of their actual
value, subject to change by the Legislature on a twothirds vote, but not to a rate in
excess of 4/10 of 1 percent. The section also authorized the Legislature to enact
implementing legislation, and provided that any such legislation enacted at the
1929 Regular Session should be effective immediately on its passage.
The California Tax Commission submitted its final report to the Governor on
February 1, 1929.203 It stated therein, in part: 204
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a comprehensive business tax, measured by net income carried on
within the State's borders, to serve chiefly as a source of state
revenue; and the third, a personal contribution from each person
residing in the State, apportioned according to ability to pay, the
yield to be divided between the State and its subdivisions.
Continuing,206 it recommended the following: that the operative real estate of all
public utilities be valued by the State, but that it be taxed locally in the same
manner as common property; that public utilities be subject to a franchise tax
measured by their net income in the same manner and at the same rate as the tax
on banks and other corporations; that the State levy a direct tax on property in the
event of deficiencies in other revenues; that the property tax offset for franchise
tax purposes be abolished, and that the franchise tax rate be increased, should
experience indicate the desirability of an increase; that the taxes on insurance
companies be modified by reducing the rate from 2.6 percent to 2.5 percent, by
eliminating the real estate tax offset, and by provisions to prevent the evasion of
taxation through reinsurance; that the people be given the opportunity to express
themselves in regard to the substitution of a personal income tax for the tax on
intangible personalty and any other classes of personal property; that local
property taxes on motor vehicles be abolished, and the state's motor vehicle
license 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 the
burden falling on widows; and that the State Board of Equalization be abolished
and replaced by a permanent professional tax commission of three members
appointed by the Governor.
Following the submission of the California Tax Commission's final report, the
Legislature at its 1929 Session provided for the appointment of a Joint Legislative
Committee on Taxation to study and make recommendations regarding the
reported.207 The committee was appointed,208 proceeded with the study, and on
January 23, 1931, submitted a report of its own.209
The committee recommended210 in its report that the existing system of taxation
be retained, the Legislature, however, to be empowered to make such additional
classifications of public utilities as might be necessary to achieve a more
equitable distribution of the tax burden, and the State Board of Equalization to
extend its studies respecting the tax burdens borne by common property and the
public utilities; that a research department be created within the State Board of
Equalization, and the board's name be changed to State Tax and Equalization
Board; that the State Constitution be amended to permit the State to assume a
larger share of the cost of education; that each board of supervisors be
empowered 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 excessive
tax burden on common property; that the Legislature take appropriate action to
secure an amendment of the federal law to permit greater latitude in the taxation
of national banks; and that the Bank and Corporation Franchise Tax Act be
amended to incorporate the oil and gas well depletion provisions of the Federal
Revenue Act of 1928, together with other amendments for the improvement of
the act.
At the General Election in 1932 the Constitution was amended to authorize the
Legislature to amend or revise the 1924 initiative act on boxing and wrestling,216
and to permit it to provide for the cessation of tax liens.217
D. 1933 - PRESENT
Many of these recommendations, along with some that had been made by the
1927 California Tax Commission and the 1929 Joint Legislative Committee on
Taxation, were incorporated in 1933 in legislation and a proposed constitutional
amendment, 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 State
Board 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 further
limiting to 25 percent of all state appropriations any amount that the State might
raise 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; for
the addition of Section 20 to Article 11, limiting local governmental
expenditures, and authorizing the Legislature to limit the amount of county
property taxes; for the amendment of Section 14 of Article 13, providing for the
elimination of the gross receipts taxes on public utilities and the return of public
utility property to the local tax rolls, such property, however, to be assessed
centrally by the State Board of Equalization, subjecting public utility companies
to the same type of franchise taxation as general corporations, authorizing the
Legislature to provide specially for the taxation of intangibles and other personal
property, in respect to exemption, classification, and otherwise, and increasing
the tax rate on insurers; for the amendment of Section 15 of Article 13, giving the
public school system and the State University a superior right to state revenue for
their support, and providing for the raising of revenue by the State and the
apportionment of such revenue locally in the event of a deficiency following
action by the Legislature under Section 20 of Article 11 in limiting the amount of
property tax revenue that might be raised locally; and for the amendment of
Section 16 of Article 13, providing in part for the removal of the 4 percent bank
and corporation tax rate limitation. The proposal also included the repeal of
Section 121/2 of Article 13, relating to intangibles, the substance of some of the
provisions of that section to be incorporated in Section 14, as was to be the
substance of provisions on intangibles in Section 16. In addition, the proposal
included the repeal of Section 18, relating to the taxation of ocean marine
insurers, the substance of that section, too, to be incorporated in Section 14, with
a 5 percent rate limitation.
The proposal was submitted to and approved by the voters at a special election
held on June 27, 1933.
At its 1933 Session the Legislature enacted the Retail Sales Tax Act of 1933,220
apparently as part of the Riley-Stewart Plan, to enable the State to meet the added
obligation imposed upon it by the constitutional amendment to finance the costs
of schools.221
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Taxes on the manufacture, distribution, and sale of alcoholic beverages were
imposed in 1933, subject to Federal authorization of the sale of such
beverages.226 An amendment of Section 22 of Article 20 of the State
Constitution in 1934 gave the State Board of Equalization the exclusive right to
collect excise taxes in respect to intoxicating liquor. In 1935 the Alcoholic
Beverage Control Act superseded the 1933 legislation.227
The year 1935 saw also the enactment of the "Personal Income Tax Act of
1935;"228 the "Inheritance Tax Act of 1935,"229 the latter repealing and
superseding the 1921 inheritance tax law; the "Use Tax Act of 1935;"230 the
unemployment insurance law;231 and the motor vehicle in lieu license fee
law.232 Legislation was additionally enacted in the same year for the taxing of
taxable intangibles other than solvent credits at the rate of 2/10 of 1 percent, and
of solvent credits at the rate of 1/10 of 1 percent, with, however, a provision for
the exemption of all such intangibles other than solvent credits on the passage of
a net income tax law.233 Enacted, too, were oleomargarine and chain store
taxes234 but each was defeated on referendum at the General Election held in
1936.
In 1937 the "Private Car Tax Act of 193711 235 the "Use Fuel Tax Act of
1937,"236 and the "Corporation Income Tax Act of 1937" were enacted.237
At the 1939 Session a gift tax was imposed on the enactment of the "Gift Tax Act
of 1939."238 The same session witnessed the origin of the licensing of itinerant
merchants engaged in transporting goods by motor vehicle.239
At the recently adjourned 1955 Session, the "Bradley-Burns Uniform Local Sales
and Use Tax Law" was enacted.244
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3. MAJOR TAXES
As has been noted, the general property tax was abandoned in 1910 as a source of
revenue for the support of the State Government,246 but has continued since that
date as the chief source of revenue for the support of local government.
(1) OUTLINE
The State Constitution requires that all but exempt property shall be taxed in
proportion to its value.247 Exempt property includes the following: property
exempt under the Constitution or laws of the United States;248 property
belonging to the State, a county, or municipal corporation;249 the property of
veterans;250 the property of householders;251 church property used for purposes
of religious worship;252 cemetery property;253 public school property;254
College property generally;255 the property of free public libraries and
museums;256 other property used for educational purposes;257 orphan asylum
property;258 property used for religious, hospital, or charitable purposes
generally;259 crops, trees, and vines;260 vessels of more than 50 tons;261 and
bonds issued by the State and its subdivisions,262 and all other intangibles with
the exception of solvent credits.263
The general property tax attaches as a lien at noon of the first Monday in March
immediately preceding the fiscal year for which the tax is levied.264 The fiscal
year commences on July 1,265 and the tax is generally levied around September
1.266
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 property
statement, made under oath, showing tile property in the county owned, or in his
possession or control, as of the lien date.267 Property statements must also be
filed by public utilities and others with the State Board of Equalization in respect
to public utility and other property assessable by the board.268
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to the Householder's Exemption, a loyalty declaration must be included.271
Between the first Mondays in March and July, the county assessor is required to
assess 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 on
or before the first Monday in August, the State Board of Equalization must assess
all public utility and other property assessable by it to the owner, likewise as of
noon of the first Monday in March.273 The Constitution provides generally that
all property subject to taxation "shall be assessed for taxation at its full cash
value,"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 of
assessing taxable personal property.276 The courts, however, have sanctioned the
assessment of property at a percentage less than its market value,277 and today
the practice is to assess property at a fraction of that value.
Immediately after the third Monday in August, the State Board of Equalization
must transmit to each county auditor an assessment roll, known as the "board
roll," showing the assessments made by it of state-assessed property in the
county.281 Such property is thereafter subject to local taxation to the same extent
and 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 equalize
the assessment of property shown on the local roll.283 To that end, it may
increase or lower individual assessments, but cannot raise or lower the entire roll.
Following such equalization, the local roll, as corrected by such process, is
delivered by the clerk of the board to the county auditor.285 The latter then totals
up the valuations, prepares duplicate valuation statements, one of which must be
sent 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 unsecured
property 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 of
Equalization meets at Sacramento for the purpose of equalizing the assessments
of county assessed property.287 On the completion of equalization, the board's
secretary transmits a statement of changes to the county auditor of each county
whose roll the board changes.288 It is then the duty of the auditor to make
appropriate entries on the assessment roll.289
The State Board of Equalization was directed to make an annual survey in each
county to determine the relationship between the assessed and market values of
property assessed locally.291 In making the survey the board was to use sales and
other appraisal data relating to representative samples of property subject to local
assessment.
Using the same data, the board was also to determine the average relationship
between the assessed and market values throughout the State of property assessed
locally.292
Each survey was to be completed by the second Monday in July, and on or before
the third Monday in that month a report of the survey, together with a notice of
the board's determinations of both the state-wide and local ratios, was to be
transmitted 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 third
Mondays in July and August.294
In the event of a difference of not more than 10 percent between the local ratio of
any county and the state-wide ratio, the board was to equalize the valuation of the
taxable property in the county by assessing public utility property in the county at
a figure bearing the same ratio to its market value as the ratio between the
assessed and market values of locally-assessed property.295
Where there was more than a 10 percent difference in ratios, the board was to
equalize the valuation of taxable property in the county either as provided in the
last paragraph or by raising or lowering the assessed value of locally-assessed
property by the percentage necessary to make it conform to the state-wide
ratio.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
The board was before the first Monday in August to prepare tabulations showing
its determination of the values of state-assessed property, and such tabulations
were to be open for the inspection of all persons interested.299
After deciding every petition for redetermination, the board was to complete its
assessment of state-assessed property, other than intangibles, for each county by
entering on its roll for each county assessed values bearing the same proportion to
market values as it found existed between the assessed values of county-assessed
property and the market values of the latter.301
The time for transmitting the board's roll to the county auditors was also changed
from the third Monday to the fourth Monday in August.302
Chapter 1466 was also designed to provide a more equitable allocation of state
funds to local units of government in respect to the construction of schools and to
assist in determining the eligibility of individuals to receive various types of state
aid, where the assessed value of property is a factor, and provisions for
accomplishing such objectives were, accordingly, also included.303
(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 on
the unsecured roll are automatically imposed at the same rates as taxes for the
preceding year on property of the same kind on the secured roll.306 In the case of
solvent 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 and
enters the amounts thereof on the secured roll.308 He must then, on or before
October 1, deliver that roll to the county tax collector for tax collection
purposes.309
(d) Collection
No lien for property taxes is removed until the taxes are paid or canceled, the
property 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 on
November 1 311 and the second on February 1.312 The first must include all
personal 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 has
elected 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
After the second installment delinquent date, the tax collector prepares a
delinquent roll showing all delinquent property on the secured roll.319 The
preparation of this roll may be dispensed with where a county elects to prepare an
abstract list of unpaid items on the secured roll.320
On or before June 8, the tax collector publishes a list, known as the "published
delinquent list" or "delinquent list," describing all property which is tax
delinquent for the current fiscal year, the names of the assessees, and the amounts
due.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 by
operation of law."322 The notice is commonly referred to as the notice of "stamp
sale." There must also be published with the delinquent list a notice that all
property sold to the State by operation of law in the fifth preceding calendar year
or 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 with
the county recorder and county clerk;324 and, in addition, the tax collector must
by registered mail send the last assessee either another such copy or a printed
notice of deeding to the State of any property that will be so deeded in the
absence of redemption.325
The "stamp sale," consisting merely of a declaration by the tax collector and
entries on the delinquent roll, occurs not less than 21 nor more than 28 days after
the -first publication of the delinquent list;326 and the property involved is
thereafter known as "tax-sold property."327
Not less than 21 nor more than 35 days after the first publication of the notice of
deeding of tax-sold property, and at least 5 years after the stamp sale, the tax
collector must execute a deed of the property to the State.328 The property
thereupon becomes known as "tax-deeded property," and continues to be until
sold by the State.329
Provision is also made for the rental of tax-deeded property by the State
Controller331 or, under special circumstances, by local taxing agencies.332
The tax collector may sell tax-deeded property at public auction to any private
person, including a former owner, with the approval of the board of supervisors
and the written authorization of the State Controller.333 A sale may be initiated
either on the application of a prospective purchaser334 or directly by the tax
collector himself.335
After the Controller's authorization is received, and not less than 21 nor more
than 28 days before the date of intended sale, the tax collector must notify the last
assessee of such sale by registered mail.336 He must also publish notice of the
sale.337
If the property is not redeemed before the receipt of the first bid at the time of
sale, the tax collector must sell it to the highest bidder; and on the completion of
the 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, with
exceptions principally in favor of liens for the unpaid taxes and assessments of a
taxing 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
Tax-sold property and tax-deeded property may be redeemed until such time as
the right of redemption is terminated.342 Generally speaking, a payment for
redemption 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's
unpaid taxes computed at the rate of 1 percent for the first year and 1/2 of 1
percent thereafter, and a redemption fee of $1.50.343
Delinquent taxes may also be paid in installments, with a right to redeem on the
completion thereof.344
Court proceedings of various types are authorized to determine the validity of tax
sales and tax deeds.345
There is today apparently no general personal liability for the payment of secured
property taxes.346
Taxes on unsecured property are due on the lien date,347 and if they are
delinquent at 5 p. m. of August 31, a delinquent penalty of 8 percent thereafter
attaches to them.348
Taxes due on unsecured property may be collected by the seizure and sale of any
of the assessee's personal property, improvements, or possessory interests.349
(e) Miscellaneous
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 was
imposed for both State and county purposes by the general revenue law of that
year.353
A lien for all taxes was to attach on the taxpayer's real property as of March 1,356
and 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 county
assessor between the first Mondays in March and August.358 The assessments
were 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 the
State Government, and each court of sessions, between the first Mondays in
March and August, was to determine and levy the taxes needed for county
purposes.360
The county auditor was to make up a list of the taxes assessed and give a
duplicate to the county treasurer.361 It was then the duty of the county treasurer
to collect the taxes payable, both State and local.362
In the case of an owner of real estate, taxes delinquent after the first Monday of
November were to be collected by a sale of the property.363 A deed was to be
given the purchaser,364 but the taxpayer was to have a right to redeem within one
year from the date of sale by the payment of the delinquent taxes, together with
damages equal to 100 percent of such taxes.365 Only in the event of a failure to
redeem 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 first
Monday of October were to be collected, together with damages equal to 10
percent of the taxes, plus costs and charges, by the seizure and sale of his
personal property.367
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It was noted earlier in the discussion of the general historical background of the
California tax system that the general property tax -of 1850 was superseded by
another in 1851,368 that other general property taxes were enacted in 1852,369
1853,370 1854,371 1857372 and 1861,373 each, in turn, superseding its
immediate predecessor; and that in 1872 the general property tax laws were
revised and codified in the Political Code. To complete the picture, it should also
be noted that the general property tax provisions of the Political Code, along with
other general property tax laws, were in 1939 revised and codified in Division 1
of the present Revenue and Taxation Code.374
Under the 1851 law the assessment period terminal date was moved up to the first
Monday in July,375 assessments were to be made on the basis of actual cash
value,376 equalization was to be performed either by the court of sessions or, if
created by law, the board of supervisors,377 county taxes were to be levied in
April,378 the sheriff was made the tax collector,379 the tax lien was to attach to
all of the taxpayer's property as of March 1,380 damages collectible on the sale of
personal property were reduced from 10 percent to 5 percent, plus $1,381 a
certificate of sale was to be executed in favor of a purchaser -of real property at a
tax sale, followed by a deed at the expiration of a year from the date of sale in the
absence of redemption beforehand,382 and damages on redemption were reduced
to 50 percent of the taxes.383
The 1852 law contained substantially the same exemptions permitted by the 1851
and 1852 laws, but provided also for the exemption of county property.384 It
omitted the detailed tax sale and redemption provisions of the 1851 law, however.
The 1853 law extended the assessment period terminal date to the first Monday
of 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;"386
and the general substance of the tax sale and redemption provisions of the 1851
law, which had been omitted in 1852, was restored.387
Exemptions of growing crops and mining claims made the 1854 law particularly
noteworthy.388
Under the 1857 law the board of supervisors only was to constitute a board of
equalization,389 the tax collector could be someone other than the sheriff,390
provision was made for the publication of a delinquent list,391 and the
redemption period in the case of realty sold for delinquent taxes was reduced to a
period 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 to
the list of exemptions,394 changed the assessment period to between the first
Mondays in March and August,395 provided for the assessment of property at its
full cash value,396 provided that the tax collector was generally to be a person
elected as such,397 and substituted for the 1857 provisions regarding the
collection of delinquent taxes by the tax collector through a sale of the taxpayer's
property, other provisions for the collection of such taxes in an action brought by
the district attorney.398 If the taxpayer was served personally or appeared in the
action, 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 the
sale 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 that
the language in Section 13 of Article 11 of the 1849 State Constitution on equal
and uniform taxation was a limitation on the power of the Legislature to exempt
private property from taxation, and on that ground held unconstitutional the
portion of the 1861 act, as amended, which exempted such property. This led to
an amendment of the 1861 act in 1868 to provide that all property should be
subject to taxation .401
The Political Code exempted only property of the United States, the State and
municipal corporations.402 It continued the requirement of the 1857 law that all
property be assessed at its full cash value,403 and, in addition, defined "full cash
value" as the amount which the property would be appraised if taken in payment
of 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 the
case of personal property, as of the date of the assessment thereof ;405 for an
assessment period extending from the first Monday in March to the first Monday
in July;406 for the completion of local equalization by the fourth Monday in
July;407 for the completion of equalization by the State Board of Equalization by
the third Monday in September;408 for the levy of county taxes on the first
Monday of October;409 for the publication of the delinquent list, relative to taxes
on or secured by real estate, on or before the first Monday in February of the
current fiscal year;410 for a tax sale at public auction not less than 21 nor more
than 28 days after the first publication411 for the issuance of a certificate of sale
in duplicate, one of which was to be delivered to the purchaser and one to the
recorder 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 the
date of sale on payment of the purchase price, plus 50 percent thereof;414 and for
the execution and delivery of a deed to the purchaser in the absence of such
redemption.415
Provision was made in 1874 for the sale of tax delinquent property to the State in
the absence of a private purchaser when the property was offered for sale.416
The changes respecting taxation introduced by the 1879 Constitution have been
mentioned in the consideration of the general historical background of the
California tax system. Many of them were reflected in implementing legislation
enacted in 1880417 and 1881.418
In 1891 legislation was enacted to provide for the payment of taxes in two
installments, pursuant to authorization in Section 7 of Article 13 of the 1879
Constitution.419
As has been noted, the 1879 Constitution has been amended from time to time to
extend the classes oil property exempt from taxation. These amendments were
particularly frequent in the years from 1894 to and including 1910, during which
exemptions were granted for fruit and nut-bearing trees and grapevines, for the
property of free museums and free public libraries, for the property of Stanford
University, the California School of Mechanical Arts, the California Academy of
Science, and the Cogswell Polytechnical College, for church property used for
purposes of religious worship, for the bonds of public agencies, for the personal
property of householders up to $100, and for real estate mortgages and trust
deeds.
In 1874 the redemption period was reduced from one year to six months from the
date 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 purchaser
of tax-delinquent property on the giving of a notice by the purchaser to the
taxpayer 30 days before the expiration of the time for redemption or application
for the deed.422 The taxpayer was to have the right of redemption indefinitely
until the notice was given, and no deed to the property was to be executed until
the purchaser filed an affidavit with the tax collector that the notice had been
given.
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 applied
as well to the State when tax delinquent property was sold to it in the absence of a
private 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 property
sold to the State off the tax rolls, but at the same time make it difficult for the
State to acquire a title to the property of a kind sufficient to facilitate its sale and
return to the rolls.423 It has also been said424 that to overcome that effect, the
Legislature in 1895425 enacted the provisions for the sale of tax-delinquent
property to the State by operation of law (known now as the "stamp sale"), for the
execution 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 the
highest bidder.
As thus modified, the general property tax law in 1895 became, structurally, the
general property tax law of today.
The tax base has become somewhat narrowed by the several amendments of the
State Constitution granting or providing for exemptions. In addition to those
mentioned as having been granted during the period from 1894 to 1910, are the
veterans' exemption, the college exemption, the orphan asylum exemption, the
welfare exemption, and the exemption of intangibles. All of these, too, were
noted in the consideration of the general historical background of the California
tax system.
It was observed in Roehin v. County of Orange (1948) 196 P.2d 550, 554-555, 32
C.2d 280, 287-288, that the existing provisions on the taxation of intangibles
were based on the recommendation of the 1927 California Tax Commission that
in view of administrative difficulties in locating and assessing such property, their
special treatment was a practical necessity.
Until the revision in 1910 of the California tax system, the State Board of
Equalization continued to play an important role in the property tax field, both in
the matter of intercounty equalization and in the assessment of the franchises,
roadbeds, roadways, rails, and rolling stock of railroads operated in more than
one county. Since the revision involved the abandonment of the general property
tax as a source of state revenue, intercounty equalization was thereafter
considered unnecessary, inasmuch as such equalization was originally provided
for primarily to prevent local underassessments of common property having an
adverse effect on the State's property tax revenue, all such property being
assessed 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 considered
necessary. This was based, particularly, on the new provision in Section 14 of
Article 13 of the State Constitution that after their assessment centrally by the
State 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 other
property."427
In recent years the need for intercounty equalization has become increasingly
important in the application of the veterans' exemption, in the allocation of state
funds to local units of government for school and other purposes, and in
determining the eligibility of individuals for various types of state aid.428 The
enactment of Chapter 1466 of the Statutes of 1949 was prompted in large part by
such necessity.429
The collection phase of the general property tax law has often since 1895 been
subjected to a refining process, with the general objective of protecting and
assisting both the taxpayer and the public.
Legislation was enacted in 1913 to provide for the sale of unredeemed property
on the "addenda list" (i. e., on the list appended to the delinquent list showing
property sold to the State five years Previously) by the tax collector at public
auction to the highest bidder.430 This legislation was continued in force in one
form or another until 1949, when it was repealed.431
During the 30's and early 40's, when the problem of returning tax-delinquent
property to the tax rolls was particularly acute, considerable legislation on the
subject was enacted. Included were the "Latham Act"432 and the "Tax
Redemption Termination Act."433 The former authorized the bringing of an
action by the State to quiet its title to real property deeded to it for delinquent
taxes; the latter provided in part for shortening the time within which the right to
redeem tax delinquent property could be exercised.
Also included in the Tax Redemption Termination Act were provisions for the
classification and disposition of tax-deeded property, and for limiting the time in
which to institute proceedings based on the alleged invalidity or irregularity of tax
deeds.
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In 1941 an action against the State to contest the validity of a tax deed to it was
authorized.437 In 1943 an action to determine adverse claims or clouds on title
could be brought by a purchaser of tax-deeded property.438
Moratorium legislation extending the due dates for the payment of current taxes
and the various tax sale provisions respecting tax-delinquent property was
enacted in 1933 and the years immediately thereafter.439
The year 1931 saw the inception of the present permanent plan for the payment of
delinquent taxes in five installments, followed by redemption.440 Temporary
installment plans were provided for in 1933 (the Ten-Year Payment Plan) 441
and in 1934 (the Quarterly Payment Plan).442 Each of the latter having served its
purpose, the legislation authorizing it was repealed in 1955.443
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 personal
property at retail in California;445 and the use tax, on the storage, use, or other
consumption in California of tangible personal property purchased from a
retailer.446
A "retail sale" or "sale at retail" is generally a sale for any purpose other than
resale in the regular course of business.447
A "retailer" includes anyone who makes more than two retail sales during any
twelve-month period.448
The sales tax is imposed at the rate of 3 percent of the retailer's gross receipts,449
and the use tax at the rate of 3 percent of the sales price of the property
purchased.450
There are exemptions applicable to both taxes relating to the sale, use, storage, or
other consumption of gas, electricity, water, gold, ships, aircraft, motor vehicle
fuel, 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 silver
bullion, sales of property to a contractor in connection with the performance of a
contract 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 and
use outside the State.452
Specially applicable to the use tax are exemptions respecting property the sale of
which is subject to the sales tax, and property purchased from the United
States.453
Liability for payment of the sales tax is on the retailer,454 but the latter must
collect it from the purchaser whenever possible.455
Liability for payment of the use tax is on the storer, user, or consumer.456
However, a retailer with a place of business in California who makes a sale of
property for storage, use, or consumption must collect the tax from the
purchaser;457 and any tax so required to be collected represents a debt which the
retailer owes the State.458
Quarterly payments and returns are generally required for both sales and use
taxes.459 They must be made to the State Board of Equalization, the agency that
administers the taxes.460
The revenue from the sales and use taxes is first deposited in the Retail Sales Tax
Fund, and then is withdrawn therefrom for the payment of refunds and transfer to
the State General Fund.461
The Sales and Use Tax Law is a codification of the former Sales Tax Act of
1933462 and Use Tax Act of 1935.463 The codification was enacted in 1941 and
became effective on July 1, 1943.464
The Retail Sales Tax Act of 1933 was evidently enacted because of a need for
state revenue to enable the State to meet the additional burden for the support of
the public schools that was placed on its shoulders on the adoption of the
Riley-Stewart Plan.465
In Roth Drugs, Inc. v. Johnson (1936) 57 P.2d 1022, 13 C.A.2d 720, the
constitutionality of the act was successfully defended against numerous points of
attack.
The use tax complements the sales tax, and was enacted to put local retailers on
an equal footing with out-of-state retailers,466 and prevent the avoidance of the
sales 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 percent
until 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 on
Revenue 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 was
extended to cover leases and rentals.472
In 1943, the rates for both sales and use taxes were reduced temporarily to 2½
percent, and it was at the same time provided that a portion of the revenue from
the taxes as so reduced should be deposited in a postwar reserve for use on public
work projects to provide employment.473 The reduced rates continued in effect
until June 30, 1949, when they were restored to 3 percent.474 The postwar
reserve provisions had, however, been deleted previously in 1947.475
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 e
of the Sales and Use Tax Law; and must, among other things, provide that the
county shall contract with the State Board of Equalization for the performance by
the latter of functions incident to the administration of the tax, and allow credits
for city sales and use taxes imposed at rates of 1 percent or less pursuant to
ordinances containing provisions generally similar to those required to be
incorporated in the county ordinance.
Aside from the purpose of affording an avenue for obtaining additional, local
revenue, the Bradley-Burns Uniform Sales and Use Tax Law was apparently
designed to reduce the possibility of subjecting retailers and consumers to more
than one local sales or use tax, and at the same time simplify the problem of
administering such a tax.477
The tax imposed by this law, commonly known as the "gas tax," is a license tax
imposed on distributors of motor vehicle fuel for the privilege of distributing such
fuel.479
Not the people who purchase the stuff!
"Motor vehicle fuel" includes gasoline and any other type of inflammable liquid
which is or can be used to propel a motor vehicle operated by an explosion type
engine.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 until
December 31, 1959, when it is to be reduced to 5½ cents per gallon.482
A distributor must file a return with and pay the tax monthly to the State Board of
Equalization.485
General administration of the tax is vested in the board,486 but the State
Controller does the collecting.487
The revenue from the tax is deposited in the Motor Vehicle Fuel Fund,488 and is
appropriated therefrom for the payment of refunds and costs of administration
and to the Highway Users Tax Fund.489 Of the amount refundable which is
attributable to taxes imposed on motor vehicle fuel used or usable for propelling
aircraft, $350,000 is appropriated annually for use by counties and cities in
connection with airports.490
The Motor Vehicle Fuel License Tax Law originated in a fuel tax licensing law
enacted in 1923,491 as a result of a need for more revenue to meet increasing
highway costs.492 As enacted, the 1923 law imposed a tax equal to 2 cents per
gallon,493 permitted a deduction up to one percent of the tax for evaporation and
handling losses,494 provided for quarterly payments and returns,495 provided for
the deposit of the revenue received in the Motor Vehicle Fuel Fund, allocated
one-half of such revenue to the counties for county road purposes on the basis of
automobile registration, and allocated the remaining half to the State Highway
Maintenance Fund.496
In 1927, by a separate law, an additional one cent per gallon tax was imposed, the
revenue from which was to be deposited in the State Highway Construction
Fund.497 This law was repealed in 1933, when at the same time the tax rate
under 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 the
deduction for evaporation losses and handling was eliminated.500
The tax rate remained at 3 cents per gallon until the enactment of the
Collier-Burns Highway Act of 1947, when it was increased to 4½ cents per
gallon.501 In 1953 the rate was changed to 6 cents per gallon for the period from
July 1, 1953 to June 30, 1955, and thereafter to 5.5 cents per gallon.502 In 1955
the 6 cents per gallon rate was continued until December 31, 1959.503
Insofar as the revenue distribution and use provisions of the 1923 law are
concerned, changes too numerous to recount here occurred at various times over
the years. The distribution and use of gas tax revenue is now provided for by the
Collier-Burns Highway Act of 1947, of which the Highway Users Tax Fund is a
part.
Article 26 was added to the State Constitution in 1938 to confine the use of gas
revenue to highway purposes, and the Collier-Burns Highway Act of 1947 is
consistent with it.
The 1923 act was in 1941 codified in Part 2 of Division 2 of the Revenue and
Taxation Code.504
The tax imposed by this law, commonly known as the "diesel tax," is an excise
tax imposed on the use of fuel by a so-called "user."506
"Use" includes the placing of fuel in any receptacle on a motor vehicle from
which fuel is supplied to propel the vehicle.508
The rate of the tax is presently 7 cents per gallon, and is to remain such until
December 31, 1959, when it is to be reduced to 6.5 cents per gallon.509
A user must file a return with and pay the tax monthly to the State Board of
Equalization.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 is
appropriated therefrom for the payment of refunds and transfer to the Highway
Users Tax Fund.514
The Use Fuel Tax Law originated in the Use Fuel Tax Act of 1937.515 The latter
imposed the tax at the rate of 3 cents per gallon, and provided for the deposit of
the 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 per
gallon by the Collier-Burns Highway Act of 1947.516 In 1953 the rate was
changed 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 rate
was continued until December 31, 1959.518
The revenue from the diesel fuel tax deposited in the Highway Users Tax Fund is
used for highway purposes in accordance with the provisions of the Collier-Burns
Highway Act of 1947. This, too, is consistent with Article 26 of the State
Constitution.
The Use Fuel Tax Act of 1937 was in 1941 codified in Part 3 of Division 2 of the
Revenue and Taxation Code.519
The tax imposed by this law, commonly known as the "truck tax," is a license tax
imposed on operators at the rate of 3 percent of their gross receipts.521
Exclusions from the term are specified in respect to persons who transport their
own property, farmers who occasionally transport for others, nonprofit
agricultural cooperative associations, transporters of school children, operators of
hearses, persons who transport fellow-workers and others to or on the way to
work, 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's
business.525
The revenue from the truck tax is deposited in the Motor Vehicle Transportation
License Tax Fund, from which, after deductions for the costs of administration, it
is withdrawn either for the making of refunds or for transfer to the Highway Users
Tax Fund.530 Upon becoming part of the latter, it is used for highway purposes in
accordance with the Collier-Burns Highway Act of 1947. Unlike the situation as
to the gas and diesel taxes, however, the use of the truck tax revenue for highway
purposes is not required by Article 26 of the State Constitution, since Section 4 of
that article expressly excludes the tax imposed by Chapter 339 of the Statutes of
1933, of which the present truck tax law is a codification.531 The exclusion was
probably incorporated because of a provision at the time in Chapter 339, as
amended, appropriating most of the truck tax revenue to the State General
Fund.532
The history of the truck tax law since 1933 is notable in part for the gradual
incorporation of the various exclusions from the term "operator." There were no
such exclusions in 1933.
The fee is due and payable to the Department of Motor Vehicles on January 1 of
each year, and, if unpaid, becomes delinquent on February 5.539
"License" is something required to legally
engage in commerce. The people don't
Enforcement is in the hands of the Department.540 need a license to exercise a secured right.
Revenue is deposited in the Motor Vehicle License Fee Fund, and is appropriated
therefrom for various administrative costs, for the payment of specified highway
bonds, and for distribution to counties and cities on a population basis for law
enforcement, highway traffic, and other state purposes.541 Special provision is
made for the distribution of the revenue derived from fees collected on trailer
coaches.542
The present law represents a codification in 1941 543 of Chapter 362 of the
Statutes of 1935. Prior to 1935, automobiles had been subject to property taxation
locally, but in the administration of that type of tax problems arose out of
inequities in valuation from county to county and because of the inherent ease of
escaping the tax.544 The 1935 law was recommended as an alternative by both
the 1927 California Tax Commission545 and the 1935 Special Joint Committee
on Revenue and Taxation.546
From 1935 to 1948 the in lieu tax rate was 13/4 percent, and has thereafter been
fixed at 2 percent.547
It is well settled that the in lieu tax is an excise tax, and not a property tax.548
An "excise tax" is a tax on the use of a
(5) VEHICLE REGISTRATION FEES privilege. There is NO TAX on the exercise
of an inalienable right.
The California Vehicle Code imposes fees for the registration of both commercial
and passenger vehicles. A "passenger" pays to be "transported" from Point A to
Point B. I don't have passengers, I have guests.
On commercial and passenger vehicles alike, a general registration fee of $8 is
now 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.550
On and after January 1, 1960, these rates will be reduced to amounts varying from
a minimum of $44 to a maximum of $244.551
The Vehicle Code in addition provides for the payment of a $3 fee for an
operator's or chauffeur's license until January 1, 1960, and one of $2.50
thereafter.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
The California Vehicle Act repealed an earlier Vehicle Act enacted in 1915,560
which, among other things, had created the Department of Motor Vehicles. The
1915 act had repealed a still earlier Motor Vehicle Act enacted in 1913,561 and
the latter, an act of 1905,562 which had levied a flat $2 motor vehicle licensing
fee payable to the Secretary of State. The 1913 act provided for the payment of
registration fees based on horsepower, and the 1915 act did likewise.
This tax is levied annually by the State Board of Equalization upon private
railroad cars operated on state railroads.564
The levy is made on or before the third Monday in August upon the basis of the
assessed value of the cars, equalized with the average assessed value of tangible
personal property throughout the State for county tax purposes, at a rate equal to
the preceding year's average tax rate, which is determined by dividing the total
amount of all county, city, and district taxes in the State by the total assessed
value 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 or
before December 10 following the levy, a penalty for delinquency attaches.567
Revenue from the private car tax is deposited in the State Treasury to the credit of
the State General Fund.568
The Private Car Tax Law originated with the Private Car Tax Act of 1937, 569
the 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 Equalization
stated in its biennial report for 1937-1938, at page 7:
"The passage of the Private Car Tax Act in 1937 was favored by
the Board as the administrator of the act, and the private car
companies who pay the taxes because it simplified the entire
procedure. Prior to 1937 private cars were assessed in the same
manner as utility property, and it was necessary for the Board to
assess the rolling equipment at hundreds of fixed locations
throughout the State. From the taxpayer's standpoint, the old law
presented many problems because of the large number of tax bills
in small amounts received by the companies. Under the new law,
the taxpayer receives only one bill and remits one check to the
State treasury."
In People v. Keith Ry. Equipment Co. (1945) 161 P.2d 244, 70 C.A. 2d 339, the
constitutionality of the private car tax was sustained as a proper exercise of the
Legislature's power under Section 14 of Article 13 of the State Constitution to
classify personal property for tax purposes.
The tax is in lieu of all other taxes and licenses, except real estate taxes and taxes
on 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 average
underwriting profit during the preceding three years.574 Thereafter, on or before
July 1, the Insurance Commissioner files a report with the State Board of Equalization showing the tax w
before August 10, assesses and levies the tax, in respect to the next preceding calendar year, in
the amount computed by the Insurance Commissioner.576
The tax is due and payable to the State Controller on August 10 of the year of
levy;577 and if it is unpaid the following November 15, it becomes delinquent
and a delinquency penalty attaches.578
All revenue derived from the tax is deposited in the State Treasury to the credit of
the State General Fund.579
Every insurer doing any non-ocean marine insurance business in California must
pay 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 gross
premiums, less return premiums, other than premiums received for reinsurance
and ocean marine insurance.581
In the case of an insurer doing a title insurance business, the base is all income
upon business done in California, with the exception of interest and dividends,
real property rentals, and profits and income from investments.582 There is also
excluded 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 by
the State.583
The tax is in lieu of all other taxes and licenses, except real estate taxes, taxes on
the income from any trust business of a title insurance company, the tax on ocean
marine insurance, and fees and taxes on motor vehicles or their operation.584
The provisions on the filing of reports, the assessment, levy, and payment of
taxes, and the disposition of the revenue therefrom which have been noted in
respect to insurers writing ocean marine insurance are also generally applicable to
other types of insurers.
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(3) HISTORY
Since at least as early as 1872, California also imposed a tax upon every foreign
insurance company doing business in California when under the law of the State
or country in which it was organized a higher tax was imposed on California
insurance companies doing business in that State or country than on its own
companies.586 This was the so-called "retaliatory tax," and it was equal in
amount to the tax imposed by the other state or country.
In 1905 an annual gross premiums tax was being imposed on foreign insurance
companies doing business in California.587 In the case of companies other than
life insurance companies, the tax was equal to 2 percent of the gross premiums
received on business done in California, less return premiums, reinsurance in
companies authorized to do business in California, and losses paid on business
done in California. The tax on life insurance companies was equal to 1 percent of
the gross premiums received on business done in this State.
The rate was increased by the Legislature from time to time, until it became 2.6
percent in 1921.589
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substance of Section 18, to establish the tax rate on ocean marine insurers at 5
percent, 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 premiums
insurance tax unconstitutional on grounds of due process, insofar as it applied to a
foreign insurance company authorized to do business in California in respect to
premiums received in another state on reinsurance contracts there executed with
other corporations licensed to do business in California. Until the decision, the
practice in such type of situation had evidently been to allow the reinsurance
deduction to be taken by the reinsured companies, and to include the reinsurance
premiums in the measure of the tax payable by the reinsurer.
In 1941 the insurance tax provisions in the Political Code were codified in the
Revenue and Taxation Code,592 and the latter has since been amended to reflect
the constitutional changes on the subject.
(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 property
received and the relationship between the decedent and the beneficiary,
distributee, or other transferee.595 it also imposes an estate or transfer tax where
either no inheritance tax is imposed or the inheritance tax imposed is less than the
maximum credit for state death taxes allowed under the Federal estate tax
law.596
The general basis of valuation is the market value of property at the date of
death.602 Specified deductions from such value may, however, be made before
the application of the rates.603
Where a particular transfer of property is subject also to the tax imposed by the
Gift Tax Law, a gift tax credit is allowed against the inheritance tax otherwise
payable.604
The personal representative of an estate and the transferee are both liable for
payment of the tax.605 The tax is due and payable at the date of the decedent's
death, and is ordinarily delinquent two years later.606 It is payable to the county
treasurer.607
The State Controller, through the Inheritance Tax Department, is invested with
the general administration and enforcement of the inheritance tax.608 He
appoints one or more inheritance tax appraisers for each county,609 and a person
so appointed is, in turn, appointed by the superior court to compute the tax in a
particular estate.
All revenue from the inheritance tax, after the payment of refunds and the
deduction 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 a
tax on a nonresident alien heir at the rate of 10 percent of the value of the
property received by him, and a tax on any other heir at the rate of 2.5 percent of
the value of the property which he received. The tax was short-lived, however, the
law imposing it being repealed in 1854.611
The next inheritance tax law was enacted in 1893.612 This imposed a tax on
collateral, as distinguished from direct, relatives of a decedent to whom property
was transferred at the decedent's death either by will or the law of intestacy, or
inter vivos in contemplation of death or with the intention that it become
effective 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 as
well as direct relatives.613 The general structure of this law has survived to the
present day, notwithstanding several intervening revisions.
The 1905 law was repealed in 1911 with the enactment of a new inheritance tax
law.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 generally
similar nature.615 By separate enactment in the same year the Inheritance Tax
Department was created.616
In 1917, 1921, and 1935 other inheritance tax laws were enacted, each repealing
its immediate predecessor, but nevertheless retaining most of the substance of the
preceding law.617
The 1935 law was in 1943 codified in the Revenue and Taxation Code.618
This law imposes a tax on the inter vivos transfer of property by gift, at graduated
rates based on the value of the property transferred and the relationship between
the donor and the donee.620
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property.
The general basis of valuation is the market value of the property given at the
date of the gift.623
A return must be filed by the donor with the State Controller on or before April
15 of the year following the close of the calendar year in which the gift is
made.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 Tax
Department.626
The revenue from the gift tax is deposited in the State Treasury to the credit of
the Gift Tax Fund, and is appropriated from the latter for the payment of refunds
and to the State General Fund.627
The Gift Tax Law codified in 1943628 the Gift Tax Act of 1939.629 The reason
for the enactment of the 1939 law was to prevent the avoidance of the inheritance
tax through the making of inter vivos gifts.
At the time of the enactment of the 1939 law there was considerable conformance
between its provisions and those of the then Federal gift tax law. Changes made
in the Federal law, however, in the intervening years have considerably reduced
the points or similarity between the two laws.
It should also be noted that the rate and specific exemption provisions of the
California inheritance and gift tax laws are, and have always been, the same.
(1) OUTLINE
The Personal Income Tax Law imposes a tax on the taxable income of
individuals, estates, and trusts, at rates ranging from 1 percent on taxable income
of not more than $5,000 to 6 percent on any portion of taxable income in excess
of $25,000.631
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"Taxable income", in the case of an individual, is gross income less various
allowed exclusions and deductions.632 Personal and dependency exemptions for
individuals are allowable as deductions.633
Detailed special provisions are included relative to estates and trusts and persons
involved therein,634 and with respect to partnerships.635
Returns must be filed with and taxes paid to the Franchise Tax Board
annually.636
(2) HISTORY
The Personal Income Tax Law originated with the Personal Income Tax Act of
1935.638
It has been said that the 1935 law "must be looked upon in part as a product of the
depression. The increasing need for revenues finally compelled recourse to
various new levies of which the income tax was one."639
The adoption of an income tax was suggested by the State Board of Equalization
in 1913,641 and an income tax was recommended as an alternative to the
personal property tax by both the 1915 State Tax Commission642 and the 1927
California Tax Commission.643
A personal income tax bill was enacted by the Legislature at its 1933 Session,644
but it was pocket-vetoed by the Governor.
The Personal Income Tax Act of 1935 was patterned generally after the portions
of the then Federal law relating to personal income taxation. It prescribed a tax
rate 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 the
administration of the law by the Bank and Corporation Franchise Tax
Commissioner, who was the predecessor of the present Franchise Tax Board.646
The Personal Income Tax Act of 1935 was in 1941 codified as the Personal
Income Tax Law.647
In 1943 the permanent maximum tax rate was reduced to 6 percent on the amount
of income over $25,000.648
Also in 1943, the tax rates were reduced for taxable years beginning after
December 31, 1942, and before January 1, 1945, to a minimum of I percent on
net income of $10,000 or less and a maximum of 6 percent on any amount in
excess of $30,000, and the personal exemptions were increased.649 Rate
reductions and personal exemption increases were continued by subsequent
legislation for years commencing before January 1, 1949.650
At the recent 1955 Session, the Personal Income Tax Law was revised
considerably in order to bring many of its provisions into conformity with some
of the provisions on the same subject in the Federal Internal Revenue Code of
1954.651
(1) OUTLINE
The Bank and Corporation Tax Law in effect imposes three types of taxes. The
first (known as the "bank tax") is a tax on banks located within the State, levied
according to or measured by their net income;653 the second (known as the
"corporation franchise tax"), a tax on other financial corporations and on general
corporations doing business in California for the privilege of exercising their
corporate franchises here, also levied according to or measured by net
income;654 and the third (known as the "corporation income tax"), a tax on the
net income of corporations doing an interstate business derived from sources
within California.655
The franchise tax rate on general corporations is 4 percent of net income, with a
minimum tax of $25.656
The rate of the tax on banks and other financial corporations is a percentage equal
to the average percentage of the total amount of net income of all general
corporations, other than public utilities, for the next preceding year payable as
franchise 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 on
their real estate and, when permitted by Congress as to national banks, motor
vehicle registration and license fees.659 I A financial corporation may offset
against the tax payable by it any amounts paid the State or any of its subdivisions
as a personal property-tax or motor vehicle "in lieu tax," or as a license fee to
carry on business as a personal property broker or money lender.660
Numerous types of general corporations are exempt from the taxes imposed,661
but most of these are liable for taxes on their so-called "unrelated business
income" in excess of $1,000.662
Returns must be filed with and taxes paid to the Franchise Tax Board
annually.663
All revenue received is deposited in the State Treasury to the credit of the Bank
and Corporation Tax Fund, and is appropriated from the latter for payment of
refunds or transfer to the State General Fund.665
(2) HISTORY
The Bank and Corporation Tax Law originated in 1929666 with the Bank and
Corporation Franchise Tax Act. The events and reasons prompting that enactment
have previously been noted in the consideration of the general historical
background of the California taxing system. It might be additionally observed that
insofar as general corporations were concerned, a substitute for the 1910
corporate franchise tax was also considered desirable in view of difficulties in the
administration of the tax and dissatisfaction with it.667
Some of the provisions of the 1929 law appear to have been modeled after those
in the Federal Revenue Act of 1928.
The 1929 law originally permitted a tax offset for all taxpayers. In the case of a
bank, the offset was allowable in the amount of 10 percent of the bank's real
estate taxes, up to 75 percent of the baa tax; and as to any other taxpayer, the
offset was 10 percent of real and personal property taxes, up to 75 percent of the
franchise tax. An allowance of an offset for personal property taxes was permitted
under 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 Tax
Commission as a temporary expedient, with the idea ultimately of eliminating the
personal property tax, but safeguarding local revenue during the transitional
period leading up to such elimination.668 The Legislature, however, went beyond
such recommendation.
In 1933 the California Tax Research Bureau (an agency in the State Board of
Equalization, which, as has been noted, was created in 1931 on the apparent
recommendation of the 1929 Joint Legislative Committee on Taxation) reported
that the offset permitted by the 1929 law discriminated against ordinary
corporations, and suggested that as a solution it be changed to what it is today.669
This was acted on in 1933.
In 1933 the Legislature also enacted a law imposing a tax on every Massachusetts
or business trust doing business in California for the privilege of doing such
business, according to or measured by net income, and at the rate of 4 percent of
such income.670 The administrative provisions of the Bank and Corporation
Franchise Tax Act were specifically incorporated by reference.
The Legislature in 1937 enacted the Corporation Income Tax Act -of 1937.671
The 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 Franchise
Tax Act or the Corporation Income Tax Act of 1937 was reduced to 85 percent of
the amount ordinarily payable for a two-year period, and a part of the revenue
collected during that time was to be placed in a postwar employment reserve. The
reduction was continued for several years by subsequent legislation.673
The Bank and Corporation Franchise Tax Act and the Corporation Income Tax
Act 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 revised
considerably in order to bring many of its provisions into conformity with some
of the provisions on the same subject in the Federal Internal Revenue Code of
1954.675
The Alcoholic Beverage Control Law imposes taxes on beer and wine and on
distilled spirits sold in California.677
The tax rate on beer is 62 cents for each barrel containing 31 gallons. On still
wines containing not more than 14 percent of absolute alcohol, the rate is one
cent 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, excepting
sparkling hard cider, the rate is 30 cents per wine gallon; and on sparkling hard
cider, the rate is 2 cents per wine gallon.
The rate on distilled spirits of proof strength or less is $1.50 per wine gallon; and
on 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 and
wholesalers.
Returns and payments of the taxes must be made monthly to the State Board of
Equalization,678 which is charged by law with their administration.679
Revenue from the taxes is deposited in the State Treasury to the credit of the
Alcoholic Beverage Control Fund, and is appropriated for refunds and transfer to
the State General Fund.680
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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 wages
with respect to which contributions must be made.687 It is exactly equal to 90
percent of the federal tax. It may, however, be reduced under an experience or
merit rating plan based on the employer's contribution and benefit experience.688
The employers' contributions are deposited in the Unemployment Fund, and are
used primarily for the making of unemployment benefit payments.689
A racing track licensee must pay the California Horse Racing Board a fee
consisting in part of a percentage of the money handled in any pari-mutual pool
operated by him, computed at rates varying from 4 percent on any amount not in
excess of $10,000,000 to 6 percent on any amount over $20,000,000;695 and in
part of any money deducted as "breakage" (i. e., odd cents on each dollar
exceeding a multiple of 5 cents) on any amount in excess of $27,000,000 handled
in the pool.696
Various fees must also be paid to the board for licenses granted by it to horse
owners, 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 fairs
and expositions, for the California Polytechnical School, and for the University of
California.697 The balance is used for state colleges, wildlife restoration, and
general purposes.698
The present horse racing law699 is based on a 1933 act700 which was codified in
1941.701
Page 59 of 99
ENDNOTES
Page 60 of 99
contract surrendering or suspending power to tax; Art. 13, § 7-payment of
property taxes in installments; Art. 13, § 8-annual property tax statements; Art.
13, § 9-State and county boards of equalization; Art. 13, § 9a-taxes on unsecured
property; Art. 13, § 10-property tax assessment situs; Art. 13, §
101/2-householder's property tax exemption; Art. 13, § 11-income tax
authorization; Art. 13, § 123/4-property tax exemption of certain trees and vines;
Art. 13, § 13-Legislature authorized to Pass all laws necessary to carry out
Provisions of article; Art. 13, § 14-assessment of public utility property by State
Board of Equalization, taxation generally of public utilities, taxation of personal
property; Art. 13, § 144/5-taxation of insurance companies; Art. 13, §
15---taxation and apportionment of revenue by State in event of deficiency
resulting from limitation on local property taxes pursuant to Art. 11, § 20, and
recovery of illegally collected state taxes Art. 13, § 16-bank and general
corporation taxes; Art. 13, § 19-taxation of property in community redevelopment
projects; Art. 20, § 19-prohibition against allowance of tax exemption in case of
subversive; Art. 20, § 22-taxation of intoxicating liquor; Art. 26-use of motor
vehicle and gasoline tax revenue
The text of the 1849 Constitution is set forth In 3 West's Annotated California
Constitution (19,54), p. 699 et seq.
Page 61 of 99
California, unless otherwise indicated.
4. Stats.1941, c. 36, P. 532, operative July 1, 1943, as part of the 1929 California
Code Commission's codification program. Codified the Retail Sales Tax Act of
1933 (Stats.1933, c. 1020, p. 2599, as amended) and the Use Tax Act of 1935
(Stats.1935, c. 361, p. 1297, as amended).
6. Stats.1941, c. 37, p. 558, operative July 1, 1943, as part of the 1929 California
Code Comm issi on's codification program. Codified the Motor Vehicle Fuel
License 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 Code
Commission'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 California
Code Commission's codification program. Codified Stats.1933, c. 339, p. 928, as
amended.
9. Stats.1941, c. 40, p. 605, operative July 1, 1943, as part of the 1929 California
Code 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 California
Code Commission's codification program. Codified the Private Car Tax Act of
1937 (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 general
laws 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 1929
California Code Commission's codification program. Codified the Inheritance
Tax 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 1929
California Code Commission's codification program. Codified the Gift Tax Act of
1939 (Stats.1939, c. 652, p. 2079, as amended).
Page 62 of 99
14. Stats.1943, c. 659, p. 2354, operative July 1, 1945, as part of the 1929
California Code Commission's codification program. Codified the Personal
Income Tax Act (Stats.1935, c. 329, p. 1090, as amended).
15. Stats.1949, c. 557, p. 961, operative July 1, 1951. Codified the Bank and
Corporation Franchise Tax Act (Stats. 1929, c. 13, p. 19, as amended) and the
Corporation Income Tax Act of 1937 (Stats.1937, c. 765, p. 2184, as amended).
The codification was prepared by the California Franchise Tax Board, with the
cooperation 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 and
16, relating to the assessment and equalization of property taxes, found in Vol. 3
of 1953 Appendix to Journal of the Senate.
17. Stats.1951, c. 655, p. 1832, effective September 22. 1951 as part of 1929
California Code Commission's codification program
Page 63 of 99
29. Sections 5001-5011
35. Section 37101. Approximately 174 California cities presently have sales and
use taxes.
36. Section 16101. License fees are also imposed by Section 16430 of the
Business and Professions Code on itinerant merchants who sell farm products and
transport such products by motor vehicle.
38. See West Coast Advertising Co. v. City and County of San Francisco (1939)
95 P.2d 138, 143, 14 C.2d 516, 521.
40. For classifications and general information on the types of special districts
(other than school districts), including statutory citations to the laws creating
them, see Analysis of California District Laws (1954), prepared by Ralph N.
Kleps, Legislative Counsel, for Assemblyman Earl W. Stanley and Assembly
Interim Committee on Municipal and County Government, and submitted to the
California Legislature at its 1955 Regular Session. An earlier classification of
such districts, also with statutory citations, is included in the 1952 Report of the
California Code Commission, at pp. 18-38.
42. Id.
43. Id.
Page 64 of 99
44. The text of the 1849 Constitution Is set forth in 3 West's Annotated California
Constitution (1954), p. 699 et seq.
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 male
citizens between the ages of 18 and 45, other than those exempt by law or who
were members of a volunteer militia company.
Page 65 of 99
61. Ibid., c. 36, p. 78. The purpose of the tax was to guard against an expanding
class 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 who
did not otherwise give a bond for each passenger to indemnify the State for the
possible expense of caring for such passenger for a period of two years.
71. The general revenue law of 1850 (Stats.1850, c. 52, §§ 20 and 21) first
provided for such assessment, and the inception of such equalization was the
general revenue law of 1851 (Stats. 1851, c. 6, § 28).
73. Id.
74. Id.
75. Id.
76. Stats.1869-70, c. 489, p. 714. The reason for the board was explained and its
existence and constitutionality upheld in Savings & Loan Soc. v. Austin (1873)
46 C. 415.
Page 66 of 99
78. Id.
79. Id.
80. Id.
82. License tax provisions were placed in sections 3356-3387, provisions on the
property 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 the
provisions of this Code on the same subject, but in all cases provided for by this
Code all statutes, laws, and rules heretofore in force in this State, whether
consistent or not with the provisions of this Code, unless expressly continued in
force by it, are repealed and abrogated."
It was held in People v. Clunie (1886) 11 P. 775, 70 C. 504, that this language
repealed the general revenue law of 1861. Not until 1939, however, was that law
specifically repealed (Stats. 1939, C. 154, p. 1274).
84. The 1870 law creating the first State Board of Equalization, while not
expressly repealed by the adoption of the Political Code in 1872, was evidently
superseded by provisions on the same subject incorporated in sections 352 and
3692-3705 (see Index to the Laws of California (1921), p. 96)
87. Article 13, § 1. The purpose was evidently in part to overcome the holding in
People v. Hibernia Sav. & Loan Soc., and thereby reach moneylenders (see
Fankhauser, pp. 263-264).
88. Id. The exemption of growing crops was one of the objectives of the
Workingmen's Party delegates to the Constitutional Convention (see Fankhauser,
p. 258).
89. Id.
Page 67 of 99
90. Article 13, § 2. The purpose of the requirement as to the separate assessment
of land and improvements was said to be to '"break up the land monopoly and to
compel improvements on the land" (Fankhauser, p. 266).
91. Ibid., § 3.
92. Ibid., § 4. This, too, was evidently to nullify the decision in People v. Hibernia
Sav. & Loan Soc. (see Fankhauser, pp. 266-267).
94. Ibid., § 6.
95. Ibid., § 7. The objectives were to make it easier for a taxpayer to pay his taxes
and to keep money in circulation, rather than locked up in a public treasury (see
Fankhauser, p. 268).
97. Ibid., § 9.
98. Ibid., §10. The provision for the assessment of railroad property by the State
Board of Equalization was prompted by difficulty that local assessors had
previously had in assessing such property and by virtual impossibility otherwise
of securing uniformity in the valuation thereof (see Fankhauser, p. 300).
100. Ibid., § 12. The primary reason given for the tax was that it would either help
rid the State of Mongolians or make them contribute toward the maintenance of
government (see Fankhauser, p. 267).
105. Ibid., § 12. The section was based on a similar section in the Missouri
Constitution, and was designed to give local government a measure of home rule
Page 68 of 99
in matters of local taxation (see Report of the Senate Interim Committee on State
and Local Taxation, Part Three, "A Legal History of Property Taxation in
California" (1955), pp. 43-44, relating to the levy and collection of property taxes.
107. Stats.1907, c. 334, pp. 614, 627, adding section 125 to the Political Code.
109. Stats.1883, c. 40, p. 71, adding section 3670 to the Political Code.
112. Id.
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.
Page 69 of 99
126. Ibid., c. 486, p. 493.
128. Report of the Commission on Revenue and Taxation (1906), p. 31, found in
Vol. 2 of 1907 Appendix to Journals of Senate and Assembly. This document Is
hereafter referred to as the 1906 Report.
134. The term '"Common property" is here and hereafter used broadly as meaning
nonpublic utility property.
136. The commission also noted that the section had been copied from a
provision in the Missouri Constitution, and that it served no purpose and never
had served any (1906 Report, p. 15).
141. Stats.1910, 2d Ex. Sess., Res. c. 2 (Assembly Concurrent Resolution No. 4).
Page 70 of 99
143. Stats.1911, c. 335, p. 530. For a complete history of this legislation
thereafter, in respect to public utilities, banks and franchises, see Report of the
Senate Interim Committee on State and Local Taxation, Part Four, "A Legal
History of Property Taxation In California" (1953), pp. 112-128, relating to the
assessment and equalization of property, found in Vol. 3 of 1953 Appendix to
Journal of the Senate.
145. Stats.1913, c. 336, p. 680. The rePeal was evidently prompted by the
supposition that the tax was unconstitutional, in view of a decision of the
California Supreme Court in H. K. Mulford Co. v. Curry (1912) 125 P. 236, 163
C. 276.
147. Stats.1913, c. 594, p. 1065, adding Section 445 to the Political Code.
150. Ibid., § 4.
152. Ibid., § 1.
153. Stats.1915, c. 190, p. 422. This was after the reversal of the H. K. Mulford
Co. case (see note 145, supra) In Albert Pick Co. v. Jordan (1914) 145 P. 506, 169
0. 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 the
repeal of the poll tax In 1914 (see Stockwell, Studies In California Taxation,
1910-1935, (1939), p. 125).
157. The commission consisted of the following three members: Clyde L. Seavey,
Chairman, E. A. Dickson and Lee C. Gates.
Page 71 of 99
158. Report of the State Tax Commission (1917). This report will hereafter be
referred to as the 1917 Report.
174. In re Heikich Terul (1921) 200 P. 954, 187 C. 20, 17 A.L.R. 630.
Page 72 of 99
177. See Arnold v. Hopkins (1928) 265 P. 223, 226, 203 C. 553, 559.
179. Stats.1927, C. 19, P. 17, adding sections 3664aa, 3670bb, and 3670cc to the
Political Code.
183. Id.
184. Stats.1927, c. 844, p. 1708. This was upheld on referendum at the General
Election of Nov. 6, 1928.
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 the
holding 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 the
Political Code; and see Stockwell, p. 136.
192. Perkins Mfg. Co. v. Jordan (1927) 254 P. 551, 200 C. 667.
Page 73 of 99
196. The chairman was Air. Irving Martin, and Professor Robert Murray Haig of
Columbia University was its adviser and director of research.
197. This report was reprinted as Part Three of the Final Report of the California
Tax Commission (1929), pp. 243-291.
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 Political
Code, taxing intangibles.
203. Final Report of the California Tax Commission (1929). This document is
hereafter referred to as the 1929 Report.
205. Id.
208. The committee consisted of 8 members of the Legislature, its chairman was
Speaker Edgar C. Levey, and assisting It was a technical staff headed by Mr.
Page 74 of 99
Edward Glass.
213. Summary Report of the California Tax Research Bureau (1932), found in
Vol. 3 of 1933 Appendix to Journals of Senate & Assembly,
226. Stats.1933, c. 51, p. 340, and c. 178, p. 625. Federal authorization came with
the adoption of the 21st Amendment late in 1933.
Page 75 of 99
229. Ibid., c. 358, p. 1266.
233. Ibid., c. 834, p. 2251, amending section 3627a of the Political Code.
244. Stats.1953, c. 1311, operative April 1, 1956, adding Part 1.5 to Division 2 of
the Revenue and Taxation Code.
246. The tax Imposed by the Private Car Tax Law (R. & T.C. §§ 11201-11752) is
today the only property tax imposed for state governmental purposes.
"R. & T.C." Is used here and hereafter as an abbreviation for the Revenue and
Taxation Code.
Page 76 of 99
247. Article 13, 11.
248. Id.
254. Ibid., § 1.
256. Ibid., § 1.
261. Ibid., § 4.
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 may
be on the real property of the owner (R. & T.C. § 2189; Fresno County v.
Page 77 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)
268. R. & T.C. § 826 et seq. The assessment of public utility and other prop. erty
by the State Board of Equalization is provided for by Section 14 of Art. 13 of the
State Constitution. Such property will frequently hereafter be referred to as
"'state-assessed property."
276. Id.
280.Ibid., § 617.
281. Ibid., §§ 109, 756. Property on the board roll is also part of the ""secured
roll," as is property on the local roll the taxes on which are a lien on real property
sufficient, In the opinion Of the assessor, to secure the payment of the taxes, The
local roll also consists of ""unsecured property," which is property the taxes on
Page 78 of 99
which are not such a lien. Such property makes up the "unsecured roll."
284. Ibid., §§ 1605 and 1606;Wells, Fargo & Co. v. State Board of Equalization
(1880) 56 C. 194, 6 P.C.L.J. 358.
287. Ibid., § 1831. The board may equalize only by increasing or lowering the
entire assessment roll of a county; It may not raise or lower any individual
assessment (Wells, Fargo & Co. v. State Board of Equalization (1880) 56 C. 194,
6 P.C.L.J. 358).
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, State
Equalization of Local Assessments (1953), p. 34 et seq., published by Bureau of
Public 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.
292.Ibid., § 1832.
293.Ibid., § 1833.
294.Ibid., § 1834.
295.Ibid., § 1836.
Page 79 of 99
298. Ibid., § 754.
304. Stats.1951, c. 1554, p. 3549; Stats. 1953, c. 362, p. 1632; and Stats.1955, c.
256.
306. Const. Art. 13, § 9a; R. & T.C. 2905; Gov.C. § 29124.
312. R. & T.C. §§ 2606, 2702. The latter was recently amended to change the
date from January 20 (Stats.1955, c. 384).
Page 80 of 99
319. Ibid., §§ 2624, 2707.
324.Ibid., § 3357.
325.Ibid., § 3358.
329.Ibid., § 127.
Page 81 of 99
340. Ibid., §§ 3695, 3712.
346. Report of the Senate Interim Committee on State and Local Taxation, Part
Three, "A Legal History of Property Taxation in California," (1955), pp. 263-265,
relating to the levy and collection of property taxes.
Page 82 of 99
360. Ibid., §§ 30, 67.
376. Id.
Page 83 of 99
382. Section 40.
384. Section 5.
388. Section 3.
389. Section 8.
390. Section 33.
394. Section 4.
396. Id.
Page 84 of 99
404. Section 3617.
411.Section 3768.
416. Stats.1873-4, c. 392, p. 143, amending section 3773 of the Political Code.
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 Political
code.
422. Stats.1885, C. 108, p. 90, amending 424. Id., pp. 341-343. section 3785 of
the Political Code.
425. Stats.1895, c. 218, p. 308, amending various sections of the Political Code.
Page 85 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.
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 Revenue
and Taxation Code.
432. Stats.1938, Ex.Sess. c. 23, p. 110, adding sections 3857 to 3859.20 to the
Political Code, now in sections 3591 to 3617 of the Revenue and Taxation Code.
434. See Gartner v. Roth (1945) 157 P.2d 361, 363, 26 C.2d 184, 188.
437. Stats.1941, c. 293, p. 1436, adding sections 3618 to 3637 to the Revenue and
Taxation Code.
438. Stats.1943, c. 897, p. 2743, adding sections 3950 to 3972 to the Revenue and
Taxation 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, now
codifled 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.
Page 86 of 99
443. Stats.1955, c. 381, repealing the provisions of sections 3817c and 3817i of
the Political Code which were in 1939, codified in sections 4256 to 4306 of the
Revenue and Taxation Code.
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.
Page 87 of 99
463. Stats.1935, c. 361, p. 1297.
465. Stockwell, pp. 201-203; Report of the Senate Interim Committee on State
and Local Taxation, Part Three, "State and Local Taxes in California: A
Comparative Analysis" (1951), p. 35
466. Chicago Bridge & Iron Co. v. Johnson (1941) 119 P.2d 945, 947, 19 C.2d
162, 165.
471. Id.
476. Stats.1955, c. 1311, operative April 1, 1956, adding Part 1.5, consisting of
sections 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 the
Assembly Interim Committee on Revenue and Taxation, '"Report of
Subcommittee Studying Property Tax Exemptions, Personal Property Tax
Administration and Local Sales Taxes" (1955), pp. 7-10.
Page 88 of 99
481. Ibid., § 7305.
489. Ibid., §§ 8352-8353. The Highway Users Tax Fund is provided for in section
2100 of the Streets and Highways Code, having been created in 1947 as part of
the Collier-Burns Highway Act of 1947 (Stats.1947, First Ex.Sess., c. 11). The
fund consists of the revenue derived from various highway users taxes, and is
appropriated and allocated for public street and highway purposes.
493. Section 3.
494. Id.
495. Ibid., § 4.
Page 89 of 99
501. See note 489, supra.
503. Stats.1955, C. 4.
515. Stats.1937, c. 352, p. 763. The law was evidently enacted because of the
Increasing use of diesel engines in motor vehicles in the middle 1930's (see
Report of the Senate Interim Committee on State and Local Taxation, Part Three,
"State and Local Taxes in California: A Comparative Analysis" (1951), p. 403).
518. Stats.1955, c. 4.
Page 90 of 99
521. R. &T.C.§9651.
531. The codification occurred In 1941 when the 1933 law was placed in Part 4 of
Division 2 of the Revenue and Taxation Code by Stats.1041, c. 39, p. 590.
541. Ibid., §§ 11001-11005; City of Los Angeles v. Riley (1936) 59 P.2d 137, 6
Page 91 of 99
C.2d 621; County of Los Angeles v. Riley (1936) 59 P.2d 139, 6 C.2d 625, 106
A.L.R. 903.
548. Ingels v. Riley (1936) 53 P.2d 939, 5 C.2d 154, 103 A.L.R. 1.
Page 92 of 99
562. Stats.1905, c. 612, p. 817.
Page 93 of 99
584. Const. art. 13, § 14.80; R. & T.C. § 12263.
587. Stats.1005, c. 133, p. 136. As has been noted, the tax was first imposed in
1903, but not on life insurance companies. It was extended in 1905 to cover those
companies as well.
588. Const. art 13, 1 14, as adopted In 1910; Stats.1911, c. 335, p. 530, later in
part codified In section 3664b of the Political Code by Stats.1917, c. 214, p. 336.
590. See page 14 of Part 1 of the ballot pamphlet issued in connection with the
General Election of November 8, 1938.
591. See pages 12 and 13 of Part I of the ballot pamphlet issued In connection
with the General Election of November 3, 1942.
Page 94 of 99
603. Ibid., §§ 13981-13990.
613. Stats.1905, c. 314, p. 341. One authority states in effect that this law was
based on the Wisconsin law of 1903 (Stockwell, p. 49); another Indicates that It
was modeled after a New York law (McDougald v. Lilienthal (1917) 164 P. 387,
174 C, 698, L. R.A. 1917F, 267).
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.
Page 95 of 99
623. Ibid., § 15551.
Page 96 of 99
645. Journal of the Senate (1935), p.2026.
649. Ibid.
Page 97 of 99
667. See Stockwell, pp. 129-13L
Page 98 of 99
689. Ibid., §§ 1521-1537.
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