THE CALIFORNIA TAX SYSTEM

By J. GOULD Deputy Legislative Counsel Analysis [Reprinted with Permission (59 West's Annotated California Codes 1-77 (1956))]

1. Present Composition 2. General Historical Background A. 1849-1879 B. 1879-1910 C. 1910-1933 D. 1933-Present 3. Major Taxes A. General Property Tax (1) Outline (a) Tax Base (b) Assessment and Equalization i. Under Existing Law ii. Under Chapter 1466 of Statutes of 1949 (c) Levy (d) Collection Page 1 of 99

i. Secured Property Taxes ii. Unsecured Property Taxes (e) Miscellaneous (2) History B. Sales and Use Taxes (1) Sales and Use Tax Law

(2) Bradley-Burns Uniform Sales and Use Tax Law C. Highway Users Taxes (1) Motor Vehicle Fuel License Tax Law (2) Use Fuel Tax Law (3) Motor Vehicle Transportation License Tax Law (4) Vehicle License Fee Law (5) Vehicle Registration Fees D. Private Car Tax E. Insurance Company Taxes (1) Ocean Marine Insurers (2) Other Insurers (3) History F. Inheritance and Gift Taxes (1) Inheritance Tax Law (a) Outline

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(b) History (2) Gift Tax Law G. Personal Income Tax (1) Outline (2) History H. Bank and Corporation Taxes (1) Outline (2) History I. Alcoholic Beverage Taxes J. Unemployment and Disability Compensation Insurance Taxes K. Horse Racing Fees 1. PRESENT COMPOSITION California's current taxing system is a combination of various state and local taxes, fees, assessments, and other levies imposed or made to obtain revenue for financing the operations of government. 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today derives the greatest percentage of its revenue; and the third, titled Division 30, lists and cites various repealed tax laws which either have been codified in the Revenue and Taxation Code or been considered obsolete.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 Page 3 of 99

'"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 Miscellaneous sources of state revenue include tonnage taxes imposed by the Agricultural Code on commercial fertilizers and agricultural minerals22 and feeding stuffs;23 taxes on admissions to boxing and wrestling matches imposed by the Business and Professions Code;24 privilege taxes imposed by the Fish and Game Code on fish canners and dealers25 and for the harvesting of kelp;26 license taxes imposed by the Public Resources Code27 on millers, refiners, purchasers, and others dealing in gold or silver bearing ores, concentrates or amalgams; oil and gas charges and assessments levied by the Public Resources Code;28 fees imposed by the Public Utilities Code29 on property transportation agencies subject to the jurisdiction of the Public Utilities Commission; regulatory licenses and fees imposed on numerous occupations and professions by the Business and Professions Code, and fish and game sporting license fees imposed by the Fish and Game Code.30 Complementing the general property tax provisions in Division 1 of the Revenue and Taxation Code are provisions in the Government Code31 relating to an annual county levy of property taxes for county and special district purposes. Cities are also authorized by the Government Code32 to impose property taxes. Pursuant to the Business and Professions Code,33 counties and cities may license businesses for purposes of regulation, in the exercise of their police powers. As of April 1, 1956, counties will be empowered by Part 1.5 of Division 2 of the Page 4 of 99

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. In accordance with authorization contained in Section 6 of Article 9 of the State Constitution, the Legislature has provided in the Education Code39 for an annual levy of school district property taxes. 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 2. GENERAL HISTORICAL BACKGROUND The development of taxation in California can be conveniently considered with respect to the periods 1849 to 1879, 1879 to 1910, 1910 to 1933, and 1933 to the present day. 1849 was the year in which the state's first Constitution was adopted; 1879, the year of its second and current Constitution; and 1910 and 1933, years in which major revisions in the California tax system occurred. 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: "Taxation shall be equal and uniform, throughout the State. All property, in this State, shall be taxed in proportion to its value, to be ascertained as directed by law; but assessors and collectors of town, county and State taxes shall be elected by the qualified electors of the district, county, or town in which the property taxed for State, county, or town purposes is situated." 45 Section 13 was evidently principally the result of a compromise between delegates to the constitutional convention who believed that the Legislature should have unrestricted power to tax, and others, mostly from the southern part of California, who were in fear that such power would vest too much political strength in the north, and who indicated that without the language they would riot support any proposed constitution.46 The second clause of the second sentence was declared particularly necessary in order to overcome the objection of large landowners against the possible assessment of their property by persons not residing in the area where the property was located.47 The first sentence and the first clause of the second were, according to the delegate who proposed them, taken from the Constitution of Texas.48 At its first session in 1850, the California Legislature enacted a comprehensive revenue law which imposed a general property tax for state purposes, provided for the imposition of such a tax for local purposes, and imposed also a poll tax .49 A military commutation tax,50 a foreign miners' license tax,51 and duties on Page 6 of 99

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 The act by which California became a member of the Union on September 9, 1850,54 curbed the state's taxing power to a limited extent in providing that the State "shall never levy any tax or assessment of any description whatsoever upon the public domain of the United States, and in no case shall non-resident proprietors, who are citizens of the United States, be taxed higher than residents. ***" A new general revenue law was enacted in 1851,55 this imposing or providing 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 Page 7 of 99

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 As a remedy for the situation, the establishment of a state board of equalization, with advisory and supervisory jurisdiction over the work of the local assessors and boards of equalization, was recommended from time to time,75 and in 1870 such an agency was created.76 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 Page 8 of 99

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. Evidently as a consequence of Houghton v. Austin, the continuation of the board for the purposes for which it had originally been created was considered futile;85 and in 1876 its composition was changed to consist of the Governor, the Attorney General and the State Controller, its equalization and assessment investigation powers were eliminated, and it became virtually a mere statistical bureau and advisory body.86 Also in 1876, the Supreme Court of the State of California decided in People v. Hibernia Sav. & Loan Soc., 51 C. 243, 21 Am.R. 704, that credits, even if secured by mortgages, were not "property" for purposes of taxation. B. 1879 - 1910 The evolution of California's taxing system was next significantly influenced by the adoption of a new constitution in 1879. For one thing, that instrument omitted the provision in the 1849 Constitution for equal and uniform taxation. It also differed from the latter in these respects: it defined taxable property as including money, credits, bonds, stocks, dues, franchises, and anything else capable of private ownership;87 it exempted from taxation growing crops and public school and other publicly-owned property;88 it authorized the Legislature to provide for a deduction from credits of debts due bona fide residents of California, except in the case of credits secured by mortgage or trust deeds;89 it required the separate assessment of land and improvements, and directed that cultivated and uncultivated land of the same quality and similarly situated be assessed at the same value;90 it required the assessment by sections or fractions of sections of tracts of land containing more than 640 acres which the United States Page 9 of 99

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): is * * * such State and county Boards of Equalization are hereby authorized and empowered, under such rules of notice as the county boards may prescribe, as to the county assessments, and under such rules of notice as the State Board may prescribe, as to the action of the State Board, to increase or lower the entire Page 10 of 99

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. In 1880, in Wells, Fargo & Co. v. State Board of Equalization, 56 C. 194, 6 P.C.L.J. 358, the California Supreme Court construed the provisions of the 1879 Constitution on the state and local boards of equalization (i. e., Article 13, § 9) as authorizing the State Board of Equalization to increase or lower the entire assessment roll of a county, but not any individual assessment, and, conversely, as empowering a county board of equalization to increase or lower an individual assessment on the county roll, but not the entire roll. In People v. Dunn (1881) 59 C. 328, 8 P.C.L.J. 319, and Schroeder v. Grady (1884) 5 P. 81, 66 C. 212, the court sustained an action of the State Board of Equalization increasing an entire assessment roll in a specified percentage by way of equalization with respect to mortgages and deeds of trust which had evidently been shown on the local assessment roll at their face value, less the value of the property involved. These decisions apparently prompted an amendment of Section 9 of Article 13 of the 1879 Constitution on November 4, 1884, prohibiting the State Board of Equalization from raising "any Mortgage, deed of trust, contract, or other obligation by which a debt is secured, money or solvent credits above its face value. * * " The section was amended at the same time to empower the Legislature to redistrict the State into four districts, "as nearly equal in population as practical," for the election of members of the State Board of Equalization. A redistricting of the State pursuant to such authorization was first provided for in 1907.107 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 License fees for fishing were apparently first imposed in 1887.110 Between 1879 and 1910, the 1879 Constitution was amended from time to time to provide for additional property tax exemptions. These included exemptions in Page 11 of 99

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 A collateral inheritance tax was imposed by the Legislature in 1893.121 In 1903 an annual tax on gross premiums, less returned premiums, reinsurance, and losses actually paid, received by insurance companies other than life, was imposed on foreign insurance companies doing business in California.122 The tax was extended to life insurance companies in 1905.123 A tax on the sale of agricultural minerals or commercial fertilizers, where the selling price to the consumer was more than $8 per ton, was imposed in 1903.124 In 1905 the 1893 inheritance tax law was repealed and superseded by another law which imposed a direct as well as a collateral inheritance tax.125 An annual license tax on corporations, with respect to their right to do business in California, was also imposed in 1905.126 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 Page 12 of 99

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 Page 13 of 99

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 To achieve separation, the commission believed that it was first necessary to amend the State Constitution. It observed in this regard that in the absence of all amendment, an express bar to separation was found in Section 10 of Article 11, the section incorporated in 1879 to prohibit the release of any county, city, or other local subdivision, or any inhabitant thereof, from its or his proportional share of taxes levied for state purposes.136 It suggested, accordingly, that the section be repealed. In addition, it recommended that Article 13 of the Constitution, which contained most of the more important revenue and taxation provisions in that instrument, be revised to eliminate or modify other provisions which might prohibit separation, to enumerate the subjects of taxation to be set aside for the exclusive use of the State, to specify the method of their taxation, and to bring all exemption provisions together.137 At its 1907 Session the State Legislature proposed that the Constitution 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. In 1909 the Legislature again proposed an amendment of the Constitution to carry out the recommendations of the Commission on Revenue and Taxation.140 The proposal called for the repeal of Section 10 of Article 11, the amendment of Section 10 of Article 13 by the deletion of the provision therein for the assessment of railroad property by the State Board of Equalization, and the addition of a new Section 14 to Article 13. Incorporated in the latter were the provisions for the taxation for state purposes of public utility corporations, insurance companies, the shares of capital bank stock, and corporate franchises. There were included also in the section a provision for the levy of a state property tax for state purposes in the event of a deficit in state revenue; a provision making bank shares and the property of public utilities and insurance companies liable for the outstanding bonded indebtedness of counties, cities, and districts; a provision authorizing the Legislature to change the tax rates specified in the section upon a two-thirds vote of the members of each house; a provision that until 1918 the Page 14 of 99

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. Legislation implementing Section 14 of Article 13, popularly known as Senate Constitutional Amendment No. One, was enacted in1911.143 The legislation itself is sometimes referred to as the Comprehensive Tax Act of 11911. The year 1911 also saw the repeal of the 1905 inheritance tax law and 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 The Constitution was amended in 1914 to provide exemptions for college property generally149 and for ships,150 to prohibit the levy of poll taxes,151 and to provide for the taxation of land and improvements thereon of a county or city located outside its boundaries and subject to taxation when acquired.152 A new corporation license tax was imposed in 1915.153 In the same year a motor Page 15 of 99

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 Dissatisfaction having arisen in respect to the 1910 revision, chiefly on the ground that the tax burden on common property was constantly increasing at a greater rate than the burden on public utility property, the Legislature in 1915 provided for the appointment by the Governor of a state officer or of experts to investigate the tax systems then in force in California and elsewhere, paying particular attention to the relative tax burdens of common and public utility property, and the revenue losses sustained by the counties as a result of the removal of railroad property from the tax rolls, and to submit a report thereon to the Legislature at its 1917 session.156 Pursuant to this legislation, the Governor appointed a State Tax Commission,157 which made the investigation and, in 1917, submitted a report.158 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 The commission recommended that an effective system of budget control be worked out for all levels of government, that there should be a more scientific basis for making assessments, that the tax burden as between common property and public utility property, and as between the various types of the latter property, should be equalized, and that an income tax be adopted.160 As was said in a report of a subsequent tax commission:161 "The recommendations of the Commission in 1917 were submitted at a singularly unfortunate time. In the excitement and preoccupations incident to America's entrance into the war the report appears to have been almost completely ignored except for the utilization of certain of its statistical results in connection with the 1921 adjustment of the corporation tax rates." The 1915 commission's recommendations appear also to have been acted on in part through the enactment of a tax limitation law in 1917, which was designed to regulate and limit the amount that might be produced by local tax levies.162 The Page 16 of 99

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 In 1920 a constitutional amendment was adopted to exempt the property of orphan asylums from taxation,166 and another was adopted in the same year to provide again for the levy of a poll tax, this time on alien male inhabitants.167 1921 witnessed the repeal of the 1917 inheritance tax law and the adoption of 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 The Constitution was further amended in 1925 to authorize the Legislature to provide for the assessment, levy, and collection of in lieu taxes on otherwise taxable notes, debentures, shares of capital stock, bonds, solvent credits, or mortgages at a rate different from, but not greater than, that on any other taxable property, subject to change on a two-thirds vote of the members of both houses .116 The purpose of the authorization was to overcome administrative difficulty that had been encountered arising out of the concealment of intangibles and their assessment.177

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The 1923 motor vehicle transportation license tax act was in 1925 repealed and superseded by another substantially similar law.178 At the General Election held on November 8, 1926, Section 15 was added to Article 13 of the State Constitution to provide that highway common carriers were to be classed as public utilities and taxed on the basis of their gross receipts, the tax to be in lieu of all other taxes and licenses; and implementing legislation was enacted in 1927.179 The effect was to remove such carriers from the scope of the motor vehicle transportation license tax, and narrow the application of that tax to highway contract carriers. This caused considerable difficulty in its administration,180 and apparently for that reason it was repealed in 1927, as of January 1, 1928.181 However, evidently on the recommendation of the State Board of Equalization,182 as a substitute for the repealed law183 the Legislature in 1927184 amended Section 77 of the California Vehicle Act to provide for graduated weight fees. 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 Pursuant to the 1924 constitutional amendment regarding the assessment, levy, and collection of taxes on intangibles, the Legislature in 1925 enacted the so-called Solvent Credits Act,187 which provided for the assessment of intangibles at 7 percent of their full cash value. Certain national banks thereafter protested on the ground that as the result of the act, "other moneyed capital" in competition with the banks was being less heavily taxed, and that this violated Section 5219 of the Revised Statutes of the United States, which permitted the taxation of national bank shares subject to the restriction that the tax "shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens. * * *"188 The protests, together with various decisions of the United States Supreme Court, including, principally, that in Merchants' Nat. Bank of Richmond v. City of Richmond (1921) 41 S.Ct. 619, 256 U.S. 635, 65 L.Ed. 1135, involving the Virginia bank tax, to the effect that the investments of individuals in bonds, notes, and other evidences of indebtedness came into competition with the activities of national banks, and, therefore, their taxation at a lesser rate than that on national bank stock violated Section 5219, led to the enactment in 19"-17 of another law to authorize the taxation of intangibles at a rate of 1.45 percent of their full cash value, which was the exact rate of the bank stock tax.189 In 1928, however, the California Supreme Court declared that the 1925 and 1927 enactments did not conform in specified details with the 1924 constitutional amendment, and hence were invalid.190

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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 In 1927 legislation was enacted195 authorizing the appointment by the Governor of a tax commission to investigate the systems of revenue and taxation in force in California and elsewhere, and to submit a report thereon, including recommendations as to necessary changes in the state's system, to the Governor for submission by him to the Legislature at its 1929 Session. Such a commission, known as the California Tax Commission, was appointed.196 On August 10, 1928, the Commission, in a special report197 to Governor Young, recommended that he call a special session of the Legislature to consider the submission of a suitable constitutional amendment to the people at the General Election in 'November of 1928, to accomplish the following: provide for a tax on national and other banks by the so-called "fourth method" permitted by Section 5219 of the Revised Statutes of the United States, that is, "acording to or measured by their net income;"198 give the Legislature corresponding authority to make -necessary changes in the form of the existing general corporation franchise tax so as to permit the use of net income as the measure of the value of general corporation franchises; and remove the constitutional obstacles to the taxation oil intangible personal property. The Governor, on August 16, 1928,199 called tile Legislature into a special session to commence on September 4, 1928, to consider the submission of the constitutional amendment suggested; and in a message to the Legislature on the date it convened, advised it that something had to be done in respect to the bank tax problem if the State's bank tax revenue was to be preserved.200 Responding to the exigencies of the situation, the Legislature proposed the addition of Section 16 to Article 13 of the Constitution,201 and such proposal was approved by the voters at the General Election held on November 6, 1928. Section 16 provided that all banks should pay an annual tax "according to 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 Page 19 of 99

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. Legislation carrying out the provisions of Section 16 was enacted in 1929.202 The California Tax Commission submitted its final report to the Governor on February 1, 1929.203 It stated therein, in part: 204 "From the analysis it has made, the Commission is convinced that the system of separation of sources, as established in 1910 by 'Amendment Number One,' has outlived its usefulness and should be abandoned. Its faults are serious and fundamental. It discriminates against certain localities and favors others by the manner in which it withdraws property for state taxation which should properly be subject to local tax levies. It supplies the state with revenues in amounts determined by factors quite unrelated to its fiscal needs. The problem of adjusting the rates of the gross receipts taxes on public utilities so as to equalize their burden with the burden on common property is difficult, if not impossible to solve and is provocative of disputes pregnant with unfortunate political consequences. It is impossible to adjust the rates on gross receipts so as to achieve a tolerable degree of equity as between company and company. Its advantages of simplicity and fiscal productivity are purchased at too high a price." It went on to say205 that it favored the gradual transformation of the existing tax system into one consisting of three main divisions: the first, an objective property tax imposed where property is located, to serve primarily as a source of local revenue; the second, Page 20 of 99

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; Page 21 of 99

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. The Legislature in 1931 apparently acted on two of these recommendations by creating a Tax Research Bureau in the State Board of Equalization211 and memorializing Congress to change the federal law on the taxation of national banks.212 In 1933 the bureau submitted a summary report213 then a final report,214 and in the same year the law creating it was repealed.215 At the General Election in 1932 the Constitution was amended to authorize 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 At the 1933 Session a Joint Legislative Tax Committee, appointed to study suggested sources of new revenue in order to provide relief for real estate through the lowering of property taxes and to effect a balancing of the State Budget, made these general recommendations:218 that the constitutional provisions on the separation of revenue sources be repealed and utility property be taxed like other property; that utility companies be made subject to the Bank and Corporation Franchise Tax Act; that a limitation be placed on any property tax levied for state purposes, this to provide that not more than 25 percent of all appropriations for state support be raised by such a tax; that the inheritance tax exemption for widows be reduced; that the State be permitted to assume a larger share of the cost of education; that a 2 percent consumers' retail sales tax be levied; that a limitation be imposed on the power of the boards of supervisors to levy taxes for general purposes; and that an income tax be imposed. 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 Page 22 of 99

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

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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 In 1938 Section 14.75 was added to Article 13 of the State Constitution to provide for the taxation of insurance companies after 1937. Article 26 was added in the same year to confine to highway purposes the use of most highway users' revenue. At the 1939 Session a gift tax was imposed on the enactment of the "Gift Tax Act of 1939."238 The same session witnessed the origin of the licensing of itinerant merchants engaged in transporting goods by motor vehicle.239 By constitutional amendment in 1944,240 the Legislature was authorized to exempt property used for religious, hospital, or charitable purposes. The constitutional provision241 authorizing a poll tax was repealed in 1946. A constitutional amendment adopted in 1952 prohibited the allowance of any tax exemption in the case of any subversive person or group.242 Implementing legislation for property tax and bank and corporation tax purposes was enacted by the Legislature in 1953.243 At the recently adjourned 1955 Session, the "Bradley-Burns Uniform Local Sales and Use Tax Law" was enacted.244 Page 24 of 99

3. MAJOR TAXES A. GENERAL PROPERTY TAX 245 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 (a) Tax Base 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 A person claiming an exemption in regard to common property must also file an affidavit in support of the exemption. In most instances the affidavit must be filed within the same period as the property statement;269 in the case of the Welfare Exemption (the exemption of property used for religious, hospital, or charitable purposes), however, the affidavit must be filed on or before April 1.270 Except as Page 25 of 99

to the Householder's Exemption, a loyalty declaration must be included.271 (b) Assessment and Equalization i. Under Existing Law Between the first Mondays in March and July, the county assessor is required 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. On or before the first Monday in July,278 the county assessor is required to complete a portion of the assessment roll known as the ""local roll," which lists all the property that the assessor is required to assess, the values of such property, the names of the assessees, and other required information;279 and upon its completion must deliver it to the clerk of the board of supervisors.280 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 ii.Under Chapter 1466 of Statutes of 1949 In an attempt to improve local assessment practices,290 the Legislature enacted Chapter 1466 of the Statutes of 1949. This legislation was to become effective on September 2, 1950, and operative initially with respect to assessments made as of the first Monday in March, 1951. 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 Page 27 of 99

State-assessed property was to be assessed by the board on or before the fourth, rather than the first, Monday in August.297 Following its notifying the board of supervisors of its determination of the county-wide and state-wide ratios, the board was to furnish a statement of the ratios, upon request, to any owner or assessee of state-assessed property; and, upon written application filed not later than the first Monday in August, was to hear any objection made by such person to a ratio in any county in which property might be owned by or assessed to him.298 Any such hearing could be consolidated with any hearing afforded any county on the ratios. 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 A petition for redetermination filed by an owner or assessee of state-assessed property was to be heard by the board at any time prior to the third Monday in August.300 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 Opposition to Chapter 1466 has resulted in the postponement of its general operation for successive two-year periods, and it now is to become operative initially in regard to assessments made as of the first Monday in March of 1957.304 (c) Levy The board of supervisors must, on or before September 1, fix the rates of and levy Page 28 of 99

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 i. Secured Property Taxes 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 A first installment which is unpaid at 5 p. in. of December 10 is delinquent,317 and thereafter a delinquent penalty of 6 percent attaches to it. A similar delinquent penalty attaches to a second installment which is delinquent at 5 p.m. of April 10.318 After the second installment delinquent date, the tax collector prepares 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 Page 29 of 99

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 Tax-deeded property may be classified by an Advisory Committee on Tax-Deeded Property as suitable for public use, as suitable for return to private ownership, or as waste land unfit either for public or private use, and may be disposed of accordingly.330 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 Page 30 of 99

consented to the sale is not preserved.340 Provision is also made for the purchase of tax-deeded property by taxing agencies.341 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 ii. Unsecured Property Taxes 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 Personal actions to obtain the payment of delinquent unsecured property taxes may evidently also be brought against the assessees of such property.350 (e) Miscellaneous There are numerous provisions relative to the cancelling or refunding of illegally or erroneously levied or collected taxes.351 In addition, the law provides in detail for the distribution of property taxes, penalties, and costs to the various agencies involved.352 (2) HISTORY

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California has had a general property tax since 1850, when such a tax was imposed for both State and county purposes by the general revenue law of that year.353 Notwithstanding the provisions of the 1849 Constitution that taxation should be "equal and uniform," and that all property should be taxed "in proportion to its value,"354 the 1850 law exempted various types of property, including property of the United States and of the State, schoolhouses, jails, churches, cemeteries, buildings used by libraries and charitable and scientific institutions, and 'the personal property of widows and orphans up to the amount of $1,000.355 A lien for all taxes was to attach on the taxpayer's real property as of March 1,356 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 As is apparent on a mere cursory reading of the provisions of the present law, there have been numerous changes and refinements in the property tax since 1850. Some of the more significant are considered in the following. Page 32 of 99

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 Page 33 of 99

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 In the consideration of the general historical background of the California tax system, mention was made of the institution of state equalization in 1870 with the creation of the first State Board of Equalization. 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 Page 34 of 99

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 Page 35 of 99

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 Page 36 of 99

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. Following the enactment of the Tax Redemption Termination Act, economic conditions became so improved that it was considered unnecessary to provide immediately for a shortened period of redemption.434 As a consequence, the operation of the termination provisions of the law was from time to time postponed435 and in 1947 the provisions were repealed.436 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 B. SALES AND USE TAXES (1) SALES AND USE Tax LAW 444 As its title implies, the Sales and Use Tax Law imposes both sales and use taxes. The sales tax is imposed on retailers for the privilege of selling tangible 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 Page 38 of 99

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, Page 39 of 99

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 (2) BRADLEY-BURNS UNIFORM SALES AND USE TAX LAW 476 This law authorizes any county to enact a I percent sales and use tax ordinance. As a condition, however, the ordinance must include provisions similar to thos 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 C. HIGHWAY USERS TAXES (1) MOTOR VEHICLE FUEL LICENSE TAX LAW 478 The tax imposed by this law, commonly known as the "gas tax," is a license 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 Page 40 of 99

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 Exemptions are allowed in respect, among others, to distributions from one distributor to another, to distributions of exported fuel, and to fuel sold to the United States.483 In addition, refunds are allowable in favor of the following: a person who buys and uses fuel for a purpose other than the operation of a vehicle upon the highways; a person who exports fuel for use outside the State; an employee of the United States who buys fuel and uses it exclusively in transporting rural free delivery and special delivery mail; and a person who sells fuel to the Armed Forces of the United States for use in ships or aircraft or for use outside California.484 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 (2) USE FUEL TAX LAW 505 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 "Fuel" includes any combustible gas or liquid used in an internal combustion engine for the generation of power to propel a motor vehicle on the highways, other than fuel the distribution of which is subject to the gas tax.507 "Use" includes the placing of fuel in any receptacle on a motor vehicle 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 Exemptions are allowable in respect to fuel used to propel vehicles used in agricultural operations or on private property or for purposes other than the generation of power to propel a vehicle.510 A user must file a return with and pay the tax monthly to the State Board of Equalization.511 Page 42 of 99

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

(3) MOTOR VEHICLE TRANSPORTATION LICENSE TAX LAW 520 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 An "operator," generally speaking, is a person who transports persons or property for hire or compensation by motor vehicle upon the public highways outside cities.522 Such a person may be a common carrier, a contract carrier, or any other person who transports as indicated.523 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 Page 43 of 99

vehicle registration fees paid on motor vehicles used in the operator's business.525 Monthly returns and tax payments are required.526 The general administration of the tax is vested in the State Board of Equalization,527 but the State Controller collects it,528 and the Department of Motor Vehicles performs various functions regarding registration and the issuance of number plates and emblems.529 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. In the consideration of the general historical background of California's tax system, mention was made of a motor transportation license tax imposed in 1923, of its supercession by another substantially similar tax in 1925, of the repeal of the latter in 1927 as a result of the addition of a former Section 15 to the State Constitution, which had the effect of removing highway common carriers from the impact of the 1925 tax, and of the substitution in 1927 of graduated, vehicle registration weight fees under the California Vehicle Act. Thereafter, an inequitable situation arose with respect to common carriers, which evidently were paying more, comparatively, in gross receipts taxes than contract carriers did in the form of weight fees, and the 1933 law was enacted as a consequence.533 (4) VEHICLE LICENSE FEE LAW 534 This law imposes a license fee, known as the '"in lieu tax," for the privilege of operating upon the public highways a vehicle of a type subject to registration under the Vehicle Code.535 Page 44 of 99

The privilege created by a corporate entity, not an inalienable right!

"Operating" meaning, running a business.

A "device" used for commercial purposes. In the Cal Commercial Code a "vehicle" is "equipment", which is property used for business, as opposed to "consumer goods" which isn't used for commercial purposes.

The fee is a sum equal to 2 percent of the market value of the vehicle as determined by the Department of Motor Vehicles.536 It is in lieu of all other taxes on the vehicle for state or local purposes.537 The fee is inapplicable with respect to publicly-owned or operated vehicles, to vehicles owned by certain disabled veterans, and to certain fire-fighting vehicles owned by colleges.538 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 Enforcement is in the hands of the Department.540

"License" is something required to legally engage in commerce. The people don't 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 (5) VEHICLE REGISTRATION FEES
An "excise tax" is a tax on the use of a 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 Page 45 of 99

$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 Revenue is deposited in the Motor Vehicle Fund, and is appropriated therefrom for various administrative costs and to the Highway Users Tax Fund.555 Upon becoming part of the latter, it is used for highway purposes in accordance with the Collier-Burns Highway Act of 1947. The Vehicle Code was enacted in 1935556 as a codification of the 1923 California Vehicle Act,557 the latter being part and parcel of a general highway finance plan consisting also of the 1923 fuel tax licensing law558 and the 1923 motor vehicle transportation license tax law.559 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. D. PRIVATE CAR TAX 563 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 Page 46 of 99

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. E. INSURANCE COMPANY TAXES 571 (1) OCEAN MARINE INSURERS Every insurer transacting an ocean marine insurance business in California must pay an annual tax to the State equal to 5 percent of that proportion of its underwriting profit from such insurance written in the United States which its gross premiums from such insurance written in California bears to its gross premiums from such insurance written in the United States.572 The tax is in lieu of all other taxes and licenses, except real estate taxes and 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 Page 47 of 99

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 (2) OTHER INSURERS 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 A deduction may be taken with respect to taxes on real property owned by an insurer on which its home or principal office is located.585 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 It was noted in the consideration of the general historical background of the California tax system that in 1862 legislation was enacted imposing a gross receipts tax on foreign insurance companies doing business in California with less than $50,000 invested in property in this State. That tax evidently later became obsolete. 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 1905 gross premiums tax on insurance companies was, on the recommendation of the 1905 Commission on Revenue and Taxation, retained as a source of state revenue when the 1910 revision of the California tax system occurred.588 It was expanded, however, to include domestic as well as foreign companies, and the rate was fixed at 1.5 percent for all types of companies, with a provision for a retaliatory tax. Further, the tax was to be in lieu of all other taxes, other than those on real estate. However, a deduction could be taken against the tax for real estate taxes paid. The rate was increased by the Legislature from time to time, until it became 2.6 percent in 1921.589 In 1930 Section 18 was added to Article 13 of the State Constitution to provide for a tax on ocean marine insurers to be in lieu of all other taxes except those on real estate. In 1933, as part of the Riley-Stewart Plan, Section 14 of Article 13 of the State Constitution was amended in part to fix the gross premiums tax rate on insurers other than ocean marine insurers at 2.6 percent, to incorporate the general Page 49 of 99

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. As a consequence of the decision, Section 143/4 was added to Article 13 of the State Constitution in 1938 to disallow any deduction for reinsurance. It was believed that the change "would correct the situation by placing the obligation to pay the gross premiums tax on the company which does the business in this State without allowing any deductions for reinsurance premiums paid to other companies."590 In 1942 Section 144/5 was added to Article 13 to correct inequalities relating to the real estate tax deduction.591 The section provided as follows: for the elimination after 5 years (i. e., after 1946) of any deduction for taxes on any real estate not used for operational purposes, the deduction in the meantime to be allowed on a diminishing percentage basis; for the restriction of the real estate deduction after 6 years to taxes on real estate on which was located the insurer's principal or home office; and for a tax on insurers other than ocean marine insurers at a diminishing rate, commencing at 2.55 percent in 1943, and finally (after 1946) equal to 2.35 percent. Various clarifying changes were made in Section 14 4/5 by an amendment in 1949; and at the same time Section 14 was amended by the removal of the insurance tax provisions therein, and Section 14¾, was repealed. 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. F. INHERITANCE AND GIFT TAXES (1) INHERITANCE TAX LAW593 (a) Outline This law imposes a tax on the right to inherit or otherwise succeed to or receive a Page 50 of 99

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 inheritance tax is applicable not only in respect to transfers of property occurring by will or under the laws of succession, but also to various types of inter vivos transfers.597 These include transfers made in contemplation of death or with the intention that they take effect in possession or enjoyment at or after the decedent's death. Taxable transfers may also occur on the death of a joint tenant or person insured under a life insurance policy,598 or where a gift is made of a power of appointment.599 An exclusion is allowed with regard to community property going to a spouse,600 and several exemptions are permitted.601 The latter include a "specific exemption," which varies in accordance with relationship, a "marital exemption," an exemption of property previously taxed in an estate, an exemption of property given to a charitable organization, and an exemption of intangible property left by a nonresident decedent. 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 Page 51 of 99

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 (2) Gift TAX LAW 619 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 Several exemptions are allowed,621 including a "specific exemption," which varies in accordance with relationship, an exemption of property given to a charitable organization, and an exemption of intangibles. Allowable also is a $4,000 per donee "annual exemption" in respect to gifts of present interests in Page 52 of 99

property. An exclusion is allowed in the case of a gift of community property to a spouse.622 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. G. PERSONAL INCOME TAX 630 (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 The board is charged with the administration of the law.637 Revenue received is deposited in the Personal Income Tax Fund, and is appropriated therefrom for the making of refunds or transfer to the State General Fund. (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 possibility of an income tax in California was conceived at least as early as 1879, for in the 1879 Constitution a provision was incorporated authorizing the Legislature to impose such a tax.640 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. At the 1935 Session a Special Joint Committee on Revenue and Taxation recommended that a personal income tax be imposed.645 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 Page 54 of 99

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 H. BANK AND CORPORATION TAXES 652 (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 Page 55 of 99

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 The board is charged with the administration of the law.664 All revenue received is deposited in the State Treasury to the credit of the 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 Page 56 of 99

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 I. ALCOHOLIC BEVERAGE TAXES 676 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 Page 57 of 99

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 In the consideration of the general historical background of the California tax system, note was made of the enactment of the Alcoholic Beverage Control Act in 1935 and the events preceding it. The act was changed in numerous respects, mostly in its administrative provisions, from time to time after 1935, and in 1953 was codified as the Alcoholic Beverage Control Act in Division 9 of the Business and Professions Code.681 At the General Election held on November 2, 1954, Section 22 of Article 20 of the State Constitution was amended to transfer from the State Board of Equalization to the Department of Alcoholic Beverage Control the board's functions relative to licensing the manufacture, sale, and importation of intoxicating liquor, retaining in the board, however, its taxing functions. In recognition of such transfer, the Legislature in 1955 recodified the taxing provisions of the Alcoholic Beverage Control Act in Part 14 of Division 2 of the Revenue and Taxation Code.682 J. UNEMPLOYMENT AND DISABILITY COMPENSATION INSURANCE TAXES 683 The Federal Unemployment Tax Act684 imposes a 3 percent payroll tax on employers, but permits a credit against such tax up to 90, percent of it for contributions paid under a state unemployment insurance law which has been Page 58 of 99

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 California also requires employees to contribute 1 percent of their wages up to $3,000 to a Disability Fund for use in making benefit payments to them in the event of nonindustrial illness or injury.690 The Department of Employment administers the unemployment compensation and disability insurance provisions.691 The California unemployment compensation insurance law was enacted in 1935,692 the disability insurance sections were added to it in 1946,693 and it was codified in the Unemployment Insurance Code in 1953.694 K. HORSE RACING FEES 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 1. United States Constitution: Article 1, § 8, cl. 3-commerce clause: Art. 1, § 10, el. 1-contract clause; Art. 1, § 10, el. 2-import-export clause: Art. 1, § 10, cl. 3-tonnage duty clause; Art. 1, § 10, cl. 3-interstate compacts clause; Art. 4, § 1-full faith and credit clause; Art. 4, § 2, cl. 1-privileges and immunities clause; Amend. 14, § 1-due process and equal protection clauses; Amend. 21, § 2-intoxicating liquor. 2. California Constitution: a. 1879 Constitution-Current Provisions: Article 1, § 11-laws of general nature to operate uniformly; Art. 1, § 13--due process; Art. 1, § 16-prohibition against law impairing obligation of contracts; Art. 1, § 21-prohibition against granting special privileges and Immunities; Art. 4, § I-effective date of tax levy bill; Art. 4, § 25, Tenth--prohibition against special or local law for assessment or collection of taxes; Art. 4, § 25, Thirteenth-prohibition against special or local law extending time for collection of taxes; Art. 4, § 25, Sixteenth-prohibition against special or local legislation releasing or extinguishing debt or liability to State or municipal corporation; Art. 4, § 25, Twentieth-prohibition against special or local law exempting property from taxation; Art. 4, § 25, Thirty-third-prohibition against special or local law where general law applicable; Art. 4, § 25a-horse racing and betting; Art. 4, § 31-prohibition against making gift of public money for private purpose; Art. 4, § 3lb-cessation of property tax liens; Art. 4, § 34a-limitation on appropriations for State purposes from state property tax revenue to 25% of total appropriations; Art. 6, § 4-appellate jurisdiction in tax cases; Art. 9, 6-school district taxes; Art. 9, 10-tax exemption of property of Stanford University; Art. 9, § 11-tax exemption of property of California School of Mechanical Arts ; Art. 9, § 12-tax exemption of property of California Academy of Sciences; Art. 9, § 13-tax exemption of property of Cogswell Polytechnical College; Art. 9, § 15--tax exemption of Henry E. Huntington Library and Art Gallery; Art. 11, § 12-taxation for local purposes, and requirement for assessment of property for tax purposes at full cash value; Art. 11, § 13-delegation of authority to levy local taxes; Art. 11, § 20-legislative authority to limit amount of local property taxes; Art. 13, § 1-general provisions on property subject to and exempt from tax, and assessment and equalization of taxable publicly-owned property; Art. 13, § 1a-general college property tax exemption; Art 13, § lb--cemetery property tax exemption; Art. 13, § 1c-""welfare" property tax exemption; Art. 13, § 1.25-veterans' property tax exemption; Art. 13, § 1.5-church property tax exemption; Art. 13, § 1.5a-orphan asylum property tax exemption; Art. 13, § 13/4-tax exemption of bonds issued by State, counties, cities and districts; Art. 13, § 2-separate assessment of land and improvements; Art. 13, § 3-assessment of sectionized and nonsectionized land; Art. 13, § 4-property tax exemption of ships; Art. 13, § 6-prohibition against 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 b. 1879 Constitution-Former Provisions: Article 4, § 22-state property tax for Panama-Pacific International Exposition; Art. 13, § 1.6-exemption of property of 'San Francisco Bay Exposition; Art. 13, § 4-taxation of indebtedness security or evidence; Art. 13, § 5--Prohibition against contract to pay tax on borrowed money; Art. 13, § 12-poll tax; Art. 13, § 121/2taxation of intangibles; Art. 13, § 14 (1910-1933)-taxation of public utilities, insurance companies, bank shares, and franchises; Art. 13, § 14 (1933-1949)-taxation of insurance companies; Art. 13, § 14.75-taxation of insurance companies; Art. 13, § 18-taxation of ocean marine insurers. c. 1849 Constitution: Article 1, § 8-due process; Art. 1, § 11-laws of general nature to operate uniformly; Art. 1, § 16-probibition against law impairing obligation of contracts; Art. 6, § 4-appellate jurisdiction in tax cases; Art. 6, § 6-original jurisdiction in tax cases; Art. 11, § 13-taxation to be equal and uniform, all property to be taxed in proportion to value, and assessors and collectors to be elected by districts, counties or towns in which property situated. The text of the 1849 Constitution is set forth In 3 West's Annotated California Constitution (19,54), p. 699 et seq. 3. Stats.1939, c. 154, p. 1274, operative February 1, 1941, as part of the 1929 California Code Commission's codification program. The commission was created by Stats.1929, c. 750, p. 1427, and abolished by Stats.1953, c. 1445, P. 3036. As used here and hereafter, '"Stats." means the official statutes of the State of 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). 5. Stats.1955, c. 1311, operative April 1, 1956. Unlike other parts of Division 2, this part does not provide revenue for the State Government, but was drafted to authorize an additional source of revenue, under standard conditions, for local governmental units. 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 18. Stats.1055, c. 1842, effective September 7, 1955. Codified various provisions of the Alcoholic Beverage Control Act formerly in Division 9 of the Business and Professions Code. The codification was, in the main, drafted by the State Board of Equalization and the Department of Alcoholic Beverage Control. 19. Sections 976-994, 2901-2903. 20. Sections 19485 and 19485.1. 21. Section 370 et seq. 22. Section 1038. 23. Section 1083.5. 24. Sections 18710-18715 25. Sections 1015-1019. 26. Section 588. 27. Section 2251. 28. Sections 3400-3433. Page 63 of 99

29. Sections 5001-5011 30. Sections 420-432.6. 31. Sections 29120-2919-6. 32. Sections 43000-43233. 33. Sections 16000, 16100. 34. See note 5 supra. 35. Section 37101. Approximately 174 California cities presently have sales 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. 37. See Cal.Const. art. 11, § S. 38. See West Coast Advertising Co. v. City and County of San Francisco (1939) 95 P.2d 138, 143, 14 C.2d 516, 521. 39. Section 6351 et seq. 40. For classifications and general information on the types of special districts (other than school districts), including statutory citations to the laws 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. 41. State Board of Equalization's Feb. 1, 1935 Summary of Revenue Districts, prepared by its Valuation Division. 42. Id. 43. Id.

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44. The text of the 1849 Constitution Is set forth in 3 West's Annotated California Constitution (1954), p. 699 et seq. 45. It Is to be noted that the adoption of the 1849 Constitution antedated California's admission into the Union, that event occurring on September 9, 1850, the date that the Admission Act (Act of Congress, September 9, 1850, Ch. 50, 9 U.S.Stats. 4.52, text also found in 3 West's Annotated California Constitution (1954), p. 745) became law. 46. See Fankhauser, A Financial History of California (1913), pp. 120-122. Hereafter this work will be referred to merely as Fankhauser. 47. Browne, Report of the Debates in the Convention of California on the Formation of the State Constitution (1850), p. 364 et seq. 48. Ibid., p. 375. 49. Stats.1850, c. 52, p. 135. Me legislation was enacted on March 30, 1850, which was prior to California's admission into the Union (see note 45, supra). 50. Ibid., c. 76, p. 190. This was to be collected from all able-bodied male citizens between the ages of 18 and 45, other than those exempt by law or who were members of a volunteer militia company. 51. Ibid., c. 97, p. 221. 52. Ibid., c. 143, p. 456. 53. Ibid., c. 130, p. 404. 54. See note 45, supra. 55. Stats.1951, c. 6, p. 153. 56. Id., § 74. 57. Stats.1851, c. 108, p. 424. 58. Ibid., c. 8, p. 165. 59. Stats.1852, c. 3, p. 18. 60. Ibid., c. 37, p. 84. Page 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. 62. Ibid., c. 39, p. 90. 63. Stats.1853, c. 167, p. 233. 64. Stats.1854, c. 74, p. 103. 65. Stats.1857, c. 261, p. 325. 66. Ibid., c. 245, p. 304. 67. Stats.1861, c. 401, p. 419. 68. Ibid., c. 330, p. 315. 69. Stats.1862" c. 227, p. 243. 70. See Fankhauser, pp. 205-207. 71. The general revenue law of 1850 (Stats.1850, c. 52, §§ 20 and 21) first provided for such assessment, and the inception of such equalization was the general revenue law of 1851 (Stats. 1851, c. 6, § 28). 72. See Fankhauser, pp. 186-187. 73. Id. 74. Id. 75. Id. 76. Stats.1869-70, c. 489, p. 714. The reason for the board was explained and its existence and constitutionality upheld in Savings & Loan Soc. v. Austin (1873) 46 C. 415. 77. Stats.1869-70, c. 489, § &

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78. Id. 79. Id. 80. Id. 81. Ibid., § 10. 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) 85. See Fankhauser, pp. 240-241. 86. Code Amendments 1875-76, c. 577, P. 11. 87. Article 13, § 1. The purpose was evidently in part to overcome the holding 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). 93. Article 13, § 5. 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). 96. Article 13, § 8. 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). 99. Article 13, § 11. 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). 101. Article 4, § 25, tenth subdivision. 102. Ibid., thirteenth subdivision. 103. Ibid., twentieth subdivision. 104. Article 11, § 10. 105. Ibid., § 12. The section was based on a similar section in the 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. 106. See Fankhauser, p. 274. 107. Stats.1907, c. 334, pp. 614, 627, adding section 125 to the Political Code. 108. See Fankhauser, pp. 291-293. 109. Stats.1883, c. 40, p. 71, adding section 3670 to the Political Code. 110. Stats.1887, c. 180, p. 233. 111. Article 13, j 1. 112. Id. 113. Ibid., § 12¾. 114. Article 9, § 10. 115. Ibid., § 11. 116. Article 13, § 1%. 117. Ibid., § 13/4. 118. Article 9, 12. 119. Article 13, 101/2. 120. Article 9, § 13. 121. Stats.1893, c. 168, p. 193. 122. Stats.1903, c. 260, p. 359, adding section 622a to the Political Code. 123. Stats.1905, c. 133, p. 136, amending section 622a of the Political Code. 124. Stats.1903, c. 225, p. 259. 125.Stats.1905, c. 314, p. 341. Page 69 of 99

126. Ibid., c. 486, p. 493. 127. Ibid., c. 612, p. 816. 128. Report of the Commission on Revenue and Taxation (1906), p. 31, found in Vol. 2 of 1907 Appendix to Journals of Senate and Assembly. This document Is hereafter referred to as the 1906 Report. 129. Stats 1907 c 206 247 130. See Fankhauser, pp. 368-370.

131. Stats.1905, c. 334, p. 390. Governor George C. Pardee served on the commission, along with Senators J. B. Curtin and M. L. Ward, Assemblymen H. S. G. McCartney and E. F. Treadwell, and Professor Carl C. Plehn of the University of California, an exp 132. See note 128, supra. 133.1906 Report, pp. 10-11. 134. The term '"Common property" is here and hereafter used broadly as meaning nonpublic utility property. 135. 1906 Report, pp. 81-82. 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). 137. 1906 Report, p. 15. 138. Stats.1907, Res. c. 27, p. 1353. 139. Fankhauser, p. 372; Stockwell, Studies in California State Taxation, 1910-1935 (1939), p. 17. 140. Stats.1909, Res. c. 33 (Senate Constitutional Amendment No. 1), P. 1332. 141. Stats.1910, 2d Ex. Sess., Res. c. 2 (Assembly Concurrent Resolution No. 4). 142. Ibid., Res. c. I (Senate Constitutional Amendment No. 1).

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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. 144. Stats.1911, c. 395, p. 713. 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. 146. Stats.1913, c. 595, p. 1067. 147. Stats.1913, c. 594, p. 1065, adding Section 445 to the Political Code. 148. Stats.1913, c. 326, p. 639. 149. Article 13, § Ia. 150. Ibid., § 4. 151. Ibid., § 12. 152. Ibid., § 1. 153. Stats.1915, c. 190, p. 422. This was after the reversal of the H. K. 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). 154. Stats.1915, c. 188, p. 397. 155. Ibid., c. 718, p. 1404. 156. Ibid., c. 194, p. 432. 157. The commission consisted of the following three members: Clyde L. Seavey, Chairman, E. A. Dickson and Lee C. Gates. Page 71 of 99

158. Report of the State Tax Commission (1917). This report will hereafter be referred to as the 1917 Report. 159. 191T Report, p. 9. In regard to public utility company rates, it should be noted that the 1905 commission recommended that the rates be fixed at percentages equivalent to tax rates that might otherwise be levied on an ad valorem basis (see 1906 Report, p. 93 et seq.). 160. 1917 Report, p. 123 et seq. 161. Final Report of the California Tax Commission (1929), p. 40. 162.Stats.1917, c. 729, p. 1402. 163. Ibid., c. 513, p. 646, and c. 687, p. 1275. 164. Ibid., c. 214, p. 336. 165. Ibid., c. 589, p. 880. 166. Article 13, § 11/2a. 167. Ibid., § 12. 168.Stats.1921, c. 821, p. 1500. 169. Stats.19923, c. 266, p. 517. 170. Ibid., c. 267, p. 571. 171. Ibid., c. 341, p. 706. 172. Ibid., c. 349, p. 721. 173. Article 13, § 12. 174. In re Heikich Terul (1921) 200 P. 954, 187 C. 20, 17 A.L.R. 630. 175. Article 13, § 9a. 176. Ibid., § 12½.

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177. See Arnold v. Hopkins (1928) 265 P. 223, 226, 203 C. 553, 559. 178. Stats.1925, c. 412, p. 833. 179. Stats.1927, C. 19, P. 17, adding sections 3664aa, 3670bb, and 3670cc to the Political Code. 180. See Stockwell, Studies In California State Taxation, 1910-1935 (1939), p. 104. This work will hereafter be referred to as ""StockweIl." 181. Stats.1927, c. 843, p. 1708. 182. Stockwell, p. 105. 183. Id. 184. Stats.1927, c. 844, p. 1708. This was upheld on referendum at the General Election of Nov. 6, 1928. 185. Stats.1925, c. 329, p. 550. 186. Cal.Const. Art. 13, 1 1b. 187. Stats.1925, c. 12, p. 11, amending section 3627 of the Political Code. 188. Stockwell, p. 136. The enactment of section 5219 was a consequence of 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. 190. Arnold V. Hopkins (1928) 265 P. 223, 203 C. 553, 191. Article 13, § 123/1. 192. Perkins Mfg. Co. v. Jordan (1927) 254 P. 551, 200 C. 667. 193. Stats.1927, c. 221, p. 396. 194.Stockwell, p. 151 (note 13). 195. Stats.1927, c. 455, p. 781. Page 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. 198. This method was authorized by an amendment of Section 5219 in 191-96 (Act of March 25, 1926). It should be noted in this regard that notwithstanding the Invalidation by the California Supreme Court of the 1925 and 1927 laws on the assessment and taxation of intangibles, the commission was of the view that the bank share tax might still be invalid as discriminatory against national banks in view of the provisions in Section 1 of Article 13 of the State Constitution exempting real estate mortgages from taxation and Permitting a deduction of debts from solvent credits, that the people, however, would not agree to the elimination of those provisions, and that the best alternative for remedying the situation was the "fourth method" (Final Report of the California Tax Commission (1929), pp. 260-261). 199. See Stats.1929, p. lxxxiii. 200. Senate & Assembly Journals (1928), pp. 15-17. 201. Stats.1928, Ex.Sess.Res. c. I (Assembly Constitutional Amendment No. 1), found in Stats.1929, p. lxxxvii. 202. Stats.1929, c. 13, p. 19, the Bank and Corporation Franchise Tax Act; Ibid., c. 14, p. 35, amending section 3627a and repealing section 3627b of the Political Code, taxing intangibles. 203. Final Report of the California Tax Commission (1929). This document is hereafter referred to as the 1929 Report. 204. Ibid., p. xxi. 205. Id. 206. Ibid., pp. xxii-xxiv. 207. Stats.1929, Res. c. 35 (Assembly Concurrent Resolution No. 20), p. 2173. 208. The committee consisted of 8 members of the Legislature, its chairman was Speaker Edgar C. Levey, and assisting It was a technical staff headed by Mr. Page 74 of 99

Edward Glass. 209. Report of Joint Legislative Committee on Taxation (1931), found In Vol. 5 of 1931 Appendix to Journals of Senate & Assembly. 210. Ibid., p. 34 et seq. 211. Stats.1931, c. 623, p. 1348. 212. Ibid., Res. c. 98, p. 3160. 213. Summary Report of the California Tax Research Bureau (1932), found in Vol. 3 of 1933 Appendix to Journals of Senate & Assembly, 214. Report of the California Tax Research Bureau (1933). 215.Stats.1933, c. 954, p. 2482. 216. Article 4, 25.75. 217. Article 4, 31b. 218. 1933 Journal of the Senate, p. 2114. 219. Stats.1933, Res. c. 63 (Senate Constitutional Amendment No. 30), p. 3072. 220. Stats.1933, c. 1020, p. 2599. 221. Stockwell, pp. 202-203. 222. Stats.1933, c. 211, p. 8\708. 223. Ibid., c. 339, p. 928. 224. Ibid., 1933, c. 436, p. 1127, and c. 769, p. 2046. 225. Article 4, § 25a. 226. Stats.1933, c. 51, p. 340, and c. 178, p. 625. Federal authorization came with the adoption of the 21st Amendment late in 1933. 227. Stats.1935, c. 330, p. 1123. 228. Ibid., c. 329, p. 1090. Page 75 of 99

229. Ibid., c. 358, p. 1266. 230. Ibid., c. 361, p. 1297. 231. Ibid., c. 352, p. 1226. 232.Ibid., c. 362, p. 1312. 233. Ibid., c. 834, p. 2251, amending section 3627a of the Political Code. 234. Ibid., c. 51, p. 384, and c. 849, p. 2273. 235.Stats.1937, c. 283, p. 62L 236. Ibid., c. 352, p. 763. 237.Ibid., c. 765, p. 2184. 238.Stats.1939, c. 652, p. 2079. 239.Ibid., c- 876, p. 2462. 240. Const. Art. 13, § le. 241. Ibid., Art. 13, § 12. 242. Ibid., Article 20, § 19. 243. Stats.1953, c. 1503, p. 3114. 244. Stats.1953, c. 1311, operative April 1, 1956, adding Part 1.5 to Division 2 of the Revenue and Taxation Code. 245. Except as otherwise indicated, the statements following relate primarily to the county general property tax. Most, however, have equal application to the property taxes of cities and districts. 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. 249. Id. As an exception, land and improvements of a county or municipal corporation which are taxable when acquired remain taxable thereafter. 250. Art 13, § 1¼. 251. Ibid., § 10.5. 252. Ibid., § 1.5. 253. Ibid., § 1b. 254. Ibid., § 1. 255. Ibid., § la. 256. Ibid., § 1. 257. Article 9, § 10-Stanford University; Ibid., § 11-California School of Mechanical Arts; Ibid., § 12-California Academy of Sciences; Ibid., I 13-Cogswell Polytechnical College; Ibid., § 15-Henry E. Huntington Library and Art Gallery; R. & T.C. § 213-property used for exhibition or exposition purposes. 258. Article 13, § 1.5a. 259. Article 13, § 1c; R. & T.C. §§ 214-214.7. 260. Article 13, § 12%. 261. Ibid., § 4. 262. Ibid., § 1¾. 263. Ibid., § 14; R. & T.C. §§ 111-113, 212. 2153; Roehm v. County of Orange (1948) 196 P.2d 550, 555-556, 32 C.2d 280, 288. 264. A tax on real property is generally a lien on such property (11. & T.C. § 2187); a tax on personal property, however, is not usually a lien thereon, but 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) 265. Const. Art. 20, § 5. 266. R. & T.C. § 2151; Gov.C. § 29120. 267. Const. Art. 13, § 8; R. & T.C. § 441 et seq. 268. R. & T.C. § 826 et seq. The assessment of public utility and other prop. 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." 269. R. & T.C. § 255. 270. Ibid., § 254.5. 271. Ibid., § 32. 272. Ibid., § 405. 273. Ibid., §§ 751 and 753. 274. Article 11, § 12. 275. Article 13, § 14. 276. Id. 277. Rittersbacber v. Board of Supervisors of Los Angeles County (1934) 32 P.2d 135, 220 C. 535, certiorari denied 55 S.Ct. 107, 293 U.S. 592, 79 L.Ed. 686. 278. R. & T.C. §§ 109, 616. 279. Ibid., §§ 109, 601-616. 280.Ibid., § 617. 281. Ibid., §§ 109, 756. Property on the board roll is also part of the ""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." 282. Article 13, 1 14; R. & T.C. 1 758. 283. R. & T.C. § 1603. 284. Ibid., §§ 1605 and 1606;Wells, Fargo & Co. v. State Board of Equalization (1880) 56 C. 194, 6 P.C.L.J. 358. 285. R. & T.C. § 1614. 286. R. & T.C. §§ 1646-1651, 2904. 287. Ibid., § 1831. The board may equalize only by increasing or lowering 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). 288. R. & T.C. § 1833. 289. Ibid., § 1834. 290. See: Report of the Senate Interim Committee on State and Local Taxation, Part Six, '"Property Assessments and Equalization in California" (1953), PI). 18-20, found in 1953 Supplement Appendix to Journal of the Senate; Lee, 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. 291.R. & T.C. § 1831. 292.Ibid., § 1832. 293.Ibid., § 1833. 294.Ibid., § 1834. 295.Ibid., § 1836. 296. Ibid., § 1837. 297. Ibid., § 753. Page 79 of 99

298. Ibid., § 754. 299. Ibid., § 755. 300. Ibid., § 756. 301. Ibid., § 757. 302. Ibid., § 758. 303. Ibid., §§ 2001-2005. 304. Stats.1951, c. 1554, p. 3549; Stats. 1953, c. 362, p. 1632; and Stats.1955, c. 256. 305. R. & T.C. § 2151 ; Gov.C. § 29120. 306. Const. Art. 13, § 9a; R. & T.C. 2905; Gov.C. § 29124. 307. Const. Art. 13, § 14; R. & T.C. 2153. 308. R. & T.C. § 2152. 309. Ibid., § 2601. 310. Ibid., §§ 2194-2195. 311. Ibid., §§ 2605, 2701. 312. R. & T.C. §§ 2606, 2702. The latter was recently amended to change the date from January 20 (Stats.1955, c. 384). 313. R. & T.C. § 2605. 314. Ibid., § 2606. 315. Ibid., § 2700. 316. Ibid., §§ 2701, 2702. 317. Ibid., §§ 2617, 2704. 318. Ibid., §§ 2618, 2705. Page 80 of 99

319. Ibid., §§ 2624, 2707. 320. Ibid., §§ 2851-2862, 4371-4376. 321. Ibid., § 3351. 322. Ibid., § 3352. 323. Ibid., §§ 3353-3355. 324.Ibid., § 3357. 325.Ibid., § 3358. 326.Ibid., §§ 3436, 3439. 327. Ibid., § 126. 328. Ibid., § 3511. 329.Ibid., § 127. 330. Ibid., §§ 3534-3556. 331. Ibid., §§ 3651-3661. 332. Ibid., §§ 3901-3913. 333. Ibid., §§ 3691-3694. 334. Ibid., § 3696. 335. Ibid., § 3697. 336. Ibid., § 3701. 337. Ibid., §§ 3702-3704. 338. Ibid., §§ 3706,--3707. 339. Ibid., § 3712.

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340. Ibid., §§ 3695, 3712. 341. Ibid., §§ 3791-3814. 342. Ibid., § 4101. 343. Ibid., §§ 4102-4103. 344. Ibid., §§ 4216-4226. 345. Ibid., §§ 175-177, 3552.38, 3591-3617, 3618-3638, 3727, 3809-3810, 3950-3972. 346. Report of the Senate Interim Committee on State and Local Taxation, Part Three, "A Legal History of Property Taxation in California," (1955), pp. 263-265, relating to the levy and collection of property taxes. 347.R. & T.C. § 2901. 348. Ibid., § 2922. 349. Ibid., § 2914. 350. Ibid., §§ 3002-3005. 351. Ibid., §§ 4801-5143. 352. Ibid., §§ 4651-4716. 353. Stats.1850, c. 52, p. 135, enacted March 30, 1850. 354. Article 11, § 13. 355. Stats.1850, c. 52, § 5. 356. Ibid., § 49. 357. Ibid., § 50. 358. Ibid., §§ 20, 23. 359. Ibid., § 29.

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360. Ibid., §§ 30, 67. 361. Ibid., §§ 31, 37. 362. Ibid., § 38, 363. Ibid., §§ 42 arid 43. 364. Ibid., § 46. 365. Ibid., § 47. 366. Ibid., § 48. 367. Ibid., § 40. 368. Stats.1851, c. 6, P. 153. 369. Stats.1852, c. 3, p. 18. 370. Stats.1853, c. 167, p. 233. 371. Stats.1854, c. 74, p. 103. 372. Stats.1857, c. 261, p. 325. 373. Stats.1861, c. 401, p. 419. 374. Stats.1939, c. 154, p. 1274" effective February 1, 1951. 375. Section 16. 376. Id. 377. Section 28. 378. Section 55. 379. Section 34. 380. Section 42. 381. Section 37.

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382. Section 40. 383. Section 41. 384. Section 5. 385. Article 10, § 13. 386. Ibid., § 46. 387. Ibid., §§ 32-34. 388. Section 3. 389. Section 8. 390. Section 33. 391. Section 14. 392. Section 22. 393. Stats.1859, c. 315, p. 343. 394. Section 4. 395. Section 13. 396. Id. 397. Section 25. 398. Sections 36-45. 399. Section 44. 400. Sections 44. 45. 401. Stats.1867-8. c. 503, p. 674. 402. Section 3607. 403. Section 3627.

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404. Section 3617. 405.Sections 3717, 3718. 406. Section 3628. 407. Section 3672. 408. 'Section 3692. 409. Section 9714. 410. Section 3764. 411.Section 3768. 412. Section-, 3776, 3777. 413. Section 3779. 414. Sections 3779-3780. 415. Section 3785. 416. Stats.1873-4, c. 392, p. 143, amending section 3773 of the Political Code. 417. Stats.1880, c. 31, p. 5. 418. Stats.18S1, c. 53, p. 56. 419. Stats.1891, c. 230, p. 438, amending section 3746 of the Political Code. 420. Code Am.1873-74, c. 392, p. 143, amending section 3780 of the Political code. 421. Code Am.1875-76, c. 9, P. 62, also amending section 3780, supra. 422. Stats.1885, C. 108, p. 90, amending 424. Id., pp. 341-343. section 3785 of the Political Code. 423. Fankhauser, p. 341. 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. 427. See Davisson and Schmelzle, Equalization of Property Tax Assessments in California (1950), Vol. III, No. 3, National Tax Journal, pp. 222-223. 428. Id., pp. 223-224. 429. Id., p. 225. 430. Stats.1913, c. 299, p. 556, amending section 3771 of the Political Code. 431. Stats.1949, c. 243, p. 466, repealing sections 3476 to 3481 of the 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. 433. Stats.1940, First Ex.Sess., c. 47. 434. See Gartner v. Roth (1945) 157 P.2d 361, 363, 26 C.2d 184, 188. 435. Stats.1943, c. 932, p. 2804; Stats. 1945, c. 700, p, 1384. 436. Stats.1947, C. 606, P. 1615. 437. Stats.1941, c. 293, p. 1436, adding sections 3618 to 3637 to the Revenue 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. 442. Stats.1934, Ex.Sess., c. 6, adding section 38171 to the Political Code.

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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. 444. R. & T.C., Div. 2, Part 1, §§ 6001-7176. 445. R. & T.C. § 6051. 446. Ibid., § 6201. 447. Ibid., § 6007. 448. Ibid., § 6019. 449. Ibid., § 6051. 450. Ibid., § 6201. 451. Ibid., §§ 6351-6368. 452. Ibid., 6381-6387. 453. Ibid., 6401 and 6402. 454. Western Lithograph Co. v. State Board of Equalization (1938) 78 P.2d 731, 734-735, 11 C.2d 156, 162, 117 A.L.R. 838. 455. R. & T.C. § 6052. 456. Ibid., § 6202. 457. Ibid., § 6203. 458. Ibid., § 6204. 459. Ibid., § 6451-6452. 460. Ibid., § 7051. 461. Ibid., §§ 7101-7102. 462. Stats.1933, c. 1020, p. 2599.

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463. Stats.1935, c. 361, p. 1297. 464. Stats.1941, c. 36, p. 532. 465. Stockwell, pp. 201-203; Report of the Senate Interim Committee on 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. 467. Stockwell, p. 215. 468. Section 3. 469. 1935 Journal of the Senate, p. 2026. 470. Stats.1935, c. 355, p. 1252. 471. Id. 472. Ibid., 1935, c. 357, p. 1256. 473. Stats.1943, c. 357, p. 1581, and c. 1004, p. 2918. 474. Stats.1948, c. 12, p. 15. 475. Stats.1947, c. 780, p. 1865. 476. Stats.1955, c. 1311, operative April 1, 1956, adding Part 1.5, consisting 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. 478. R. & T.C., Div. 2, Part 2, §§ 7301-8403. 479. R. & T.C. § 7351. 480. Ibid., § 7304.

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481. Ibid., § 7305. 482. Ibid., § 7351, as amended by Stats.1955, c. 4. 483. Ibid., § 7401. 484. Ibid., § 8101. 485. Ibid., § 7651. 486. Ibid., § 8251. 487. Ibid., §§ 7851-7935, 8251. 488. Ibid., § 8351. 489. Ibid., §§ 8352-8353. The Highway Users Tax Fund is provided for in 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. 490. Ibid., § 8352. 491. Stats.1923, c. 267, p. 571. 492. Stockwell, pp. 92-93. 493. Section 3. 494. Id. 495. Ibid., § 4. 496. Ibid., §13. 497. Stats.1927, c. 795, p. 1565. 498. Stats.1933, c. 631, p. 1631. 499. Stats.1931, c. 85, p. 105. 500. Stats.1937, c. 776, p. 2217. Page 89 of 99

501. See note 489, supra. 502. Stats.1953, c. 1200, p. 2715. 503. Stats.1955, C. 4. 504. Stats.1941, c. 37, p. 558, effective July 1, 1943. 505. R. & T.C., Div. 2, Part 3, §§ 8601-9354. 506. R. & T.C. § 8651. 507. Ibid., § 8604 508. Ibid., § 8607 509. Ibid., § 8651. 510. Ibid., §§ 8652-8653. 511. Ibid., § 8751-8753. 512. Ibid., § 9251. 513. Ibid., § 9301. 514. Ibid., § 9302. See, also, note 489, supra. 515. Stats.1937, c. 352, p. 763. The law was evidently enacted because of 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). 516. See note 489, supra. 517. Stats.1953, c. 1200, p. 2715. 518. Stats.1955, c. 4. 519. Stats.1941, c. 38, p. 578, effective July 1, 1943. 520. R. & T.C., Div. 2, Part 4, §§ 9601-10501. Page 90 of 99

521. R. &T.C.§9651. 522. Ibid., §§ 9603, 9653. 523. In re Bush (1936) 56 P.2d 511, 6 C.2d 43. 524. R. & T.C. § 9603. 525. Ibid., § 9654. 526. Ibid., §§ 9851-9852. 527. Ibid., § 10401. 528. Ibid., §§ 10050-10126, 10401. 529. Ibid., §§ 9726-9780. 530. Ibid., §§ 10451-10456. 531. The codification occurred In 1941 when the 1933 law was placed in Part 4 of Division 2 of the Revenue and Taxation Code by Stats.1041, c. 39, p. 590. 532. See Stats.1937, c. 679, p. 1931. 533. See Stockwell, pp. 105-106. 534. R. & T. C., Div. 2, Part 5, §§ 10701-1005.5. 535. R. & T.C. § 10751. 536. Ibid., §§ 10752-10753.2. 537. Ibid., § 10758. 538. Ibid., §§ 10781-10786. 539. Ibid., § 10854. 540. Ibid., § 10951. 541. Ibid., §§ 11001-11005; City of Los Angeles v. Riley (1936) 59 P.2d 137, 6 Page 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. 542. R. & T.C. §§ 11003.1-11003.4. 543. Stats.1941, c. 40, p. 605, in effect July 1, 1943. 544. Stockwell, pp. 109-110. 545. 1929 Report, p. xxiv. 546. 1935 Journal of the Senate, p. 2027. 547. Stats.1948, c. 26, p. 129. 548. Ingels v. Riley (1936) 53 P.2d 939, 5 C.2d 154, 103 A.L.R. 1. 549. Veh.C. § 370, as amended by Stats. 1955, c. 4. 550. Veh.C. § 372, as amended by Stats. 1955, c. 4. 551. Veh.C. § 372.1, as amended by Stats. 1955, c. 4. 552. Veh.C. § 381" as amended by Stats. 1955, c. 4. 553. Veh.C. §§ 374-374.4. 554. Ibid., § 378. 555. Ibid., § 781. 556. Stats.1935, c. 27, p. 93. 557. Stats.1923, c. 266, p. 517. 558. Stats.1923, c. 267, p. 571. 559. Stats.1923, c. 341, p. 706. 560. Stats.1915, c. 188, p. 397. 561. Stats.1913, c. 326, p. 639.

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562. Stats.1905, c. 612, p. 817. 563. R. & T.C., Div. 2, Part 6, §§ 11201-11752. 564. R. & T.C. §§ 11251, 11401. 565. Ibid., § 11401, 11403. 566. Ibid., § 11252. 567. Ibid., § 11405. 568. Ibid., § 11701. 569. Stats.1937, c. 283, p. 621. 570. Stats.1941, c. 41, p. 610, in effect July 1, 1943. 571. R. & T.C., Div. 2, Part 7, §§ 12001-13113, 572. Const. art. 13, § 14 4/5; R. & T.C. § 12101. 573. Const. art. 13, § 14.80; R. & T.C. § 12102. 574. R. & T.C. §§ 12126-12154. 575. Ibid., § 12402. 576. Ibid., § 12431. 577. Ibid., §§ 12622, 12624. 578. Ibid., § 12623. 579. Ibid., § 12624. 580. Const. art. 13, § 14.80;; R. & T.C. 12251. 581. Const. art. 13, § 14.80 ; 11. & T.C. 12252. 582. Const. art. 13, § 14.80;; R. & T.C. § 12253. 583. Const. art. 13, § 14.80; R. & T.C. 12255.

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584. Const. art. 13, § 14.80; R. & T.C. § 12263. 585. Const. art. 13, § 14.80; R. & T.C. § 12258. 586. Section 622 of the Political Code. 587. Stats.1005, c. 133, p. 136. As has been noted, the tax was first imposed 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. 589. Stats.1921, c. 22, p. 20. 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. 592. Stats.1941, c. 113, D. 1139, in effect July. 1, 1943. 593. P. A T.C., Div. 2, Part 8, §§ 13301-14901. 594. Estate of Bloom (1931) 2 P.2d 753, 213 c. 575. 595. R. & T.C. §§ 13401-13407. 596. Ibid., §§ 13441-13442. 597. Ibid., §§ 13641-13647. 598. Ibid., §§ 13671-13671.5,13721-13724. 599. Ibid., §§ 13691-13698. 600. Ibid., §§ 13551-13556. 601. Ibid., §§ 13801-13873. 602. Ibid., § 13951.

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603. Ibid., §§ 13981-13990. 604. Ibid., §§ 14051-14059. 605. Ibid., § 14101. 606. Ibid., §§ 14102-14103. 607. Ibid., § 14104. 608. Ibid., §§ 14731-14740. 609. Ibid., §§ 14771-14774. 610. Stats.1853, C. 167, p. 233, Art. 5. 611. Stats.1854, c. 74, p. 103. 612. Stats.1893, C. 168, P. 193. 613. Stats.1905, c. 314, p. 341. One authority states in effect that this law 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). 614.Stats.1911, c. 395, P. 713. 615. Stats.1913, c. 595, p. 1066. 616. Stats.1913, c. 594, p. 1065, adding section 445 to the Political Code. 617. Stats.1917, c. 589, p. 880; Stats. 1921, c. 821, p. 1500; Stats.1935, c. 358, p. 1266. 618. Stats.1943, c. ON, p. 2297, In effect July 1, 1945. 619. R. & T.C., Div. 2, Part 9, §§ 15101-16652. 620. R. & T.C. §§ 15201-15208. 621. Ibid., §§ 15401-15451. 622. Ibid., §§ 15301-15306. Page 95 of 99

623. Ibid., § 15551. 624. Ibid., § 15651. 625. Ibid., § 1590L. 626. Ibid., § 16501. 627. Ibid., §§ 16651-16652. 628. Stats.1943, c. 658, p. 2297, In effect July 1, 1945. 629. Stats.1939, c. 652, p. 2079. 630. R. & T.C., Div. 2, Part 10, §§ 17001-19500. 631. R. & T.C. § 17041. 632. Ibid., §§ 17131-17265. 633. Ibid., § 17181. 634. Ibid., §§ 17731-17837. 635. Ibid., §§ 17851-17932. 636. Ibid., §§ 18432, 18551. 637. Ibid., § 19251. 638. Stats.1935, c. 329, p. 1090. 639. Stockwell, p. 235. 640.Article 13, § 11. 641. Report of the State Board of Equalization for 1913-1914, p. 50 et seq. 642. 1917 Report, pp. 110-115. 643. 1929 Report, pp. 98-100. 644. Assembly Bill No. 2429. Page 96 of 99

645. Journal of the Senate (1935), p.2026. 646. See Stats.1949, c. 1188, p. 2108. 647. Stats.1943, c. 659, p. 2354, in effect July 1, 1945. 648. Stats.1943, c. 354, p. 1568, known as the "'Ward Act." 649. Ibid. 650. Stats.1948, c. 11, p. 15. 651. Stats.1955, c. 939. 652. R. & T.C., Div. 2, Part 10, §§ 23001-26481. 653. R. & T.C. § 23181. 654. Ibid, §§ 23151, 23183. 655. Ibid., § 23501. 656. Ibid., §§ 23151, 23153. 657. Ibid., §§ 23186-23186a. 658. Ibid., § 23501. 659. Calif.Const. art. 13, § 16; R. & T.C. § 23182. 660. R. & T.C, 123184. 661. Ibid., § 23701 et seq. 662. Ibid., § 23731 et seq. 663. Ibid., §§ 25401, 25555. 664. Ibid., § 26422. 665. Ibid., § 2648L 666. Stats.1929, c. 13, p. 19. Page 97 of 99

667. See Stockwell, pp. 129-13L 668. 1929 Report, pp. 276, 301. 669. Report of the California Tax Re search Bureau (1933), p. 78 et seq. 670. Stats-1933, c. 211, p. 708. 671. Stats.1937, c. 765" p. 2184. 672. Stats.1939, c. 1049, p. 2902. 673. Stats.1948, c. 12, p. 15, was the last. 674. Stats.1949, c. 557, p. 961. 675. Stats.1955, c. 938. 676. R. & T.C., Div. 2, Part 14" §§ 32001-50018. 677. R. & T.C. §§ 32151, 32201. 678. Ibid., § 32251. 679. Calif.COnst. art. 20, § 22; R. & T.C. 1 32451. 680. R. & T.C. §§ 32501-32502. 681. Stats.1953, c. 152, p. 954. 682. Stats.1955, c. 1842. 683. Unemployment Insurance Code, §§ 976-994,2901-2903. 684. Internal Revenue Code of 1954, § 3301 et seq. 685. Ibid., § 3302. 686. Unemployment Insurance Code, § 101. 687. Ibid., § 978. 688. Ibid., §§ 978-983. Page 98 of 99

689. Ibid., §§ 1521-1537. 690. Ibid., §§ 984-985, 2901-2903. 691. Ibid., § 301. 692. Stats.1935, c. 352, p. 1226. 693. Stats.1946, First Ex.Sess., c. 81. 694. Stats.1953, c. 308, p. 1457. 695. Bus. & Prof.C. § 19,185. 696. Ibid., § 19485.1. 697. Ibid, § 19620 et seq. 698. Ibid., §§ 19620.1, 19627. 699. Ibid., § 19400 et seq 700. Stats.1933, c. 769, p. 2046 (ratified by State Const. Art. 4, § 25a). 701. Stats.1941, c. 47, p. 659. LRC homepage http://66.102.7.104/search?q=cache:8dwwKPezWmIJ:www.sandiego.edu/lrc/taxation_code.html +%22Stats.+1913%22+motor+vehicle&hl=en&gl=us&ct=clnk&cd=11

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