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    The Neabg BL, Ue Book of Caulolnin: Hm/,Ty M. Po&Ter

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    This document provides an overview of taxation in California. It discusses the origins of taxation from early human tribes through modern systems. It then describes the key types of taxes in California, including corporate franchise taxes, inheritance taxes, and various other state taxes. The document explains where tax funds are allocated by the state, with the largest portion going to schools. It concludes with a brief overview of the machinery for tax collection in California.

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    The Neabg BL, Ue Book of Caulolnin: Hm/,Ty M. Po&Ter

    Uploaded by

    real-estate-history
    108 views8 pages
    This document provides an overview of taxation in California. It discusses the origins of taxation from early human tribes through modern systems. It then describes the key types of taxes in California, including corporate franchise taxes, inheritance taxes, and various other state taxes. The document explains where tax funds are allocated by the state, with the largest portion going to schools. It concludes with a brief overview of the machinery for tax collection in California.

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    Taxation Real Estate by Hervey M. Porter Second Vice President Los Angeles Realty Board

    Original Title

    Taxation Real Estate by Hervey M. Porter Second Vice President Los Angeles Realty Board

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    This document provides an overview of taxation in California. It discusses the origins of taxation from early human tribes through modern systems. It then describes the key types of taxes in California, including corporate franchise taxes, inheritance taxes, and various other state taxes. The document explains where tax funds are allocated by the state, with the largest portion going to schools. It concludes with a brief overview of the machinery for tax collection in California.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF or read online from Scribd
    Download as pdf
    108 views8 pages

    The Neabg BL, Ue Book of Caulolnin: Hm/,Ty M. Po&Ter

    Uploaded by

    real-estate-history
    This document provides an overview of taxation in California. It discusses the origins of taxation from early human tribes through modern systems. It then describes the key types of taxes in California, including corporate franchise taxes, inheritance taxes, and various other state taxes. The document explains where tax funds are allocated by the state, with the largest portion going to schools. It concludes with a brief overview of the machinery for tax collection in California.

    Copyright:

    Attribution Non-Commercial (BY-NC)
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    of 8

    The neabg Bl,ueBook of CaUlolnin

    Hm\,TY M. Po&TER
    Aecokd !ic" Prcsidefrt
    Los Angcles Rcalt| Board
    224 The ReatrtyBlua Boolcol Cal,ifornit

    Taxation
    B? H. M. PoRTEB

    Genesis ol Torafion-EarlA Anprtrun T@rcs -Thp LL-


    hcritoltrc T " .Mia.puctneous Stctp Texes_Wherc Tar
    Fund.s Go-Mackiner.! f or Ta,fi Col,Lectio11,-ScLle
    ltL,t,oloes Tar
    Liabilitu-The Singl,e Tq,ft Plan-lllti,fonL Equi.tabte SustenL

    HE subject of [axation. like the VolsteadAct. is a dry subjecl,,


    bul neverthelessit is full of inleresting facrs. Taxadon ij foi
    the purposeof providing for schools,asiylums, policeand fire ile-
    partltrents, anal those features of modern society. _Taxation is the
    dl'namicforce that has brought lhrough the agpslhe high staie of civ_
    lllzalron of whtch we are now so proud. The word tax comesflom
    the Lal,in root "Taxare'-,,1o touch',-and we havebeen.,touched',in
    each succeediDgage. We are ta-xedfrom the moment we are botn or
    befole. WF sre bom under a taxed roof; we spendour lives eaiine
    food that is taxedi and we are finally taid to r;sl in a cofrin thal ii
    IAXeO.
    GENDSIS OF TAXATION
    . Tn the beginning man lived by himsell He never gave ajd or
    askectard from anybocly. Al last he garheredinto tribes. Each lribe
    had a leader. The only form of taxal,ionthal existed was mililarv
    servicein time of war. In time of pea.ejhe leaderobtainedhis food
    and meansfrcm his foilowers. As interchangejncreasedthe tribe
    gave up ils moving about,ils nomadiclife, and setueddo1,1,,n in a fixed
    location. Ihe leadernow becamea king or ruler. It now became
    neeessaryto build roeds, bridges and iqueducts; and taxes were
    nccassaryfor lhe adminishalion of {he kingdom. lt was soon found
    t}Iat in timp of war il was ne.essaryfor thtkins io Dav larse tribute
    to the victor. In tirnes of peace he fed his a-rniy a;d gained
    rood ror rhose.underhlm by sendingout collectomand takjng a por_
    non.or nrs sxoJect s property. part of their slaves,grain and live
    stock..As ci{ies-and townsbpganto springup in his kingdoma form
    or excnangern the tbrm ot moneyhad to be devisedso thai taxation
    camebobe in the forrn of moneytaxation.
    As early as the time of the C reekswe 6nd the Dublicbeinq taxed
    on personalproperty, family proppny and slaves,horsesand b-usiness
    vocalions. In EglTt and portionsof Asia Minor they had {hesetaxes
    at the time of Christ. The custom was at that tim; to send out tax
    collectors.and to give them all over a.ertain sum 1,hatthey were to
    bring in lrom certain territories. Thesetax coilectorsbecamever.v
    rich. this is vhere the te1m "dch man', in the Bible camefrom. The
    "rich man" ref€rfed to \ilas a tax collector. No wonder it .w.as,,Easier
    Tlk Eealtu BLueBoak of Cdli.foijtiLL 225

    for' a camel to pass thrcLrgh the eye of a needle, than for a rich man
    to enter the Kingdom of Heaven." Aftel the downfall of Rome in the
    fifth century, all EuroDe \'!as brokeD up into smatl principalities. It
    was natural that the people should suppo* someleader in time of war
    and expect protection in time of pcace.
    It ras ther the feudal system splang up. The men would render
    militarv seNice iu time ol !r'ar',and iD rcturn hold certain lands in fee.
    Through this sJrstemevery tenant held lald for life, but there .!vasDo
    inhe tancc. Later lalge tlscts of land $rele lurned o\.er by the ruler
    to the chulch oI to his favo].ites. These lands rere ir1 tun siven to
    r h a ! r s s n l qo n A I a r b a s i : . A " d i r $ r . ' i , . . . r h i i r ' l . f , r r d r f . r ' s t c '
    . p | a r , gr r na r r d , a n n i r l o I r . . T l p ! r c J l l s J . l I I o r d I a ' r r ' d o f l i ^ p ;
    but it soon becane a denand that they ir$erit this tand, and through
    a tax iD fee this \{.as :rllowed. .lrd the fir'st inhe tance tax came into

    EARI]Y.{MERICANTAXES
    Thele *-as thus a heavr bulden of taxatioD on ihe larld oll.1rer.s.
    They wADted sonrenethod of relief, so thel' got together and stalted a
    tax that could be levied on the Door peolle without theil tmowing it.
    So they starte.l the excisetax, knonn in this country as the intemal
    reverue tax; that is, a t:lx on commodities. If sugxr. $as selling for
    twelve cents a pourd they would laise it to fourteen. and so with other
    commodities. PeoDle paid their taxes \dthout realiziDg it, paying
    it in ihe increasedlrjce of ploducts. This has been one ofthe main
    for-msof taxation in thc \1or'ld evef si ce. Itl:1 r rv:r|s h:rve alisen
    ovei this lo|m of taxation. Chatles the First of EnEland lost his head
    thlough Ih;q ,x\. It \\_:rsrhe ca .F of l-. \rrpricrn tpro urio''.
    In the United States, Drior to the last war, our. taxes $.ere raised
    lrcm trvo soluces: Flom custom dutics, excise taxes or inter.nal
    revenue taxes. Cushms duties ,tre tnxes on all eoods. war.es. or
    m p t ,h ^ n d i s . h r ' o u g l ^' rr ' r . r h c U r , i r e dS , c L p sf " o n t i . o r p g c n r u r u y .
    Excise tax is ^ tax on goods, \yares, .)1'melchaldise, Uoduced in the
    United States.
    When the great war camc o , it \\'as {ound that it was inpossible
    to r'aisesullicient Dloney from these sources,and theF $'as added the
    lncome tll\ and Lhe fcderal esl,at€tax. These are discussedrt lenqth
    ^ l s a $h . f c r ' r h i . \ o . r m . .
    In addition to the tecleral income tax 1.hegolehment has the
    estatctax. 'lhich is not .lrr inheritancctax.
    ,I!IE INHERITANCETAX
    lI a nlan dies and leaves an cstrte of S150,000.in California. the
    heils nust rcpolt that to the Fcderal Go\.cl nrent. Thc \fife gels
    half the estate. so t'ou deduct g?5,000as the lvife's sharc of the estate-
    That lcaves $75,000 to be inxed. Out of that 1j75,000]'on cnn deduct
    all funeral and administratioD cxpenses, then you have a deduction
    of $50,000on $,hich you pa-vno tax. That leares g25,000on whicl to
    pay a tax. The excess\ror.ld then b€ $25.000on an estate of 9150,000
    You need not repolt under 950,000 estatcs.
    In California \,!e have a peculial situation. All of our state taxes
    comefrom trvo sourc€s,tax€s from corporation franchises and an in-
    heritarcet:rx. Oul o1'.rllthe taxes faisedhere last year (940,000,000)
    226 TlLeRe(LltuBlue Book of Ca.Iilornia

    $34,000,000was paid by the coryorations and g6,000,000by the inheri-


    tarce tax. If a Inan dies in Califomia with an estate of 91b0,000,as
    with the Federal Government, 975,000 go€s to the widow. He leaves
    thrpc children, ona ol agc. $25.000goes ro each child. Betore lhe
    Inhentanre tax is figured you firsr deduct. as with rhe federalta-x,
    all iuneral and a.dmiDis{ration Fxpenses. We will assumplhet there
    is slill $25,000Iell tor each child. Ch;ldrel| undcr aee hare e aleduc-
    lion of $24.000.which lpave!onlv $1,000to be {axedof rhosechildren
    under age. Those ovFr age have cn exemprionol g15.000. Thus the
    total tax on a 9150,000 estate as mentioned above would be onlv
    $170.00. Il a man leaveshis propprtr io hjs wife and brorhers and
    sislers.t\p ra-xwould be higher.. The brolhers and sisterswould onlJ
    be allowed a dpductionof $2,000each. That would brinq it up much
    higher. Uncles.aun(s and .ousins cre allo$cd 9t,000 dpaucli6n and
    all oth€r persons 9500. AII gifts to charitable or educational irstitu-
    tions are exempt from this tax.
    MISCELLANEOUS STATETAXES
    In addition to the iDheritance tax there is a corDoration tax. the
    "franchisp tax, prid b) p\erJ corporalion in rhe .iate. Thp public
    servrcecorporations.eyplps.. railroad. elpcrric lighr companies,pay
    from 4 to 5 per cent of their gross earnings to the state ai a tai ind
    pay no tzrx any piace else. The insurance companies pay tuo per cent
    of their goss premiums to th€ state as a tax ; and all banks pay one
    rnd ona-fi{th per cent o rhplr capilal stock ro the srarp. The total
    lrom .orporationswrq $34.000,000 lasl Jpar.
    \!'HDRE TAX FUNDSCO
    W}lat does the state do with the money it raises from taxation ?
    We produce in the State ot Califor.nia g160,000,000a i,ear. Of this
    amount 9100,000,000goes to the schoots,of which sum the state Days
    abour 20 per cFnr. That is someth,ng lhal dops nol ffcur in the
    other states. If there happ"ns1o be a poor coLnry in thc othpr sLares
    they have to employ cheap teachers, and children have to go to school
    fewer days in the year. But in the state of California thd state pays
    part of the cost. For every pupil lhe slate pays $30.00. Thp avaiagp
    daily a-ttcndanca muhiplied Ly lhe 930.00is what thp eommuniuygels
    f r o m l h e s r a l e . l n 1 8 7 0i r c o s r$ 1 5 . 0 0p e r p u p i lp F r v e a r ; n o * r h e i o s t
    is $30.00 for eA.h .hild artpndirg ar elamFnrafy school, and
    $200 for those ir1 high school. In Los Angeles county $.e have an
    assessedvaluation of one billion dollars, and the assessealvaluation of
    Los Angeles cit.v''is one billion. That makes two billion of assessecl
    valuation; and rre raised here.last )'ear 960.000,000.Out of that
    sixty million, thirt). million went to schools, and thirtv million to
    other purposes.
    MACI]INERY FOR COLLECTION
    How ar,e taxes paid? In every county and city and hamlet in
    California the Tax Collector.sendsout his tax assessorson the first
    Mondayin March. If he comesto personalpropertl, that has nothing
    to secureit, he makesI'ou pay the ta-x ght then and there. He starti
    out in Malch to make the assessments and makesthe retur-nthe fiIst
    Mondat_in JLly. By the first Monday in July all of the property in
    ?he Req,l,tABltue Boot of Cq,tiforntia 227

    'n+lita:t""1
    *$a?$g+i'*#ft
    ni5:1"*!i:d;i;""f;i"iil'#tifliiixTnilt;ri
    alyway.
    jftT::"?"'1i"ffi
    1**il""i:X"""",""It"
    %"i.v",;"if
    fif"iu ;:"ff*'r#'ji
    trnfii"}Jl!,1i"";'ix""ll"nti,t",,'''x"rigj:*
    tti*il:iTl,i*#1iih:l{":i+t"rfi
    fi#"[dlli;""qhi
    H',"1:,'J"Tj:i;Xlliffi j$:I""",,*
    t53Ti"T,S;x",1;'1fl
    :t'"
    p"?u*Ji"ffr j"lJi;
    .1?T,';.Xl.:#iilii;'ir"Ji.H"":ifl",1,?
    if,i"r'fl:i#Y,i"'J,,,lll,"
    l3i"o?"nf:: t"i t'*"uniir''tr'"
    fln" "ott""toi
    ;;;,ft."r,##;;:f;i il""o"",,..f"",l
    ""t#*..,"r,;llf,il'"','0,T:;,i{,
    #ri-rux#rr{i;i###iarxT";gxi rili.r
    SALE INVOLWS TAX LIAIIILITY

    ,,"mit.'.::1il:$f":""Hy,l$;i'"T-$ili
    li3i"'1i""fi;:X,9{r'.;;',1',1"",""1?,"i?;.
    ;il;ffi"""l#?Ti:iTJr*"tii%?""J,",',*'
    PERSONAL PROPE&TY TAXES

    ffi
    H$f.qjft j*:lry
    i:h*":rlill!Ftlti*',ii.j*"
    l""i,Ji",l,i#,I#,l?,'":'$j:l
    t3iil:1J", ti," ii""
    ""a "i"i" ""r.i".i,i!
    THE SINCLE-TAX PLAN

    ,y1x,['i:.1"*i*xi]il"m*,"rFi.rll*
    '1i'j#{;?",{:Hi;"Ji*}":Ti:x1ffi
    "'r,':,r#*;:rxr
    .ll;i'"^x'::"
    il"::!l'?;^1ll
    il'fftT,li;'"#f
    ls,",H*;tji,":"'ffi
    [
    j"'i:?"",iT#ui:l-:X*;f":,f"*
    il1""l:"1*^;:,;:!:[::,"lfi,
    224 The natl,ta BLueBook oI Col,ilornia

    advocated and the single tax on lard proclaim€d by IIenry George


    is the last plan of singletax propounded.
    The reasons advocated for a single land tax are the following:
    Land is th€ creation of God, therefore no one is entitled to ownership
    of land. Increasein land valuesare causedby growth of the commu-
    nity, thereforeth€ unearnedincrementor advancein value belongsto
    society. The governmentshould,thelefore,take sll land for the bene.
    fit of the whole community,
    The defects of the single ta-y system are pointed out as follows:
    The single ta-\ would prevent €quality of taxation, would divorcethe
    int€rest of people from the govemment, wolild discriminate between
    profits on land and profits from other sources,would not raise suffi-
    cient r€venue in poor communities,would exempt a large part of
    property from taxes without brirging relief, eliminate ability or
    faculty, and put the burdensof the many on the shouiders of the
    UNIFORM EQUITABI,ESYSTDMLACTING
    In the organization and co-ordination of business the United
    Statesleadsthe world, but, paradoxicalas it may seem,in the build-
    ing up of a uniform equitable machine for the assessmeniand collec-
    tion of tax€s in this country we have been a failure. In every staie
    t}ere is a completevariation ol systemand conflictof laws. In twenty-
    onestates,personalproperty includes€ver,4hingexceptrcal property;
    in eighteenslaLes, peEonalpropefly is (onfinedto particularit€ms:
    in eleven states three to fifteen class€sof taxable property are recog-
    nized; in twenty states improvementsare not separatedin making
    assessments,and in eleven states improvements are assessedsepa-
    rately. The United Statesis the only nation taxing credits. In some
    states debts are deductedftom c].editsand in others not. In some
    states mortgages and bonalsare taxed; in others .a small ta>( is im-
    posed,and in still othersno tax at all is leviedon this classof property.
    fn some states raihoads are tax€d on their general property; in other
    states on their franchises; in other states on the amount of their
    issuealbonalsend stock, and in other stateson a percentageof either
    their gross or net earnings. In Iova ten stands of bees are exempted
    from iaxation. In Idaho and Nevadaall property of Free Masonsand
    Odd Fellows; in Massachusetts,all prolerty of old maids; in Miss-
    issippithe property of the deaf and dumb; in the Distdct of Columbia
    all jei'elry; in Alabamaonesewingmachine;in Connecticutsll church
    musical instruments, and in New York, New Jersey and California
    depositsin SavingsBanks. In Mississippibarb€rstr|aya state license
    tax; in Tennesseecloak and hat rooms; in Texas for operatingcock
    pits and dog ffghts; in Alabama sleight-of-handmen; in Connecticut
    osteopaths;in Inuisiana oculists; in Mississippiarchitectsand piano
    and organ agents; in Tennessee second-hand clothing merchantsand
    undertakers;in Alabama,vendoN of brass knucklesand dirk knives,
    ancl in Louisiana operators of slaughter houses, chute-the-chutes and
    caHan dancers; in Mississippi contractors employing more than teD
    men and in Virginia, g}asies.
    REAI,TY BEARS BUBDEN
    In the United Statesthe valuesof real estateand peNonalprop-
    TlLeEealt! Bhe Book ol Calilor is, 229

    erly are about equal, bur }pal estate pays over eighly-nve per cent of
    au laxas. tnls ls tnevttatrle undef our aystem of taxation. Here in
    Califomia, for instance, a wido'i{ left with a tract of uncultivateal lsnd
    valued at. say, $25.000.00,jf in Los Arjgelescounly, would pay aD
    annual tax ofl from 9300.00 lo 9400.00. She mav have no income from
    which to pay this tax and will be compellFd to moflgage her land to
    securemoney to pay her taxes, provided the land is not alreaalvmort_
    gaged. On the olhpr hrnd. a sucresslulphysician,law\er or c;rDora-
    tion executi\e, with an incomeor salary o[ 925,000.00 or more a vear.
    canlive in an expensiverented home,invest his surDll,sin tax exemnt
    bonds. and not pry any taxeq, receiving all the benefils oI a motlern
    city and a civilized community.
    Remarkable gro{4h in the increasing burdeD of taxetion in th€
    U0ited States is revesled jn a report recently made public bv the
    National Induslrial ConferenceBoard. The Board calli alr€ntion to
    lhp mFnaceof the constantly rising amounLol property wli"h has
    Deenrerioeredb) varrous meanspxempt from te\ation Jnd the valuc
    0l whrch.isgivpn as 954,000.000.000 in.19ZZ. This stuperdoussum of
    non-taxable propedy in the form of tax exajpt securities represents
    a little less than one-fifth of our national wea.lih and is equai to one-
    third oJ aI property assessedunder the gereral property_tax, which
    fbrms the bulwark of state and local government dnance.'
    . Summarizingl!e growlh of the.ountrJ s tax bill. reporl shows
    lhat lhe nation paid last year in taxes approximately
    $?,000,000,000
    compare-dwith $2.194,000.000 in 1913 and $1.A82.000,000 in t908.
    laxes ot slate and toral go\emments have greatly incrpased. Sl,atp
    l,axesIncreasedfrom $30?.000.000in tgtg to $846.000,000 in 1922.
    ine tcx bhlden tigured in lerms of pach persons incomein l92Z was
    $64.63per capita as compared yrith g1Z.O?per capita in 1913.
    TNEND OF TAXATION
    The preseDt trend of taxation in the United States is towarats
    co-ordination in the assessmentand collect:on of taxes and the sub-
    stitutionol income lor property as the besjsol tcxation. ft is sener_
    ally Fcogrized that a s),stemoI propedy taxaiion, exfepr in soiar as
    ceflain forrns ol reel e.tale are concerned,is ulsuited lo modem eco_
    nomicconditions. Ihp time is not frr otr when the vast expenseof
    re-duplica{ion ol taxrng ma.hinery will bc eliminated,when rll'federal.
    3tal,e.counly. schooland cily taxes will be asscssedand collectedal
    onetime by the United States Governmeni and re-apportionealto the
    vadous divisions, or will be assessedand collected und_eran efficiendv
    orga.nizedTax Commission in each state made up of federal and state
    selection.competenr.trained men. well paid lor their servicesand
    Fhosepositionsare lree ffom l)oliri.s. Thp asseslorsuDderrhentwould
    hold-ihpir Fositionsdur':ng goud bpha\ior, bp fraid adequalcsalatips.
    work the entire yeer and be free lrom polirical control. The laxpaver
    wrll make but one return. Rel'enuF will bp derived from the taxiLlon
    of lranchiseof the corporation.tax on incomp,iax on inheritances,tax
    ohtangrble propertyand tax on business.Theresull willbeacoordi-
    natronol taxation thar will maka a far more equiiabledistribution of
    theburdenoflaxation and bdng grearcr.ornJoit ana lappin.ss lo ihe
    Iax-payrngpublic.

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