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old system a practical impossibility. 49 The public was, therefore, eager to accept any change which might promise relief.

In response to the growing demand for a more practical taxation system, the Legislature of 1905 passed an Act providing for a commission 60 "to investigate the system of revenue and taxation in force in this State and to recommend a plan for the revision and reform thereof." The appointment of an expert in taxation and public finance was also authorized, his compensation not to exceed $250 a month. The members of the commission, other than the chairman, were to be paid $10 a day and their necessary expenses "when actually en

found them to be true and faithful to their trusts; therefore, be it:

"Resolved, That in their demise this Association and the people of California have met with a great and distinct loss.

"Be it further Resolved, That we extend to their families and friends our sincere sympathy.

"Be it further Resolved, That these resolutions be spread upon the minutes of the Association."

Incidentally, it may be added that these resolutions have been printed at the expense of the State, and are distributed at the expense of the State.

49 At the legislative session of 1909 Sanford of Ukiah introduced bills to provide the machinery by which assessors would be able to hunt out wealth concealed from the tax collector. Immediately a powerful lobby appeared at Sacramento in opposition to these bills. The county assessors were

among the most persistent opponents. It was held at the time, however, that the assessors had proceeded on representations made to them that the bills were vicious and had acted without knowledge of their purpose.

50 The paragraph authorizing the Commission was curiously worded. Under it, the Legislature, and not the Governor, as is customary in such cases, appointed. “If and when," the paragraph read, "the Senate and Assembly of the hirty-sixth session of the Legislature of the State of California shall provide for the appointment, and there shall be appointed pursuant to said provision, a joint committee of said Senate and Assembly to investi. gate the system of revenue and taxation in force in this state, and to recommend a plan for the revision and reform thereof, the Governor is authorized to appoint an expert in taxation and public finance, to sit with said committee, and with said committee to constitute a Commission upon the revision and reform of the system of revenue and taxation in force in this State. The Governor shall be ex officio a member of said Commission and shall be chairman thereof."

To carry

gaged in the performance of their duties."
on the work, an appropriation of $10,000 was made.

Acting under the provisions of this law, the 1905 Legislature authorized the appointment of a joint legislative committee, or commission, of four, two Senators to be appointed by the President of the Senate, and two Assemblymen to be appointed by the Speaker of the lower House.51

This commission reported to the Legislature of 1907.

The commissioners were a unit in finding that the existing system of taxation did not equally distribute the burden of taxation and that the burden could not equally be distributed by an ad valorem system. They held the burden could be more equally distributed by separating the revenues of the State and county so that

81 The Commission appointed consisted of Senators J. B. Curtin and M. L. Ward; Assemblymen H. S. G. McCartney and E. F. Treadwell. Professor Carl C. Plehn of the State University was appointed as expert on taxation and public finance. The $10,000 originally appropriated for the work proved insufficient. The Commission organized early in the summer of 1905. Between the date of organization and September 10, 1910, the Commission's expenses, paid by the State, were $21,077.44. Of this amount $9,781 went to Expert Plehn for his services as expert. From May, 1905, to March 9, 1907, expert Plehn was paid $200 a month; from March, 1907, to April, 1909, $250 a month; from July 20, 1910, to Aug. 31, 1910, $250 per month. In addition to this $21,077.44, $20,000 was paid to the four Commissioners. Special Acts were passed at the 1907 session of the Legislature, to pay the claims of Ward, Treadwell, Curtin and McCartney, for $2,500 each. At the 1909 session other special Acts were passed to compensate them further in the sums of $2,500 each. At the 1911 session, a bill was introduced (Senate Bill 347, 1911 series) “to pay the claim of J. B. Curtin" for $6,000. The bill passed both Houses. Governor Johnson, however, failed to sign it. Senator Curtin did not get the $6,000. At thé 1913 session a Bill (Senate Bill 374, 1913 series) was introduced to pay the claim of Senator Curtin for $7,750. The Bill passed both Houses. Governor Johnson once more failed to sign it. Up to date, therefore, the expense to the State of the Commission responsible for the change in the taxation system has been $41,077.44, more than four times the original appropriation of $10,000. The allowance of Senator Curtin's claim by some future Legislature-unless it be further increased-will swell the amount to $48,827.44, instead of the $10,000 originally appropriated.

the State would get its revenue from public-service companies and other corporations, and the counties their revenue from the remaining property.52

To that end, a constitutional amendment was recommended for the separation of State and local taxes. The draft of such an amendment was submitted for the consideration of the Legislature.

The 1907 Legislature, after amending the measure to meet the views of the several members, submitted this amendment to the electors for ratification.

The electors refused to ratify it. The commission's plan, as expressed in the amendment, was defeated by a vote of 87,977 for the amendment to 114,104 against it.58

52 The Commission recommended, however, that the State continue to derive revenues from: (1) Poll Tax, (2) Inheritance Tax, (3) Tax on Insurance Premiums, (4) Annual Franchise Tax on Corporations, (5) All Fees at the Time Collected, (6) All Earnings of State Property and Investments, (7) All Collections by State Institutions, (8) The Revenue from Sale of State Land.

The Commission further recommended that the State retain its right to levy on general property, but that such levy should be resorted to only to make good a deficit.

53 The Commission on Revenue and Taxation in its 1910 report states that the four principal defects urged against the 1907 amendment were:

(1) Under the amendment, if the revenues of the State to be derived from the operation of the new system were insufficient, there would be no way of meeting the deficit without again amending the Constitution, and therefore the amendment was deemed too inflexible.

(2) Its provisions were held not to be clear as to whether or not public service corporations were exempt from paying their share of past bonded indebtedness, and as many counties had incurred a bonded indebtedness and did so upon the faith that all the property then in the counties and cities, respectively, would be subject to taxation for its fair share of that indebtedness, to relieve those public service corporations of that indebtedness would, it was thought, shift too great a burden upon the remaining property.

(3) That if a deficiency ad valorem tax should ever be necessary, the corporations taxed for State purposes would not be required to pay any portion of this deficiency, but it would fall on the remaining property taxed for county purposes, and this was deemed unfair and regarded as an objection to the amendment.

(4) That no provision was made for changing any of tho

The commission, after the defeat of the amendment of 1907, presented a second amendment, which was considered, and finally submitted to the electors, by the Legislature of 1909.54

The amendment as submitted to the electors . relieved all property-except the operative property of publicservice corporations made subject to a tax on their gross earnings of taxes for State purposes, but exacted from such property all taxes for county, municipal or district purposes.

On the other hand, all the operative property of the companies made subject to a tax on gross earnings, namely, railroad companies, including street railroads, car companies, express companies, telephone and telegraph companies, and light, power and heat companies, was exempted from local, county, municipal and district taxation. In lieu of this exemption the companies

rates should it be found that the rates were inadequate or in any manner unfair, and for that reason again the amendment was deemed too inflexible.

54 The Senate vote (1909 session) by which the Revenue and Taxation Amendment was submitted was:

For the amendment-Senators Anthony, Bates, Bills, Birdsall, Black, Burnett, Campbell, Curtin, Cutten, Estudillo, Finn, Hare, Hartman, Hurd, Kennedy, Leavitt, Lewis, Martinelli, McCartney, Miller, Reily, Roseberry, Rush, Sanford, Savage, Stetson, Strobridge, Thompson, Walker, Weed, Welch, Wolfe, and Wright-33.

Against the amendment-Senators Bell, Boynton and Caminetti-3.

The vote on the amendment in the Assembly was:

For the amendment-Assemblyman Barndollar, Baxter, Beardslee, Beatty, Beban, Butler, Callan, Cattell, Coghlan, Cogswell, Collier, Collum, Costar, Cullen, Drew, Feeley, Fiavelle, Fleisher, Flint, Gerdes, Gillis, Greer, Griffiths, Hammon, Hanlon, Hans, Hawk, Hayes, Hewitt, Hinkle, Holmquist, Johnson of San Diego, Johnston


Contra Costa, Juilliard, Kehoe, Leeds, Lightner, Macauley, McClellan, McManus, Melrose, Moore, Nelson, Odom, Otis, Perine, Preston Pugh, Rech, Sackett, Silver, Stanton, Stuckenbruck, Telfer, Transue,' Wagner, Wheelan, Whitney, Wyllie, Young-60.

Against the amendment-Assemblymen Dean, Irwin, Johnson of Sacramento, Johnson of Placer, Maher, Mendenhall, Mott, Polsley, and Wilson-9.

affected were required to pay a percentage tax upon their gross earnings, as follows:

Railroad companies, including street railroads—4

per cent.

Car companies—3 per cent.
Express companies—2 per cent.
Telegraph and telephone companies—31/2 per cent.
Light, heat and power companies—4 per cent.

In addition, the insurance companies were made subject to a State tax of 1/2 per cent. of their gross premiums; their real estate to continue , subject to an ad valorem tax for local purposes. But the further provision was made that the amount paid as local taxes should be deducted from the amount of the gross premium tax paid for State purposes.

Banks were assessed for State purposes six-tenths of one per cent. on their capital stock, surplus and undivided profits. Their real estate, however, was left subject to an ad valorem tax for local purposes, but provision was made for deducting from their capital stock the assessed value of their real estate.

All franchises other than those included in the property taxed for State purposes were made subject to an ad valorem tax of one per cent. for State purposes.

After the Legislature had adjourned, the discovery was made that the amendment as it had been submitted to the electors was fatally defective.

In describing how the proposed corporation taxes on their gross receipts should be computed, the amendment, as originally drafted, provided that “the gross receipts and gross premiums herein mentioned shall be com

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