M 1ODICAL ROO PER LIBRARY RESEARCH BULLETIN OF THE NATIONAL EDUCATION VOL. XII - No. 1 JANUARY - 1934 ASSOCIATION Five Years of State School Revenue Legislation 1929-33 Published by the RESEARCH DIVISION of the NATIONAL EDUCATION ASSOCIATION 1201 Sixteenth Street, N. W., Washington, D. C. RESEARCH BULLETIN o » Published five times each year in January, March, May, September, and November President, JESSIE GRAY The payment of the $5 membership fee of the National Education Association entitles one to receive for one year the Research Bulletin, the Journal, the An nual Volume of Addresses and Proceed- ings, and certain other publications of the Association. One dollar of each $5 mem- bership fee is for a year’s subscription to NATIONAL EDUCATION ASSOCIATION |. W. CRABTI Secretary the Research Bulletin. The Resea Bulletin may be subscribed for separat at $1 per year. Copies may be | chased for 25 cents, and in quantities reduced rate. Those entitled to the Research Bulletin regularly are ask: to report at once any change of residen giving old as well as new address. rece Entered as second-class matter February 10, 1923, at the Post Office at Washington, D. C., under Act of August 24, 1912. Acceptance for mailing at special rate of postage provided for in Section 1103, Act of October 3, 1917, authorized February 10, 1923. Director of Research: William G. Carr; Associate Director: Frank W. Hubbard Assistant Directors: Richard R. Foster, lvan A. Booker Executive and Editorial Offices 1201 Sixteenth Street, N. W., Washington, D. C Purchasing Copies Additional copies of this issue of the Research Bulletin may be obtained at the following prices, postpaid if remittance accompanies order: Single copies, 25c. 2 to 9 copies—10% reduction. 10 to 99 copies—25% reduction. 100 or more copies—331%4% reduction. Orders for Research Bulletins not ac- companied by remittance are subject to transportation charges. Make checks pay- able to National Education Association. Subscriptions The Research Bulletin may be received regularly thru a special subscription at $1 per year. Many of the early issues of the Research Bulletin are already out of print. The special subscription at $1 px year offers an opportunity to maintain complete file of future Research Bulletin Reproduction of Material in Research Bulletins Material appearing in Research Bul letins may, with the usual acknowledg ments, be reproduced for the advancement of education. No authority other than thi notice is needed previous to such reproduc tion. In such cases a letter describing th proposed use of materials will be appre ciated. Address communications to th: Research Division, National Educatio: Association, 1201 Sixteenth Street, N. W. Washington, D. C. ° On request, the Division of Publica tions will supply at cost mats of figures which appear in the Research Bulletin CONTENTS fF OREWORD i. II. IV. V. VI. VII. VIII. IX. X. XI. INTRODUCTORY STATEMEN' SUMMARY OF PRINCIPAL FINDINGS INCOME TAXES SALES TAXES General Sales ‘l'axes Selective Sales Taxes CHAIN StTorE TAXES Corporation, TAXES FRANCHISE AND LICENSE TAXES SEVERANCE TAXES INHERITANCE, ESTATE, STATE Property TAxXeEs STATE T'Ax SURVEYS AND STATE TAX ADMINISTRATION BIBLIOGRAPHY 7. State Tobacco Taxes as Related to State Sc hool Support, 1928-33 . State General Sales Taxes as Related to State School Support, 1928-33 LIST OF TABLES Tax Provisions Affecting School Support, 1928-33 . State Personal Income Taxes as Related to State School Support, 1928-33 . State Corporation Income Taxes as Related to State School Support, 1928-33 Annual Yield of New and Revised State Income Taxes Contributing to State School Support, 1929-33 Annual! Yield of State General Sales Taxes Contributing to State School Support, 1929-33 7? . Annual Yield of New and Revised State Taxes on Sales of Tobacco Products Con- tributing to State School Support, 1929-33 . Yield in 1931 of State Gasoline Taxes Contributing to State School Support . State Taxes on Sales of Malt as Related to State School Suppert, 1928-33 . Estimated Annual Yield of State Taxes on Sales of Alcoholic Beverages Contributing to State School Support, 1933 Annual Yield of State Taxes on Sales - Soft Drinks C watcienion to State School Support, 1929-33 . Chain Store Taxes as Related to State School Support, 1928- Annual Yield of Chain Store Taxes Contributing to State Sc hoot Support, 1929-33 Annual Yield of New and Revised Franchise and License Taxes Contributing to State School Support, 1929-33 . Annual Yield of New and Revised Severance Taxes Contributing to State School Support, 1929-33 mee eee - ‘ Annual Yield of New and Revised Inheritance, Rotate, and Gift Taxes Contributing to State School Support, 1929--33 Annual Yield of New and Revised State General Prepents I'axes Contributing to State School Support, 1929-33 LIST OF FIGURES . Status of Certain Types of Taxes in the United States, January 1, 1934 . Status of Certain Types of Taxes in the United States, December 31, 1928 . Number of States Levying Certain Types of Taxes, 1928-33 [3] FOREWORD ITH THE WEAKENING and collapse of the prevailing systems of taxa tion in some of our states, educational leaders have been forced to turn their attention increasingly to questions of public financial policy. The proper types of taxes to be levied and the proper management of the public revenue are questions in which education has a primary interest. For many years students of taxation have been declaring that existing state tax systems were inadequate for modern governmental needs and unfair in op- eration. The various states have been attacking this problem, each in its own way, and with varying results. As the states assume a larger share of the cost of supporting education, the interest of the schools in sound tax systems inevi- tably increases. Without attempting in any way to assume the functions of experts in taxa- tion, various agencies of the National Education Association have recently been giving attention to this problem. The Research Division has published a series of reports summarizing the findings of experts with respect to better methods of taxation. The Journal is now publishing a series of non-technical articles for schools and study groups on the essentials of taxation. The National Conference on the Financing of Education studied the current problems of school support and described the broad lines along which state school revenue programs may best be developed. This Research Bulletin is another important contribution to this phase of the Association’s work. Urgent school revenue problems existing in many states make its appearance exceedingly timely. It should be useful to the legislative committees of state education associations, to state legislators and legislative reference bureaus, to state school and tax officials, and to all students of taxation and school finance. When educational spokesmen present a convincing case concerning the need for adequate school support they are often met with the query, “And where is the money coming from?” This bulletin should be of assistance in answering that question by providing a cross-section of the experience of the forty-eight states in this field. J. W. Crasrreg, Secretary, National Education Association I. Introductory Statement publication reviews school revenue tion for the vears 1929 to 1933. During five-year period the problem of. state finance has received increasing atten from educators, legislators, and the public n general. During this period the gross ex penditures for public education climbed to the highest point they have yet reached. During period also the nation suffered a serious nomic depression which taxed alike the in juity of school officers in devising programs maximum economy and the wisdom of legis tures in providing funds for the support of created in schools. State tax commissions and state survey were school j many states. Their reports stimulated study commissions ind action by the various legislatures looking toward more adequate methods of providing ind distributing state school revenues. During this period also, under the auspices of the fed- ral government, an important national survey 1{ the financing of education was instituted. \ review of the school revenue legislation f these years, therefore, should reveal inter- esting and significant trends in the direction of idequate school finance programs. In present ing a review which is limited merely to state school revenue legislation, it is not at all im- plied that this problem covers the entire field of school finance. The apportionment of state hool funds, local school finance, and many other issues are also matters of great impor tance. Nor is it intended in describing the pro grams of school revenue enacted recently. by one state or another to imply that every state should copy these programs in routine fashion. On the contrary, the purpose of this study is to present the experience of the several states in such a fashion that all states may profit from by selecting and adapting procedures which re suitable in the particular state concerned. Method of study—State revenue laws were examined to find those which, in their opera- tion, might affect the amount of money avail- able for state school support. The material was then compiled tentatively and mimeographed copies of the tentative report were submitted to every state education department and state gasoline, 1 This list merely illustrates the types of taxes included in the text as one group might easily be placed in one or more of the other groups. 2 Generally considered as a tax on the privilege of using public roads, the amount of use tax commission for corrections and Newspapers, magazines, books, and cx 1 ] } ence with state departments of edu commissions also were used. Scope of ref Iwo general types « tax revenues are described in this re po all state taxes the proceeds of which are def nitely allocated in whole or in part to pu education at any level: (b) state taxes whicl vield enough income to make possible cant school appropriations out of the stat eral funds. Local taxes are not included treats the following top The report order given: taxes—Taxes on both corporatio Income personal incomes, If a tax on corporations is call an excise tax, a corporation franchise tax, or a license tax, but the amount of the tax is determined by the amount of the net income, it is included as an income tax. Sales taxes specifed commodities Both general sales taxes and taxes on sales of The section on general sales taxes includes: (1) flat-rate taxes on wholesale sales, (2 raduated iimed t retail sales and/or gross retail and/or wholesale taxes not chain stores, (3) classified sales taxes, (4) gross income or gross receipts taxes, and (5) product or manufacturers’ taxes based on amount of the good produced.’ The section on selective taxes includes taxes on sales of tobacco, malt, alcoholic beverages, and miscellaneous art and services. Chain store against chain stor taxes—Taxes levied es and graduated g taxes aimed at chain stores Corporation taxes—1 corporation This ixes on Capital other taxes not falling classifications. classification does not in taxes levied against corporation income Franchise and license taxes—All franchis: license taxes not included under any other cla cation. Severance severing natural Inheritance, estate, and gift taxes taxes Taxes on th priv resources from the earth inheritances or gifts. tate property taxes decreasing Laws levying, abolishing, increasing, or state taxes on general property; and laws providing for classification of property for purposes of taxation State tax surveys and state tax administra- tion—Laws providing for surveys and for admin istration of school tax revenues sales taxes.’’ A tax th being mea ($3 Ii Hanno _ [6] vebl'T AYVNNVE SAIVIS CALINN FHL NI SAXVL JO SAGAL NIVLUI) JO SNLVLS I aanodIld a P L PURPAsYUY] SOxP I, PIS urTey) YEW fo SeTRS UO saxRy OP TOT, JO S9TPS UO SexXP] xel SaTPS TPAIUeyH XRT, sUTODUT uorzer0d 107 f ‘UY FUACIU] TRPuUcszeg SGOr ‘Te UAAWAIAT SADVIS CALINN SHIN] SAXWE 40 SAdAL NIVIGAD AO SNLVIS — Ii HANOI ‘79 ‘d ‘uUOI}BONpy JO ZUIDULUTY 24} UO BUaIaJUOD [eVUOTyeNY JO Jiodsay ‘UOIjwONpyY ul AQuas10UIY 24} UO UOIssIWIWIO>) juIof—spunj fO SadINOS payIvU -182 A]ivyIUIs UOI}VINPI 1OF WTETD 0} 3g ABUL JUIWIOU 9y} 3e Apawial a[quyivar Ajuo dy} ‘Sasvd [RNprIAIpu ul Aduatpadxa JO 19}} vu B SY *JUDUWIUIZAOS 3}"]S UI ainpasoid [viouvuy pur Aivyaspnq Ul WOJII [vI9UIS ¥ Aq Ajuo pa3da1109 aq {j1ado1d uvD II «‘“a]qeilsapun pur a[quiiNbaul st UOIJVNIIS B YING *sadINOsaI $.9}¥}s BY} UOdN UAT] YIINOF JO Ply} & YIM JULUTILTD & JO UOI}ISOd J[qeIISapUN dy} UI UOTIED Npa aavay AvW pun}; [eiaues B& YONS WoI;s suOTjelIdoidde UOdn adUapUsdap pu I] x11} & O} PadNpal UVIg dAvY Avur puny [eioues 243 ojul AJuOUT FO MOY dy} sUOTIIIPsIINf asaya UT * * * “SaNUIAII payseUiva dYIDeds Jo spaad0i1d JY} JO Way} 0} [eNAD0v DJIVBUIOJNE 343 Aq padueuy JUasaid Je 91¥ SIIJIAIQIV 93VIS JO SsPU B]qQUIIPISUOD B ‘IaAaMOY ‘sd}vjs AULUI UT * * * ‘papuvWeap A[qvUOs¥aI 9q UBD Ivy} [[e 3q ABU ‘9UIT} OF JUII] WIOIF UOISIAII BAI}LISISIT 0} JDafqns ‘UOIZeINpa 10f UOIjeIIdoIdde SummutjuOD v ‘puny [e19UaB ayy WIOIZ sUOT}EIId -o1dde 3Ajvysisaq Stpottad uodn juapuadap st JuauUIaAOS Jo suOT}IUNY {ev AT]eNULIsqns fo J10ddNs 94} J1IYM SALVLS ASOHL | ) Z 6 tI or 9 6 L 8 It 9I 6! LI 97 74 rfor 9 ¢ Ss a 6 s £ 0 s X tI or Q 1Z 0z °° * "seer Ss t 9 it 6 S Zz 0 ¥ 9 et ol L 0z st ee s t s I 8 £ i 0 z + a L 9 91 LA! . Fh ae + z ? a 8 £ 1 0 z ¥ i! r s 91 Lai re """ "6761 £ if £ 6 L s 0 0 I £ a! Zz ? zt Wt “"" "S761 “9 st a +1 oe €1 a Zt Il ol 6 8 L 9 s + e z I : Sexe, Soxey SoxE} soxey Sexe} Saxe $oxv} Sexe) Sox} $0xe) SaEy foes SOxe},. _ sSoxe} soxe} sexe} r soles 21038 soles eur0oul eur0oul sores 21038 soles eur0oul eur0oul sores 01038 , soles eur0ourl eur0oul 0208q0], Uleyd jeleued uoNwI0dI0D jeu0sieg o20BqgOy 4 uleyd [eleues uONBI0di0d euOSsIeg oo0eqoy = ureyd feleues uoNBI0dI0D jeuOsieg —””*« NZ PeAMOS om mop —t™*S ‘’ Pi em ae ae a suonviudoidde juBdgrusis ny} Ap} DelIpul UWONBINPS 0} SOINQIUOD XB} YITYA Ul SajzBIs Jo Jequiny wonvonpe sqnd 0} jsed Jo []e ZuNHvoO]]e sejB}s Jo JequIny But4ag] $9}8}8 Jo Jequinyy €€-8Z6I LHOddNS IOOHOS ONILOAAAV SNOISIAOdd XVI—I AIAVL [8] II. Summary of Principal Findings convenient quick reference, the princi findings are presented here. Figure I shows present status of certain types of taxes in everal states; Figure II shows status as of 1928: and Figure III shows trends between 8 and 1933. The general trends with re to the number of states levying certain s of taxes, the number allocating all or part the revenues for state school support, and number in which these taxes contribute to » school support indirectly thru appropria from the general funds, are indicated in le 1. General Trends in Tax Adoption! The number of states taxing personal in es and the number taxing corporation in es more 1928 3. In 1928, there were eleven states levying than doubled between and -rsonal income taxes and twelve levying co: ration income taxes. The number of states ing these taxes has steadily risen, showing 1ost rapid increases in 1931 and 1933. In 1933 twenty-four states taxed personal incomes and twenty-six states taxed corporation incomes. 2. Within a single year, 1933, the number of states levying general sales taxes more than doubled. In 1928, there were four states levy- ing this tax; by 1932, there were six; and in 1022 1933, the number increased to seventeen. 3. The number of states having chain store es increased from two in 1928 to nineteen 1933. In the latter year, the number nearly doubled as compared with ten states in 1932. +. The number of states taxing sales of to bacco increased only slightly between 1928 and 1933. There were eleven in 1928 as compared with sixteen in 1933. Revenues Allocated to Education ” 1. There is a growing tendency to earmark personal and corporation income taxes, general sales taxes, and chain store taxes for the pur- pose of state school support. While the number: of states levying personal income taxes more than doubled, the number allocating all o1 part of the revenues for the schools more than trebled. The number of states levying corpora 5, and 6 of Table 1. 2 See Columns 7, 8, 9, 10, and 11 of Table 1. ®See Columns 12, 13, 14, 15, and 16 of Table 1. * This accounts for the fact that, in Table 1, the figures in ¢ Column 2, +See Columns 2, 3, 4, 7, Solumns 7 tion income taxes more than doubled, w earmarking the revenues fo: schools eightfold. This has steadily increasing development tl 1928-33 period. the numbe1 incre ised , , ; Just as the greatest development , ‘ >> } , took piace in 19 99, the only de é faxes lor lax revenues this year. Before 1933, none ving this type of tax earm irked in €arimark also took p of the states | the revenues To! the schools : in this vear, seven states adopted the 3, Likeu se, the development of all x revenue for se 19 3 ;. practise. fing j j ; by . lOOtS Tf K ce Neither of taxes In chain store ta ’ almost entirel} the 1928 ] | oniy three within two states Ving chain store earm irked the revenues for schools : of the twelve states levying this type of tax In 1933, nineteen 1932 did so; but in nine of states had this provision. Indirect Contributions to Education There are revenues may become available for which tax | S¢ ho« | dire | two veneral ways D\ the First, the statute levying the tax may the that funds raised from it be devoted to to educational purposes. The second method is t« place the revenues from a given tax in a general fund out of which appropriations for the sup port of education may be made. The last five Table 1 indicate the states in which columns of certain taxes contribute indirectly to education thru appropriations from the state general funds. ‘here has been a general tendency to increase such allotments in all of the types of taxes covered by the table. Taxes Not Available for Education Table 1 make no significant contribution to the support In some states the taxes included in of education, because (1) revenues are placed in funds created for other purposes, or (2) re enues are placed in general funds from which the states make little or no educational appro priations.* In 1933, three of the twenty-four states having personal income taxes and four of the twenty-six states having corporation in- and 12 instance, do not total to the figure [9] come taxes virtually excluded public educa- relatively more often than any of the ot! tion from the proceeds. There is a tendency for course, it may well be that taxes fron schools to profit directly or indirectly from per- schools receive no financial support n sonal income taxes relatively more often than _ be of some assistance to the schools by from corporation income taxes. Of all these sources of school revenue from a bu: taxes, however, the general sales tax is used, taxation for the support of other gover: directly or indirectly, for state school support functions. FIGURE III | __ NUMBER OF STATES LEVYING CERTAIN TYPES OF TAXES - 1928-1933 D' RING the nineteenth century the general property tax was accepted, almost universally, as the backbone of the state and local tax systems. It was sup plemented, sometimes generously, by poll and license taxes. . . . The growing complexity of industrial conditions, however, made it increasingly necessary to devise new taxes. Special taxes on corporations, on intangibles, and on personal income have been developed in consequence. . . . As a result of these new taxes certain classes of property have been withdrawn from the general property tax. Where this has occurred the state has sometimes attempted to compensate the local governments concerned by sharing the revenue of the new taxes with them. The local governments have appealed to the state governments for assistance and the states have responded,—in some cases generously.— Mabel Newcomer. “Ten dencies in State and Local Finance.” Political Science Quarterly 43: 3, 27-8; March, 1928. III. Income Taxes INCcomn< CAN SO TI sonal + + itil 1911 few people believed that a s 1¢ tax in the United States would 10 a few states had experimented with -rsonal incomes, Wisconsin 1911 the first state to adopt a successful me ype tax tax bo onal and corporation incomes. and the federal ] succeed tes, and al m taxes rson il income in went income This was a on chool rev able adopted in tes were neg the period 1929. iIncluslv¢ rnment, a revised i1 rsonal income ta Since that 33 , other states, vove ’ ive followed suit until in 1933, twenty-four imounts avaliable In x on pi nal and bond Table the ] + State pe! L income a way l‘enness income Ss de I iddition, states taxed personal incomes and twenty were aft states taxed corporation incomes. the ta In 1933, twent taxes Personal income four states ? had laws taxing personal incomes wre 1928 Since the beginning of 1929, fifteen states - pl ot } 1 1 l hnool ) Revenues ae support. ided for this form of taxation. lated in d Alabama, Arizona Idaho, Kans 4 Arkansas (1931 a (1931 and 1933) not Does Oreg and Tenne aS Delawa ota (1 und 1 North Dak in (1932) 2.—STATE PERSONAL INCOME TAXES AS RELATED TO STATE TABLE SCHOOL SUPPORT, 1928-33 States having personal income taxes in specifi [CAPITALS indicate personal income tax revenues eart narked in whol italics indicate personal income tax revenues contributing to state propriations from general ] funds. ] 1928 1931 1 4 DELAWARI DEI I ELAWARI DELAWARE DELAWARE DELAWARI DEI A ARI : MASSACHUSETTS® M ASSACHUSETTS?# Mississippi MASSACHUSETTS# Mississippi Missouri MASSACHUSETTS* Mississippi Vv {; ississippt wt our ; MASSACHI Mississippi Mi New Ha Vew } North Car \ Dak OKLAHOM SOUTH CA Missouri New Hampshire” New York North Carolina North Dakota Oklahoma South Carolina Virginia WISCONSIN ARKANSAS Oregon Tennessee” Missours New Hampshire” Vew York Vorth Carolina North Dakota Oklahoma South Carolina V irginia VISCONSIN New Har New York North Carol North Dakota Oklahoma South Carolina Virginia WISCONSIN ARKANSAS Uregon Tennessee OKI \HOMA uth Caroli ginia onsin RKANSAS Virginia Wis ARKANSA Oregon nmsin Tenn Georgia VERMONT Kan MINNI ( MONTANA NEW * Altho the Mass: aC ‘hus etts income tax act does not p pose of state school support, Section 1 of Chapter 70 of the Gen from the proceeds of the income tax, without appropriation, the su supervisors, principals, assistant superintendents, and superintendents for > Applies only to income derived from intangibles. © Held invalid. for the specific eart } £ f part of the rt ral Laws requ the state treasurer to pay ms required part reir rsement for salar public rovide services in the schools Corporation income taxes—In 1933, twenty six states had laws taxing corporation incomes. Since the beginning of 1929, fourteen states provided for this form of taxation. Revenues derived from corporation income taxes in eleven ° of these states, and also from a Tennes see tax limited to corporation incomes derived from stocks and bonds, went, in whole or in part, directly or indirectly, to the schools. School revenues made available by corporation income taxes adopted in three states® were negligible. During the period, 1929~33, in- clusive, seven states revised their corporation income tax laws in such a way that the amounts available for schools were affected.’ In addi tion, Tennessee revised the tax on corporation incomes derived from stocks and bonds. ‘Table 3 shows the 1928-33 development of state corporation income tax legislatio: lated to state school support. Income taxes allocated to schools—B 1929 and 1933 nine states, that adopted personal or corporation income taxes ¢ earmarked the proceeds in whole o1 for purposes of state school support. B; scriptions of these measures follow: Arkansas. A personal and corporation tax law, adopted in 1929, provided that $500,000 annually was paid into the State C! Fund, the Common School Equalization Fun receive the remainder up to $750,000. A 19 ure changed the claims against the proce: the Equalization Fund would receive its after an amount sufhcient to pay the annua on all bonds issued by the Arkansas Const Commission ($315,000) was allotted to the ¢ Fund.® Alabama, Arizona, Arkansas, California, Georgia, Minnesota, New Mexico, Oklahoma, Utah, V« nt, and Wa ® Idaho, Kansas, and Oregon ’ Arkansas (1931), Georgia (1931), Missouri (1931), Montana (1933), North Carolina (1931 and 1933 Oklah and South Carolina (1930). ® Acts of Arkansas, 1929, No. 118. Effective March 9, 1929. Acts of Arkansas, 1931, No. 193. I e Marcl TABLE 3.—STATE CORPORATION INCOME TAXES AS RELATED TO STATE SCHOOL SUPPORT, 1928-33 States having corporation income tax laws in specified years revenues earmarked in whole or in part for state sch [CAPITALS indicate corporation income tax support; italics indicate corporation income tax revenues contributing to state school support indir thru state appropriations from general funds.] 1928 1929 1930 1931 1932 1933 2 3 4 5 6 Connecticut Connecticut Connecticut Connecticut Connecticut Connecticu Massachusetts Massachusetts Massachusetts Massachusetts Massachusetts Massachuse Mississippi Mississippi Mississippi Mississippi Mississippi Mississippi Missouri Missourt Missouri Missouri Missouri Missouri Montana Montana Montana Montana Montana MONTANA New York New York New York New York New York New York North Carolina North Carolina North Carolina North Carolina North Carolina North Car North Dakota North Dakota North Dakota North Dakota North Dakota North Da South Carolina South Carolina South Carolina South Carolina South Carolina South Ca Tennessee Tennessee Tennessee Tennessee Tennessee Tennesse Tennessee* Tennessee* Tennessee* Tennessee* Tenness Virginia Virginia Virginia Virginia Virginia Virginia WISCONSIN WISCONSIN WISCONSIN Wisconsin Wisconsin Wisconsin ARKANSAS ARKANSAS ARKANSAS ARKANSAS ARKANSA California California California California California Georgia Georgia Georgia Georgia Georgia Oregon Oregon Oregon Oregon Oregon Idaho Idaho Idaho OKLAHOMA OKLAHOMA OKLAHOM UTAH UTAH UTAH VERMONT VERMONT VERMON1 WASHINGTON WASHIN( Alabama Arizona Kansas * Applies only to income derived from intangibles. > Held invalid. MINNESOT NEW MEX [12] Illinois. Revenue from a graduated personal in 1x, adopted in 1932 but later declared uncon ial, would have been ’ School Fund created especially to receive enue.” the voters in 1 >? levied a tax n corporati ( s. Revenu vent 1 Minnesota. The net proceeds from a tax on per Current Scl Fut The tax wa ind corporation incomes, adopted in 1933, are in 1933 in the Income Tax School Fund.’ Income ntributina Montana. A personal income tax law, adopted in a ey rabes that oieneal provided that one-fourth of the net revenue . ay i be placed in the Common School Equaliza corporation income taxes or both be ind and one-fourth in the Common School and 1933 did not earmark the re st and Income Fund. At the same time, rates’ cifically for hool support. Never existing tax on corporation incomes were dou of the total One-fourth revenue is the s, all of the revenue from the corporation income tax had been placed in the State General Fund th \ New Mexico. A 1933 law levying a tax on in s of individuals and corporations provided that 5 percent of the net revenue be placed in the newly ited State School Equalization Fund. The re ng 25 percent must be applied toward reti1 certain state indebtedness; any .surplus must t to the Equalization Fund. Oklahoma. In 1931 the tax on personal incomes is replaced with a tax on both corporation three-fourths of the eeds was placed in the Common School Fund and sonal incomes and gross merly receipts from the personal income tax had en credited to the General Revenue Fund. In 1933 e rates of the tax were increased; the exemptions e lowered; a surtax was levied the - and cor ition income tax was made applicable to finan al institutions. Five percent of the revenue must certain administrative the leducted for purposes; en three-fourths of remainder is credited to schools.” Utah. Laws taxing corporation and personal in adopted in 1931, provided that 75 the net proceeds be placed in the State District hool Fund.” nes, percent Vermont. A law taxing personal and corporation credited to 1 new credited Common School Equalization Fund. Before combined proce is, $3 wer the Consolidated § Washington. An initiatis eas four cases, and in the case 1 ot Tennesss thet ¢ t ; limited income tax, these taxes do con a. , ; , substantially, altho indirectly, to public ed tion. Alabama. A constitutional amendment, by the electorate on July 18, 1933, put int taxes on personal and corporation incomes warrant amendment, adopted at the sa pledged the net ceeds of any income tax for retiring warrants and for paying intere the state’s floati indebtedness is retired; for reducing a alorem taxes. Of the $19.0 to be refunded, $11,000,000 is for education Arizona. Taxes on personal and cor comes were adopted in 1933. Revenues General Fund in which the pupil to the State $70 ticipate to the extent of } per laily attendance California. In 1929 a law passed taxing th chise of all financial, mercantile, and manuf ing corporations, the amount of the tax to be mined on the basis of net income. Proceeds made payable to the State General Fund which the public schools of the state and the university are ven a prior claim. A constit amendment, adopted in 1933, extended this include public utilities, formerly taxed on the of gross receipts. This amendment further req the state to raise from state sources the that the constitution formerly required the o raise for school schools mes, adopted in 1931, provided that from the support. Laws, 1931-32, First Special Session 1 f. Eff ’ Laws of Minnesota, Chapter 405. Effective earne Laws of Montana, 1933, Chapters ind 1 E fie M Laws of New Mexico, 1 Chapte . Effect Ma session Laws of 1931, Chapter 66, Art a6'h \ 5 ‘ ) \ ble year 1933 and succeeding taxable ' Laws of Utah, 1931, Chapters 39 and 44. Effective M ] Laws of Vermont, 1931, No. 17, Parts I and II. Effective Dece Laws of Washington, 1933, Chapter 5. Effective for incomes ¢ . ( et al. v. Chase et al., 25 P. (2d) p. 81-91 Extra Session, 1933, Act No. 125. Became Article XXII of th n { Act No. 1 I | income tax amendment; Act No. 179. Became Article XXIII of the Co» ution flabam * Laws of First Special Session, 1933, Chapter 8 Statutes of 1929, Chapter 13. Effective March 1, 1929. Constitution of ¢ ’ Ar e XIII, Section 14 ¢ e Article XIII, Section 15. Statutes of 1933, Ch ‘ t Georgia. A personal and corporation income tax School Fund. In 1932 he authorized a ref law, adopted in 1929, levied an amount approxi- percent of the taxes collected for the yea mately equal to one-third of the federal tax. Re- December 31, 1931.° venue went into the State General Revenue Fund, but the main purpose of the Act was to make more Massachusetts. The personal income revised in 1929. Most of the net proceeds money available for the schools. Georgia has a law . . under the Education Law for schools.” requiring that 50 percent of all revenues received } . ‘ P . . f . A 7 , ‘ by the state shall be _used for the support of the Missouri. In 1931 a personal incom state school system. The 1929 income tax law was haying rates graduated from 1 to 4 perc : . ap aving rz graduz repealed in 1931 and a new law, containing pro- substituted for the law having a flat 1 perce visions independent of the federal law, was sub- Proceeds go into the General Revenue | 4 > 20 A mt stituted. which one-fourth, by constitutional provisi Tennessee. A law taxing personal and corpora- be used for the schools. The practise has tion incomes derived from stocks and bonds was 4Ppropriate one-third. At the same time a adopted in 1929. From the proceeds of this tax, the state received 55 percent. The Tennessee public schools are given a specific claim on one-third of esti, Cocaiian in 1951 the existing the gross revenues of the state. In 1931, a provision exempting income from certain stocks was revised so as to make additional income of this type taxable.” equalization law was enacted that provi increased state aid for the schools.” and corporation income tax laws were repla new laws providing for increased rates same time a law providing for state support Income taxes not available for education six months’ constitutional term on state st Contributions that the income taxes adopted in WS enacted. ee “page ae tax 2 on , aL. #%ain increased in 3 and a plan for state Idaho, Kansas, Oregon, and Tennessee make of an eight months’ school program on stat to the state school system, if these taxes con- ards was adopted.” tribute at all, are negligible. It is possible that ‘ } ‘ B | soe f P he T North Dakota. Personal income tax rat revenues going to the local units from the en increased in 1933. Revenues are placed in th nessee individual income tax, adopted in 1931 General Fund from which important edu and declared unconstitutional in 1932,** con- appropriations are made. tributed indirectly thru local funds to local South Carolina. The rates on corporat support of education. However, since this re- comes were increased in 1930 and the brack port deals only with state support of education, the tax on personal incomes were lowered. R laws of this nature are bevond its scope. were placed in the State General Fund wh Revisi lier i ce 1 oe 1927 provided nearly half of the total genera! y oe — of ear —y Caen fax laws—WUUurI- fund. The rates on personal incomes were f ing the period, 1929-33, eight states that had increased in 1933 and exemptions were decr« income taxes before 1929 revised their laws in The School Act of 1933 earmarked for scho such a way that their contribution to state PS€s $893,000 of the personal income tay : “c ceeds.” support of education was modified. Delaware. In 1929 a personal income tax act was Virginia. In 1930 the exemptions were in enacted, superseding all previous acts. This re- in the personal income tax. This, it was esti vision represented a slight decrease. Net proceeds would decrease the revenue by about $34 are payable to the State School Fund. The governor, Revenue is credited to the General Revenue according to 1931 legislation, has power to reduce from which certain educational appropriation the income tax in conformity with the needs of the made.” ® Georgia Laws, 1929, p. 92-99. Georgia School Code, 1923, p. 38, Section 109. Georgia Laws, Extraordinary Se Act No. 13. Effective January 1, 1931. *! Public Acts, Regular Session, 1929, Chapters 86 and 116. Extraordinary Session, 1929, Chapter 16. Acts of 19 264, Section 1; as amended by Acts of 1913, Chapter 23, Section 1; and by Acts of 1923, Chapter 75, Section 7. *2 Public Acts, Second Extraordinary Session, 1931, Chapter 21. Declared unconstitutional by State Supreme Cour essee, July 22, 1932, in L. C. Evans, et al., v. Charles M. McCabe, et al., 164 Tenn. 672, 52 (2d) 159 * Laws of Delaware, 1929, Chapter 8. Effective for the year 1930. Laws of Delaware, 1931, Chapter 9. *4 Massachusetts Acts and Resolves, 1929, Chapter 361. General Laws, Chapter 70, Section | * Laws, Missouri, 1931, p. 365-75. Effective April 16, 1931. p. 334-47. Comstitution of Missouri, Article tion 7, °6 Public Laws of North Carolina, 1931, Chapter 427, Sections 310 and 311. Chapter 430. Section 1 Publi North Carolina, 1933, Chapter 445, Sections 310 and 311. Chapter 562, Section 1. 27 Laws of 1933, Chapter 253. Effective December 31, 1933. 28 Acts, South Carolina, 1930, Act 803, Sections 1, 3, and 4. Applicable to all incomes earned or accrued January 1, 1930. Acts, South Carolina, 1933, “School Act of 1933.” % Acts of Assembly, 1930, Chapter 46. Effective for taxable year 1930. [14] 1x ns General Wisconsin. From 1925 to 1931 nsolidated and graded schos Fund and the state university, the normal schools, yn schools on the state props 1 and the income tax revenue is now TABLE 4.—ANNUAL YIELD OF NEW AND REVISED STATE INCOME rty tax wert Chis provision was rep¢ Fund, from priations for education are m which ide. In TAXES CONTRIBUTING TO ibove, is given in Lable 4 STATE SCHOOL SUPPORT, 1929-33 ee hi schools on the f the income n the State al ; State 1 Ar 1 Arkar i California lelaware Ma nusetts Missouri M ina New Mexico North Carolina North Dakota Oklahoma South Carolina Tennessee Vert nt Virginia Wisconsin * Estimate. Personal and Personal and Corporation it incomes corporation omes and < rpora incomes and porat in 5 on incomes and rporation and rporation and poration and rporation Personal and corporation . Corporation incor 1eS Personal and corporation Personal and Personal and * Evening Star (Washington, D. C.) U. S. Department of California Tax Research Bureau. Ref Information from Montana Education, ; [ f Information from Marshall Gregor * Commissioner of Commerce, B Hollowa April, 1933. r < Finance and Taxation orporation rporation lirector h Information from Francis L. Bailey, state con Wisconsin Tax ( $1,986,529: and (2) relief tax, Fifth Bie incon nco!r resear nnial Report. ner mmission. Bulletin No. 53. This figur the emergency 7; eaucé 4 ne * 129,424 4 y g ending J + 1 : Lea ng J 8 l Year ending ] IV. Sales Taxes For convenience in discussion, sales taxes are here divided into two groups: (a) those which are levied on all or nearly all sales of a given type, and (b) those which are levied only on sales of specified commodities. These two types are discussed in order. General Sales Taxes Since the beginning of 1929, fifteen states have adopted general sales tax laws. Revenues from general sales taxes in seven of these fif- teen states were earmarked in whole or in part for state school support; in seven states reve nues were placed in general funds from which substantial appropriations are made for the schools. Table 5 sets forth the 1928-33 devel- opment of state general sales tax legislation as related to state school support. General sales taxes earmarked for state school support—General sales taxes were en- acted to contribute directly to state school sup- port in the following states: Illinois. Net revenue from a 3 percent sales tax, adopted early in 1933 but later declared unconsti- 1 Laws of Illinois, Fifty-eighth General Assembly, 1933, p. (See Winter v. Barrett, 352 Ill., 441.) 938-44, tutional, was to have been distributed n the counties in proportion to their populati used in Cook County for relief purposes and other counties for schools. Under some of the money in Cook County could ha used for schools and the money in the other could have been diverted for tax was replaced later in the session with cent retail sales tax designed to operate f: 1, 1933, to July 1, 1935. Up to February 1 the proceeds are to be used for emergency after that date, they are to be paid into a ne fund called the Occupational Tax Fund March 1, 1934, the Common School Fund University of Illinois, each fund the amount it would receive from a stat erty tax levied for it. The amount that would certain cor relief purpos is to receive f: wise have to be raised by means of such tax will thus be reduced. Michigan. A 3 percent gross retail sales ta adopted in 1933, provides that $31,700,000 net revenue be appropriated annually as f $12,000,000 to the State Emergency Welfa: $19,000,000 to the General Fund for the fisca ending June 30, 1934, and June 30, 1935, $ to the University of Michigan, and $200,00( Michigan State College. Any remainder was o placed in a special fund to be disbursed appropriation by the legislature. From this fund, an annual appropriation of $15,00 945-47. Effective March 924-29, 1090-91, TABLE 5.—STATE GENERAL SALES TAXES AS RELATED TO STATE SCHOOL SUPPORT, 1928-33 States having general sales taxes in specified years [CAPITALS indicate general sales tax revenues earmarked in whole or in part for state school sup; italics indicate general sales tax revenues contributing to state school support indirectly thru state propriations from general funds.] 1928 1929 1930 1933 1 2 3 4 5 6 Delaware* Delaware* Delaware* Delaware* Delaware® Delaware Pennsylvania* Pennsylvania* Pennsylvania* Pennsylvania*® Pennsylvania® Penns ylvani Pennsylvania Pennsy! Virginia Virginia Virginia Virginia Virginia Virginia West Virginia West Virginia West Virginia West Virginia West Virginia West Vir Georgia Georgia Georgia Mississippi Mississippi Mississippi Mississippi North Carolina North Carolina Curvii North Carol Arizona California ILLINOIS Indiana MICHIGAN New York OKLAHOMA OREGON SOUTH DAK UTAH WASHINGT‘ ® These are, respectively, a merchants’ and manufacturers’ license tax and a mercantile license tax. plus a tax measured by gross value of sales. - They levy a fl [16] for support of the public schools. The tax ture at a ¢ session replaced this with 1SSl ever, it was estimated, would produce only fied gross tax. After 19 percent of the ” ¢ ),000.° revenue is iside for certain specified purposes ‘ 75 percent of e remainder is placed in the Sta 1" Oklahoma. All of the revenue from a 1 percent : a ‘ tia General | 1 which appr lations i sales tax, adopted in 1933, with the exception id , : tor educatl a2 percent to cover costs of collection, was ear ‘ ked for the schools as follows: 50 percent to California. In 1933, a flat-rate retail sales tax common school districts for reduction of loca was adopted. Reve was ordered place | taxes, 30 percent for the purchase of teach State General Fund upon which the s¢ i non-payable warrants, and 17 percent for the given a prior claim. At the same time ac il Common School Equalization Fund tional am nt providing for increas ato } ] 8 ‘ ° . school s | s adopted Oregon. A 1 percent tax on retail sales and cial e tain utility services was adopted in 1933. Seventy Georgia. R ie from the 1929 clas 1 gross 1 percent of the net. receipts was earmarked sales tax wl expired in 1931 was placed in tl | purposes. State Gener nd it the measure was ted : P , for the s purpose ot making en eC South Dakota. In 1933 a gross income tax was as ‘ ts ie : ivailable the public schools. As previ 1. Fifty percent of the gross revenue was eai : ic schoo igh : i" cated, Geo has a |: ul that ercent ked tor the schools as follows: > percent for rigs , law sd — ha ; ‘ , f alls eceived by the state from all source ols unable to operate because of delinquent local ‘ ee ed by the state from all nee ‘ shall be used for the state school syster s, and 45 percent for the Interest and Income ; ‘ — ix ‘ . é Common School Fund. Local property levies are t Indiana. In 1933 a gross income tax was adopted reduced by the amount received from this fund.* which is described as a “cross between a general fa : ; sales tax and a net ircome tax.” Net revenue i Utah. The net revenue of a comprehensive retail waiter = Ly es tax of 2 percent, adopted in 1933, after $2,00 credited to the General Fund. At the same t the annually is set aside for relief purposes, must legislature ided for increased state sch su placed in the State District School Fund to re port which will necessitate a state school fund of , ce the state property tax levy. Any balance of over $20,0 to come from the General Fund.” . $2,000,000 not used for relief and remaining ae ee ene - : ; Mississippi. In 1930 a classified gross sales tax # it the end of the fiscal year must be transferred to hicl “te? 1932 , = I is . ; which expired in 1932, was adopte n 1932 a gros State District School Fund. - Nats pom : 7 income tax, designed to expire June 30, 1934, was Washington. In 1933 a classified sales tax on adopt | All State taxes in Mississippi are | ival le unufacturers’, wholesalers’, and retailers’ sales to the General Fund of the state from which ap ind on sales of certain services was adopted. All propriations are made for the public scho me f , ve , 512,500,000 ‘ -red , . yf the Tevenue, up to $12,500,001 » ‘was ordered = anpropriations the school vear 1932 smounted iced in the State Current School Fund. to $7.63 oO 3/,630 General sales taxes contributing indirectl New York. In 1933 a retail sales tax was the schools—Seven states enacted general adopted. Revenue is payable to the State General sales taxes which, altho not earmarked for edu- Fund, from which appropriations for education are i os . ° 6 6 . : . made. ion, contribute significantly thru appropria ons from the general funds. Brief descriptions North Carolina. In 1931 a graduated gross sales \f these measures follow: tax was levied on retail and wholesale merchants, for the purpose of supporting at state expense the | | PI Arizona. A 2 percent sales tax, adopted early in six months’ constitutional term on state standards ’ 1933, was declared unconstitutional. The legisla In addition to this tax, the legislature, in its 1933 1 _ —= 3 Public Acts, 1933, No. 167. Effective June 28, 1 N i * Harlow’s Oklahoma Session Laws, 1933, Chapter 66, Article 9, S« Effect June 1, 1 * Session Laws of South Dakota, 1933, Chapter 184. Effective Ju 1 June 1° Chapte ‘, > Laws of Utah, Special and Regular Sessions, 1933, Chapter Effect Ma l to April 1, 1° i led | of Utah, Second Special Session, 1933, Chapter 20 Effective Augu l ® Laws of Washington, 1933, Chapter 191. Effective March 21, 19 ‘Laws of Regular Session, 1933, Chapter 90. Effecti April 1° S x Stultz Eagle Drug ( 21 3 ‘ Laws of First Special Session, 1933, Chapter 17 fiective June 28, 19 March 1935 \ ® Statutes of California, 1933, Chapter 1020. Effective July 31, 19 Chapte icts, 1929, pn. 103 f. Effective October 1, 1929, to December l , h ( e, 72 p 5, sect ROTA icts, 1933, Chapter 50. Effective May 1, 1933. Chapter 96. Effect Janua 1934, or as soon after as | Oo? General Laws of Mississippi, 1930, Chapter 90, Article I. Effective May 31, 1930. General Laws of Mississippi Chapter 90. Effective April 30, 1932, to June 30, 1934. Information fr A. S. ( ly, secretary, Mississippi State Tax ( sion, lat * Laws of New Yerk, 1 Chapter 281. Effective April 1 )3 session, adopted, in connection with the new eight and many others. The discussion of thes: months’ school program to be supported wholly at . . . : “ _ is organized according to the commodit state expense, a 3 percent tax on retail sales. : * lected for taxation. General sales taxes not available for educa- i , ; . ; P 1s f he E Relief Taxes on sales of tobacco—During tion—FProceeds trom the Emergency Kelie . ; ‘les T i i p riod 1929-33, seven states adopted Sales Lax of yercent, adopted by Pennsyl- 5 “1 in 1932 ] : es sales taxes.?° In three of these seven stat vania in 52, were placed in the Genera . Fund. | ' I levy; revenues were earmarked in whole o: ‘und, Dut the reason tor levying the tax was ° ¢ ‘ , 6 'S for purposes of state school support. > o , sat 14 0 roy S ¥ e WO) e re 4¢ . so 1 - aoe ment relief States they were ordered placed in state Yield of general sales taxes—Table 6 gives funds from which substantial educatior the annual yield of general sales taxes adopted since the beginning of 1929 that contribute propriations were made. In two stat zona '® and Michigan,"* contributions f to the schools. cational support were little or nothing. of these seven states and four others tl TABLE 6.—ANNUAL YIELD OF STATE existing tobacco sales tax laws revised t] GENERAL SALES TAXES CONTRIB- jy such a way that revenues available { UTING TO STATE SCHOOL SUPPORT, : 3 state school systems would be affected. ‘| 1929-33 4 vg »2? sets forth the 1928-33 development of State Estimated annual yield tobacco tax legislation as related to state s S oe re ~ support. * cami 8 ss The three states adopting tobacco sal Arizona $900,000" _— a California $48,000,000" between 1929 and 1933, inclusive, th Georgia $950,000" : A Illinois $33,000,000" marked the proceeds in whole or in p Indiana $12,000,000 to $14,000,000! Michigan $32,000,0008 the state school systems were: Mississippi $2,347 ,442¢ New York $28,000,000 to $30,000,000" A North Carolina $8,160,000» Ohio. In 1931 a cigarette sales tax was North Dakota $4,000,000" for the years 1931, 1932, and 1933. The re Oklahoma $3.401,0144 : dee Oresen $4000.000° were ordered placed in a Cigarette Tax | South Dakota $10,000,000» . ¢ A ae vs Utah $1'680000" be used for (1) paying expenses of adn Washington $5,000,000 to $6,000,000" ing the tax, (2) paying expenses of the State | mating rena Cee : ization Fund for schools, (3) constructing * Estimates based on figures: Joseph G. Riddle. Revenue from structing, repairing buildings at the institutior General Sales Taxes. Chicago: American Legislators Association, agg : : December 6, 1933. p. 5. ministered by the Department of Welfar« » Evening Star (Washington, D. C.), June 1, 1933 quiring land for such institutions. A 1933 enact © Estimate based on $1,173,721.15 produced during first six ¥ , . E : | Sl, , Produced Curing extends the tax from January 1, 1934, to De: months of operation. Stone, A. H. Mississippi Sales Tax Statis J ov, 0 tics. Jackson, Miss.: State Tax Commission, 1932 31, 1935, and appropriates the revenue to ¢! 4Information from Marshall Gregory, director of research, lic School Fund." State Department of Public Instruction. * Oregon Education Journal, January, 1934. p. 17 . : Oklahoma. A cigarette sales tax law, ad 1933, provided for apportioning 95 percent Selective Sales Taxes gross revenue to the school districts of the This law, however, never went into effect. It Sales of certain specified commodities are defeated by a referendum vote on August 15 frequently selected for taxation. A list of such Texas. In 1931 a cigarette sales tax law ae tae “te aie aaa ' | commodities would include: tobacco, gasoline, ieunii al ik aensceds be placed ia th malt, alcoholic liquors, cosmetics, amusements, Available School Fund was enacted. This law 13 Session Laws, 1931, Chapter 427, Session 164. Session Laws, 1933, Chapter 445, Sections 400-522. Effect 1933, to June 30, 1935. “4 Laws, Pennsylvania, Extraordinary Session, 1932, Act No. 53. Effective August 19, 1932 % Arizona, Louisiana, Michigan (defeated at referendum), Mississippi, Ohio, Oklahoma (defeated at referendu Texas. % Laws of First Special Session, 1933, Chapter 18. Net revenue for Board of Public Welfare 1? Public Acts, Michigan, 1929, Act 119. Effective August 28, 1929. Revenue for General Fund 18 Taws of Ohio, 1931, p. 805-15. Became Sections 5894-1 thru 5894-21 in Ohio General Code Baldwin's ( Service, September, 1933, Number. Sections 5894-1 thru 5894-2b. Effective July 14, 1933. 1” Harlow’s Oklahoma Session Laws, 1933, Chapter 66, Article 13, Sections 710-27. Effective May 17, 1933 [18] ) ided in 1933 to give all of the revenue iring enut I a Spe Educatior 1933-35 biennium to the State Available Scl strengthened. In 1932 the rates , increa tes I ( i v ; ’ ’ the tax was ex de to } f § Lhe two states adopting tobacco sales taxes However eit state app ‘ati ng this period and providing that the re sources had been reduced, the int es be placed in state general funds fron made a e by this enat nt 1 ~ . “ ] $8 va not expected t ( vhich substantial educational appropriations amount e im the state f ‘ la ‘ere made Were. was aga hened in 1933 ‘of 927 ¢: ' toare ivarettes > 1 Louisiana. In 1932 taxes on cigars, cigar Arkansas. A 1929 enactment replac: { smoking tobaccos were adopted and the rey cigar and trette tax act with a new es were placed in the State General Fund. At the claims against the proceeds remained : same time increased appropriations were made for as they were before The Common Sel | common schools and the state university would rec the first $750, - the | Fund, the xt $750,000; and of any Mississippi. In 1 >" 1 tax on retail sales i ciga each would receive one half The previo and cigarettes was enacted. In 1932 the tax law was provided that the first $75 She credit eplaced with one which included smoking tobacco (Common S« | Fund. and anv remaind vell as cigars and cigarettes Equalizing nd. In 1931 the sales tax on « ; F , was increased by one cent per packa; i! \side trom the states discussed above, Toul extra reve! thus made available was ea ° 1 - ¢ ¢) 7 ‘ ' revised tobacco sales tax laws in such a way for buildin it the state higher educatio ] utions Lil i¢ ) iX iaWws we ¢ SI that revenues available for schools were af 1933 cted. These states were: South Dakota \ 1929 enactment Alabama. In 1931 a 1927 act levying a tax on cigarette tax la nd provided that t igars, cigarettes, and cheroots, and placing the rey placed in the State General Fund inst 1 1 Gener I Regu ( ] 7 ’ , { pte 15 {cts, Louisiana, I ar Session, 1 N 4 Efe , ' General Laws V ppi Chapte A e Ill } ner j 2. Effective June l to June 3 1934 General Acts, Alabama r § ” 1, Act ner { Extr n A Alabama, Extra Session, 1933, Re i ea effect 1 N 4 Acts of Arkansas, 1929, No. 152. Effective March 1 { { IN 1 12, 1931. Acts of Arkansas, 1933, Ne Effective Ma TABLE 7.-—-STATE TOBACCO TAXES AS RELATED TO STATE SCHOOL SUPPORT, 1928-33 States having tobacco tax laws in specified year [CAPITALS indicate tobacco tax revenues earmarked in whole or in part for state s¢ sup] indicate tobacco tax revenues contrilt iting to state school support r ectly thru state appropria general funds.] 1928 1929 93 19 l 2 3 4 5 ALABAMA ALABAMA ALABAMA ALABAMA ALABAMA ALA ARKANSAS ARKANSAS ARKANSAS ARKANSAS ARKANSAS ARKANSA ( Georgia Georgia Georgia reorgia i low lowa Towa / / I Kansas Kansas Kansas Kansas K iS I LOUISIANA®* Louisiana Lou North Dakota North Dakota North Dakot Vorth Dakota North Dakota South Carolina South Carolina South Carolina South ( 1 South Carolina you ( SOUTH DAKOTA South Dakota ith Dakota South D South Dakota Sout) TENNESSEE TENNESSEE rENNESSEI TENNESSI ri VESSEI rt Utah Utah Utah Utah Uta Uta Michigan» Mississippi Vississip pi Vi ppi M IHTO Hig IHTO * Repealed > Defeated at referendum. 19] special building fund for educational institutions In 1933 the law was replaced with a stronger one. Substantial appropriations are made for the state school system from the State General Fund.* Tennessee. In 1929 the tax on sales of cigarettes was increased. All of the revenue is credited to the State Educational Equalization Fund.” Table 8 gives the annual yield of tobacco taxes adopted or revised since the beginning of 1929 that contribute to the support of the state school system. TABLE 8—ANNUAL YIELD OF NEW AND REVISED STATE TAXES ON SALES OF TOBACCO PRODUCTS CONTRIBUTING TO STATE SCHOOL SUPPORT, 1929-33 State Yield Year ending 1 2 3 $1,500,000* ® $508,451 $662,517¢ $4,500,000* 4 $1,500,000* ¢ $2,184,448¢ $153,041° Alabama Arkansas M ississippi Ohio . Oklahoma Tennessee Texas 1931 1933 September 30, December 31, June 30, 1932 December 31, 1931 * Estimate. ® Correspondence with Frank L. Grove, secretary, Alabama Education Association »b Journal of Arkansas Education. November, © Tax Research Foundation, Federal and State 1933. p. 198-200 4 The yield from effective date September 1, 1931, to Decem- ber 31, 1933 was $10,100,000. Information from B. O. Skin ner, director of education, State Department of Education * Evening Star (Washington, D. C.), June 1, 1933. 1933. p. 8 Tax Systems, Taxes on sales of gasoline and lubricating oil—In 1928 Massachusetts and New York were the only states that did not have gasoline sales taxes. By 1929 all of the forty-eight states had this type of tax and, since then, none have abandoned it. Revenues are generally used only for road construction and upkeep. How- ever, a few states deviate from this practise. During the 1929-33 period Louisiana, Ohio, and Texas adopted the practise of earmarking part of the gasoline tax proceeds for their state school systems, and Florida, Georgia, and Wis consin provided for increased school from this source. In Wisconsin part of t} enue was diverted to the Genera! Fund which all educational appropriations are Florida later repealed all provisions gasoline tax proceeds to the schools. A state, New Mexico, earmarked the from a new tax on lubricating oil for purposes. Summaries of these laws foll: Florida. In 1929 one cent a ga gasoline was added to the existing five-cent ¢ the additional revenue placed in the Pu School Fund. This law, along with a 1927 that two-thirds of one cent from the proceeds five-cent tax be apportioned to the county a tax o! was repealed in 1931.” Georgia. The gasoline tax was increa two cents in 1929 and one cent of the total t earmarked for an Equalization School Fund the former law the schools had been entitled one-half cent per gallon. The law was amen 1931 to provide that, before the revenue fro: and from an existing one-cent per gallon kerosene go to the schools, one-half percent ducted in order to cover of collection speation.” cost Louisiana. A constitutional amendment a in 1930 increased the tax on gasoline, naphtha zine, etc., by one cent per gallon and ea one-half cent for an equalizing fund.” New Mexico. A 1933 law levied a tax cents a gallon on lubricating oil. The reven ordered placed in a Free Textbook Fund Ohio. One cent of the gasoline tax was r in 1933 and replaced with a one-cent tax liquid fuels. The net revenue from the liqui tax was allocated to the State Public School | Texas. In 1929 the rate on gasoline was cha from two cents to four cents. One-fourth of th« enue, by constitutional provision, must be pla the State Available School Fund.” Wisconsin. The 1933 budget act provided during the two fiscal years, 1933-34 and 1934 $1,000,000 per year be diverted from the reve: the gasoline tax to the State General Fund which all state school expenses are paid.™ Sessions Laws of South Dakota, 1933, Chapter 190 Acts, 1929, Extraordinary Session, Chapter 17. 1931 of Florida, 1931, 25 Session Laws of South Dakota, 1929, Chapter 242. 2% Public Acts, 1929, Regular Session, Chapter 50. Public 1931, Second Extra Session, Chapter 1. Effective December 9, Laws of Florida, 1929, Chapters 14573 % Acts, 1929, p. 101, Section 2. *® Acts, Louisiana Extra Session, 1930, No. 1. % Laws of New Mexico, 1933, Chapter 115. 31 Laws of Ohio, 1933, p. 629-31, 631-42. 82 Tax Research Foundation. Federal and State Tax Systems, 1933. p. % Laws of Wisconsin, 1933, Chapter 140, Section 20.49. Pub and 14575. Laws Chapter 15659. Effective July 1 Became Article 6A, Section 1-14 of Constitution Louisiana 140. [20] or elds of the taxes discussed abDove are ¢{ n they ont? hle Q. rn e « ran, pI ( TABLE 9.—YIELD IN 1931 OF STATE GASOLINE TAXES CONTRIBUTING O STATE SCHOOL SUPPORT oT stat = school i o1i4 i ; » SA Lhe m $ . Support $1 briefly as f Mex ( Arkansas , T'ax hee? I i on malt ar availabl f revenue | Infor y= 1927, h i t of Pu Inst which wa xX } D as $ I ten mulls I dire 1 t S D I shifted tl which is negligi Georgia Taxes on sales of malt—In 1928 only on tax law an tate had a tax on sales of malt; in 1933, nine re a “ _ tes had such taxes. During the 1929-33 iod, nine states adopted this type of tax. sores none of these nine were proceeds in any w OE SE ag revenue CO marked for the schools; in six, however for the Ed j First Sp ‘ ( \ | eral La Idaho, Extraordir ( é icts, 1 No + I \ e used for tut patie icts of Arkansa N r ( 1 { Georgia Laws, 1 7 S / 1930, No ' naire stat on Id ?) I Duted not Juring this per , Y malt tax iv ( xpected ft h the 1928-33 egislation ( ystems 29 enactment ley ex acts and p reduce the st ite | f mills of the state r cation \ 19 x I enue to é f state ct 1 in 1929 adopt ed the rever t nd, half of wt ina in 1930 chan malt tax s¢ ected All tion | I juali of the \l TABLE 10.—STATE TAXES ON SALES OF MALT AS RELATED TO STATE SCHOOL SUPPORT, 1928-33 ) States having malt sales tax laws in spe [CAPITALS indicate malt tax revenues earmarked in whole or dicate malt tax revenues contributing to state school support indir eral funds. ] UISIANA LOUISIANA LOUISIANA LOUIS IANA Arkansas Arkansas irkansas Georgia Georgia Georgia Michigan* Michigan South Dakota South Dakota South Dak Tennessee Tenness Tennessee South Carolina South Car * Administration suspended thru state appr l ye s tate school suppor priation $ fal fr ‘ D a Mississippi. A 1932 enactment levied a tax on sales of malt. Revenue was ordered placed in the General Fund, from which are made all state edu- cational appropriations.” South Carolina. A malt tax was adopted in 1930 and the revenue was placed in the General Fund. Rates of the tax were decreased in 1931 and later in that year the tax was repealed. Until 1933 ali state educational appropriations in South Carolina were made from the General Fund.“ South Dakota. In 1929 a tax on sales of malt extract was adopted. All of the revenue was ordered Fund reduce the state credited to the General to property tax.” Tennessee. In 1929 a tax on sales of malt extract, derivatives, or combinations was adopted. As pre- viously indicated, the schools of Tennessee are given one-third of all the revenues of the a claim on state.“ Taxes on sales of alcoholic beverages—In 1933, sales of 3.2 beer and wine and other alcoholic liquors became the object of much special sales tax legislation. At least thirty-one states adopted such a tax. Such legislation af- fecting state school support is described as follows: Arkansas. Seventy percent of the state’s revenue from beer is earmarked for the Common School! Fund.® Connecticut. Revenue from a tax on the gross receipts from sales of alcoholic liquors was ordered placed in the General Fund from which state edu- cational appropriations are made. The law was so worded as to tax automatically all alcoholic liquors, irrespective of alcoholic content.” Florida. All of the revenue from the tax on sales as well as from the license fees on manufacturers, wholesalers, and retailers is allocated to the County School Fund.” Idaho. Fifty percent of the revenue from a tax on sales of 3.2 beer and from license taxes is al- lotted to the State School Fund.“ 4! General Laws of Mississippi 1932, Chapter 95. Indiana. Net revenue from state licens taxes on alcoholic beverages was 01 tributed to the tuition funds of the sev taxing units.” Maine. Revenue from a tax on sales beverages containing over one-half perce was credited to the General Fund of the sta which significant educational appropriat made.” Maryland. Revenue from a tax on 3.2 wine becomes a part of the state's general which is an important source of school su Michigan. From the revenue of the li 3 the sum of $ sales tax on 3.2 beer and wine is earmarked for the Primary School Fund Missouri. The revenue from such a Missouri was ordered placed in the Gene is used for education one-third of which Oklahoma. Ninety-five percent of the from a tax on sales of 3.2 fermented bevera from the license taxes is for the schools Pennsylvania. Revenue from the tax on and wine in Pennsylvania was ordered the State General Fund. All propriations are made from this fund educ atiol A tax ind state per gallon was levied on alcohol, whiskey manufactured or stored within the state bef peal. Revenue was ordered turned into the G Fund, but one of the for adopting of making appropria purposes measure was that an $5,000,000 for financially tricts.™ embarrassed sch South Carolina. A law taxing sales of and wine provided that 40 percent of the collected in towns, cities, and incorporated \ and 50 percent of the revenue collected outsid: limits be used for school purposes. This was repealed and a law levying a license and sal was enacted. From the revenue of the license $24,000 was earmarked for state aid to scho #2 Acts, 1930, No. 810. Acts, 1931, No. 250. Information from W. G. Query, state tax c« el #3 Session Laws of South Dakota, 1929, Chapter 245 “4 Public Acts of Tennessee, 1929, Chapter 67. Public Acts of Tennessee, 1931, Second Extra Session, Chapter tive December 19, 1931. Public Acts of Tennessee, 1933, Chapter 59. Effective April 7, 1933. “5 Dawson, Howard A. “The Arkansas School Dollar.’’ Journal of Arkansas Education 10: 6-1 N ber, 193 46 Public Acts of 1933, Chapter 140, Part II. Effective April, 1933. ** Laws of Florida, 1933, Chapter 15884. Effective May 8, 1933. Chapter 16172. Effective June 7, 19 48 General Laws, Idaho, Extraordinary Session, 1933, Chapter 3. Effective Tune 21, 1933 * Acts, 1933, Chapter 80. Effective March 1, 1933. ™ Laws of Maine, 1933, Chapter 268. *t Laws of 1933, Chapter 213. %2 Public Acts, Michigan, 1933, No. 64, Section 7. Effective April 27, 1933. ® Missouri Statutes, Annotated. Laws to April 10, 1933, with Annotations, Article 9, Sections 1 e thru 131392 4 Harlow’s Oklahoma Session Laws, 1933, Chapter 16. Effective May 5, 1933. Information from Edward B. Logan, budget % Laws of Pennsylvania, 1933, No. 104. “ Acts, South Carolina, 1933. ‘School Act of 1933.” lennessee. From the net rev sales of 3.2 beverages, one-third 1 the state and one-third mus ted to the several counties to or, by a two-thirds tary schools court, for general purposes Utah. Net revenue from a tax on beverages < not more than 3.05 percent alcohol (man for vas ordered placed in a State ctured within the state outside the state Fund for the Relic Utah. After tl »val of such necessity, 50 percent must bx sale the Unemployed Residents of place n a special fund to be known as the “Junior ( Fund.’ Wisconsin. From the proc eeds of a tax on sa 3.2 malt beverages and wine up to July 1 vere appropriated aids to certain school distri inable to complete the school year without assista1 m the state. Table 11 gives the estimated ann f these taxes. TABLE 11—ESTIMATED ANNUAL YIELD OF STATE TAXES ON SALES OF ALCOHOLIC BEVERAGES CON TRIBUTING TO STATE SCHOOL SUPPORT, 1933 Arkansas idaho Michigan Missouri Oklahoma Pennsylvania beer an alcohol, whiskey, and nsin | \ t wine Wise probably s Education, November, 1933, p. Information from Wi m A. Gartin k. State Department of Education Evening Star (Washington, D. C School and Community. April, 1933 Information fro Marshall Gregory Department of Public Instruction Information from Edward B. Logan prod > I l Will Taxes on sales of soft drinks—During t} 1929-33, three states adopted taxes on Ala bama, proceeds are specifically earmarked for period of various kinds of soft drinks. In the schools; in Louisiana and Tennessee, pro ceeds contribute to state school upport indi Public S Laws of {ct Utah Wisce Louisiana, National Tax Association Public Acts Temmesss Alabama. terms Louisiana was adopt General Fund niversity re¢ South amended in 1 sion refund to da } schools priations a Tennessee. idopted in General Fur h | 100] TABLE 12.- TAXES ON SALES CONTRIB SUPPORT In 1932 a tax on sales All of the revenue gox ym which the scho increased app Carolina. : ft ire that the Tax ! j ] paid on all m om this tax ’ om which al A 1 tax on ii percent the innual -ANNUAL YIELD OF STATE OF SOFT DRINKS UTING TO STATE SCHOOL 1929-33 Taxes Services above, there and Se€TVICeS S ibiect tax Is specii Oklahoma Scho Common 1) Fund ellaneous from the commoditie ° ’ miscellaneou ( ne ire many to sales taxe lly earmarked for th \ 1933 enactment earmark the revenue from tax of 4+ percent on gross receipts earned within which the state school system was given fir the state by freight car companies.” A constitutional amendment adopted in 19 Other taxes on sales of specific commodities ished this tax and provided that these pu ties be taxed under the corporation income that contribute thru general funds to school ; . adopted in 1929.” support are too numerous to be described in detail here. A few illustrations follow: Maryland. A 1933 enactment taxes sums on all races conducted under the Racing Co: California. Up to 1933 California levied a tax except bona fide county fairs or agricul on “operative” property of railroad and street rail- hibits.” way companies, gas and electric companies, express companies, telegraph and telephone companies, sleeping car and other car companies, and highway transportation companies, but the measure of the South Carolina. South Carolina increa Mississippi. Mississippi levied a tax o1 ment admissions in 1930 and revised it in tax was gross receipts from operation. Proceeds rates on candy in 1930 and levied a tax on were payable to the State General Fund, upon power in 1931.” LB ‘ California, 1 Chapte * Laws of 1933, Chapter 324 ®* General Laws of Mississippi 30, Chapter 90, Article IT. General Laws of Mississippi, 1932, Chapter 94 Code of Laws of South Carolina, Sections 25 5) and 2558 thru 2564 \ YiTHIN the last year or so the sales tax has spread rapidly among American , states. On the one hand this development has taken the form of selective taxation of specific commodities, such as tobacco, candy, cosmetics, electric power, and so on, with the result of building up in a few cases rather comprehensive sys tems of selective excise or sales taxes. In other jurisdictions a different course of development has been followed. General sales taxes, varying in scope, but center ing usually upon retail transactions, have been developed. . . . They reach a class in the community who pay little or nothing under the usual income tax, but who, nevertheless, owe a financial cbligation to the state and may be capable of paying some additional taxes. ‘The introduction of a sales tax broadens the base of state taxation. ‘The administrative difficulties of the sales tax, however, have been quite generally underrated. Moreover it is difficult, if not impossible, to prevent such a tax from impinging in many cases on a class in the community near or below the subsistence level who should probably now be required to make no additional! contribution to government. As contrasted with the income tax, the general sales tax is somewhat simpler, somewhat more dependable fiscally, but is perhaps less defensible from the point of view of equity —Joint Commission on the Emer gency in Education. Report of National Conference on the Financing of Edu cation, p. 58. [ 24] V. Chain Store Taxes ng the period 1929-33, twenty st ed for chain store taxation.' ‘There eneral types of chain store taxes. ( lated to the general sales t - retail sales tax which has rates ¢1 iccording to the amount of sales for the purpose of levying the s the sales of the individual stores o roceeds into a lump sum and applies the highe: or During the period 1929-33, taxes pq nature were adopted in Kentucky, New Te) ( xico, Vermont, and Wisconsin usual method, however, is to graduate t] per store, according to the number of un chain. Indiana in 1929 was the first t a tax of this nature and since then twel states have done so. Minnesota adopt ombination of both types, and Georgia, TABLE 13.—CHAIN STORE TAXES AS RELATED TO STATE SCHOO! SUPPORT, 1928- States having chain store taxes in spe CAPITALS indicate chain store tax revenues earmarked in whole ndicate chain store tax revenues contributing ] rom general funds. ] 1928 l ware® Delaware t Carolina» Georgia G ria Georgia INDIANA INDIANA North Carolina th 1 Vorth Caroli W Wi , LOUISIA )AHO f , Mas MICHIGA MINNI MONTANA NEW MEXI( Vermont WEST VIR¢ ra * Not ‘the usual kind of chain store tax. This is a bran ot business outside the state and maintaining branch stores > Held invalid. © Repealed in 1933 » the State Common School Current | Alabama. A 1931 law levying a graduated chain t store license tax provided that all of the net reve- one-third of the remainder, schools are to nue be placed in the Special Educational Trust aid for retiring indebtedness and meetin Fund.* expenses.? Idaho. A graduated chain store license tax was West Virginia. A chain store tax law adopted in 1933. Gross proceeds are credited to the in 1933, earmarks the net revenue for elen State School Fund. school support.” Indiana. Indiana adopted a graduated license tax Chain store taxes contributing indire law in 1929 and directed that from the net proceeds school support—In the following state there should be placed in the School Relief Fund ; Gait. Goth ae en , $250,000 for the fiscal year ending September 30, aes a proceeds 99 placed ” the 1929; $550,000 for the fiscal year ending September ¢tal funds from which substantial app 30, 1930; $500,000 for the fiscal year ending Sep- tions are made for the state school systen tember 30, 1931; and $300,000 each year there- after. The law was revised in 1933 to increase materially the tax on large chains and to provide that the net revenue become a part of the Genera! Fund. The legislature at the same time provided also for increased state school support from the Georgia. A 1929 enactment levying a lice: General Fund. of $50 for each store in a chain of five or mo held unconstitutional. Revenue would hav: placed in the General Fund, one-half of whi be used for schools.* Florida. A 1931 enactment levies a gra chain store license tax. Revenue is payable General Fund from which important state appropriations are made.” Louisiana. A chain store tax law, adopted in 1932, provides that the net revenue be distributed to the parishes on the basis of population to be used first for liquidating bonded indebtedness and then Maine. A 1933 enactment levying a grad (except for the Parish of Orleans, in which Re chain stove fteomes tax provides that the reve: balance must be placed in the General Fund) for placed in the General Fund. All state sch: ° 7 . s. oe ° , . 5 public school propriations are made from this Fund.” Michigan. A chain store license tax law, enacted Maryland. Revenue from a 1933 graduated in 1933, provides that the net revenue be appropri- store license tax becomes a part of the state’s ated to the school districts in proportion to the num- eral revenue from which important appropr ber of teachers employed in the elementary schools, are made for schools.® except that no primary district may be allotted an amount which, when taken with the Primary School Interest Fund distribution, exceeds $800.* Mississippi. A classified gross sales tax ad in 1930 included an additional tax of one-f percent on the gross income of all retail st Minnesota. A 1933 enactment levying on chain any chain of more than five. This prov stores a graduated license tax and gross sales tax declared unconstitutional. Proceeds would hay placed in the General Fund from which a educational appropriations are made.” North Carolina. A 1929 tax of $50 per st cases where there are six or more under the management was held unconstitutional. A 1931! New Mexico. One-third of the net revenue col- of $50 for each store in excess of one was lected under certain sections of a License and Occu- constitutional. The Revenue Act of 1933 changes pation Tax Law (graduated gross retail sales tax tax to a graduated tax ranging from $50 on aimed at chain stores), enacted in 1933, is credited second, third, and fourth stores to $150 on appropriates the gross revenue for aid to schools.’ Montana. Half of the net proceeds from a gradu- ated license tax, adopted in 1933, is earmarked for the Common School Equalization Fund.” * General Acts of Regular Session, 1931, Act No. 369. Effective October, 1931. Session Laws, 1933, Chapter 113. Effective July 1, 1933 icts, 1929, Chapter 207. Effective July 1, 1929. Acts, 1933, Chapter 271. Effective January, 1934. Acts, 96. Effective January 1, 1934, or as soon thereafter as possible. ’ Acts of 1932 Regular Session, Act No. 19. * Michigan Public Acts, 1933, Act No. 265. Effective July 17, 1933 * Laws of Minnesota, 1933, Chapter 213. Effective July 1, 1933. © Laws of 1933, Chapter 155, Effective July 1, 1933 ™ Laws of New Mexico, 1933, Chapter 73. Effective January, 1934 12 Acts of Regular Session, 1933, Chapter 36. Effective March 8, 1933 13 General Laws of 1931, Chapter 15624. Effective July 3, 1931 4 Acts of 1929, Section 27, p. 71. Became Section 993 (280) of 1933 Supplement to the Georgia Code. See Woolw rison. Georgia Supreme Court, 1931. (156 S. E. 904.) (Ga. CT p. 5811.) (1931 CCH 12,026; Req. 36, 633.) % Laws of 1933, Chapter 260. Effective July 1, 1933. 1¢@ Laws of 1933, Chapter 542. Effective June 1, 1933. 17 General Laws of Mississippi, 1930, Chapter 90, Article I, Section 2-c, p. 227. Effective May 31, 1930. Interlo junction granted by U. S. District Court, Southern District of Mississippi, Penny Stores, Inc. v. Mitchell, Sept. 9, 1930. A U. S. Supreme Court. (52 Supreme Court 27.) (Miss. CT p. 134Q.) [ 26] excess of fhiits im ear for the General Fund and the ised responsibilities tor school s ipport South Carolina. South Carolina in iduated license tax. Revenue is 11 Fund from which ited gross retali saies ad »pted Procee revenue Tr Vermont. In 1933 a gradu | chain immed at stores was ne a part of the state's general significant educational appropriations Wisconsin levying an occupation tax on chai levies a graduated tax on gross Wisconsin. In 1933 the legisla vided for es. The law ncome of all persons engaged in the chain store siness within the state; but, if this tax is held ilid either in its entirety or in its application to particular person or group, it levies in lieu of allows an ffset for any amount paid under the 1931-32 tax 1934. m the new tax is placed in the State a graduated license tax. The law that was due to expire January 1, Revenue Genera TABLE 14.—ANNUAL YIELD OF STORE TAXES CONTRIBUTING STATE SCHOOL SUPPORT, 1929 CHAIN rO Year ¢ VI. Corporation Taxes’ During the period 1929-33, annual corpora tion taxes contributing indirectly or directly to state school support were adopted in four states: Georgia, Mississippi, ‘Tennessee, and ‘Texas. Incorporation fees on domestic corpo- rations and entrance fees on foreign corpora- tions contributing to state school support were adopted in one state, Tennessee. “Iwo states, Michigan and Delaware, revised the corpora- tion tax laws so that greater school revenues would be available from annual taxes and a third, South Carolina, provided not only for additional annual taxes but also for earmark- ing part of the revenue for schools. ‘These laws are described below: Delaware. The annual tax on capital investment in the state was repealed in 1929 because, in the opinion of those who administered that tax, its pres- ence tended to decrease the yield of the annual franchise tax on domestic corporations. Proceeds from both of these taxes were credited to the School Fund. In 1933 the sum of $919,000 of the franchise tax proceeds was shifted from the School Fund and appropriated partly to higher education and partly for tax administration.” Georgia. Georgia in 1929 levied an annual cor- porate license tax, proceeds of which are placed in the General Fund, half of which must be used, ac- cording to law, for state school support.° 11-15. * Laws of Delaware, 1929, Chapter 6. See Daugherty, M. M 182. Newark, Del.: Agricultural Experiment Station Acts of Georgia, 1929, p. 85-92 * Public Michigan, 1929, No. General Laws, 1930, Chapter 89. icts, South Carolina, 1933, ‘School Act of 1933.” Laws of For corporation income taxes, see p {cts, 175 * Laws, 1930, Chapter 68. Laws, 1931, Chapters 120 and Studies in Taxation November, Michigan. In 1929 the law fees on domestic corporations ievving org and entrance foreign corporations was clarified revised. All of the that from sleeping car constitutional provision, to the revenue companies, schools.* Mississippi. Mississippi in 1930 provid levy of an annual franchise tax based stock of domestic and foreign corporations General | for edu the revenue is placed in the which all state appropriations made.® South Carolina. The School Act of 1933 for imposing additional annual corporation taxes and earmarked $906,000 for school | Tennessee. Tennessee in 1929 provided levy of an incorporation tax on domestic tions, an entrance fee on foreign corporatio! an annual franchise tax on both foreign mestic corporations. All of the revenue goe General Fund, one-third of which is designa state school support.’ Texas. In 1930 a annual franchise domestic and foreign corporations was ena new place of a former corporation tax law that wv unconstitutional. Revenue goes to the State ‘ Revenue Fund. This law, and also a law pi: for organization and entrance fees of domest foreign corporations, were clarified in 1931 Financing 1 in Del 1932. p. 44. Also Laws of D 1 1933, H. B 1929, Chapter 90. Laws of 1929, Extra Session, Chapters 12 and 13. 265. VII. Franchise and License Taxes ring the period 1929-33, franchise and Montana 1933 the proceeds of e tax legislation affecting state school suy freight car license tax were transferrs ; State General Fund to the Common School | was enacted as follows: , zation Fund. At the same time the kansas. In 1929 Arkansas levied an annual natural gas license tax, half of which was er . ~redite te h mo Te) at li privilege tax on fortune-tellers, clairvoyants credited to the Common School Equa Revenue was ordered to be used for the schools N C | , ; Sats rcent to the county where the tax was assessed orth arolina, North Carolina in 1 re was ¢€ itl : ’ , ee ae 9 hise 50 percent to the State Common School Fund creased a whole seri r existing franch ° ° ’ 7 y, | f toh ] 931, Arkansas levied a license tax on legally proceeds of which went into the General | ited slot machines and vending machines, and at the same time made increased educat ded that the revenue be placed in the Equa propriations. In 1931 these franchise x Fund. At the same time, receipts from teachers se fees were shifted from the General Revenue to the Common School Fund again increas id new ones adopted in meet the exper of the state-supported six-m term. Severa inchise taxes were again Florida. In 1931 Florida revised th , _ Slightly le mot cle license tax law and directed that net ‘ Ohio. 933 ractment taxing s be distributed to the county school funds panies u I w franchise ouisiana. Louisiana in 1932 adopted an annual the intangibles tax law provid ise tax on imsurance companies. Net revenu the revenue be apportioned into the General Fund from which increase = Te ; sj 93 ‘ted F )priations were made to the schools and tl Pexas. Texas in 1931 enacted a pri ° ° _ ° ° mé I act rif 1n¢ I ) ow ¢ I t university. A _ constitutional amendment nanutac 1g and importing cemen ind - ‘ Ol +} ott hy n! ted that year, provided that after July 1, 1934, that one-fourth of the revenue be iced n tl I . ° j bl S 0 | f 922 net revenue from excise or license taxes imposed Available chool Fund. A 1933 enactment a nsurance companies be dedicated to the Louisi the law taxi in-operated vending State University and to the A. and M. College.‘ that all of the rey from the machine occupation coin-operated marble machines of any Mississippi. The “Privilege Tax Code,” enacted 1932 to replace the 1930 act, levied annual license will be placed to the credit of the Stat School Fund. One-fourth of the reven s on 226 occupations. Revenue was placed in taxes on other vending machines will General Fund go to this f For corporation franchise and licen mmodities, see p. 18-24. ts of Arkansas, 1929, No. 236. A s of Florida, 1931, Chapter 15 ts of Louisiana, Regular Session, ts of 1932, Chapter 89 Laws of Montana, 1933, Chapter 134 Laws of 1929, Chapter 345, Schedule C Laws of Ohio, 1933, p. 548-600, Sections mws, 1931 Regular Session, Chapter 212 ; TABLE 15.—ANNUAL YIELD OF NEW AND REVISED FRANCHISE AND LICENSE TAXES CONTRIBUTING TO STATE SCHOOL SUPPORT, 1929-33 State Franchise or license taxed 1 - ? Year « Slot machines Feachers’ license Motor vehicles Freight cars Natural gas Carolina Railroads Utilities Sleeping cars I xpress Telegraph Telephone Insurance, license Insurance. premium Estimate * Correspondence with Howard A. Dawson, director > Correspondence with J. C. Compton, chief clerk ® Montana Education. April, 1933. p. 25 “Tax Research Foundation. Federal and State Tax VIII. Severance Taxes A severance tax is one levied on the privilege sulphur was revised and new taxes we against extracting salt from brine and of extracting or otherwise removing the natu- : shrimp and oysters.* ral resources of the state. During the period 1929-33, severance tax legislation affecting New Mexico. An oil and gas severan school support was enacted as follows: adopted. in 1933. One-third of the rev credited to the Common School Fund. Arkansas. Arkansas had a series of severance taxes, two-thirds of the proceeds of which were credited to the Common School Fund. The remain Texas. Texas in 1930 provided for a tax on the production of sulphur based or , : ; , ber of tons produced in place of the old ing one-third was returned to the counties from which the resources were severed, one-half to be . : used for public schools. During this period, 1929-33, to raise the rates from fifty-five to seventy the revenue from a tax of ten cents per ton on man- 4 ton and to earmark fifty-five cents for ganese ore was shifted to the support of the State Geological Department.’ on gross receipts. The tax was again revis Available School Fund, the remaining tw« going to the State General Fund. At the s epi the tax on the production of natural gas was Louisiana. Louisiana in 1932 repealed a tax on <9 that more revenue could be expected. Or the manufacture of carbon black from natural gas. ange = of the revenue, by constitutional provision This was one of several severance taxes, one-fifth in the State Available School Fund. A of the combined proceeds of which was returned for. P : : in 1933 repealed a 1925 law levying an school purposes to the local parishes where collected. The remaining four-fifths, after allowing $261,000 for other state purposes, went to the State Severance Fund for free school textbooks. Any balance not ¢armarked one-half of the revenue fo needed for textbooks was credited to the State Cur- Available School Fund, whereas one-fo rent School Fund. In this year, also, the tax on former tax was credited to this Fund tax of 2 percent on the value of oil prod placed it with a tax of two cents per law and finance, State Department of Ed Information from G. C. Floyd, director of school 2 Information from T. H. Harris, state superintendent of education, State Department of Educat icts, I lar Session, 1932, Nos. 72, 134, and 162 * Laws of New Mexico, 1933, Chapter 72. Effective March 8, 1933 * Laws, 1930, Chapter 74. Laws, 1931, Chapters 73 and 312. Laws, 1933, Chapter 162, TABLE 16—ANNUAL YIELD OF NEW AND REVISED SEVERANCE TAXES CONTRIBUTING TO STATE SCHOOL SUPPORT, 1929-33 State Object taxed Yield Year l 2 3 cy Louisiana ...Carbon black : , $267,102 Dece New Mexico ..Oil severance er 500,000*" Texas Sulphur se 1,382,0302 Decet Natural gas : 163,582" Decet Oil ~ . 7,000,000*» * Estimate * Tax Research Foundation. Federal and State Tax Systems, 1933. p. 198-200 » Evening Star (Washington, D. C.), June 1, 1933 “ [ 30] IX. Inheritance, Estate, and Gift Taxes 1928, forty-five states had inheritar in 1933, forty-seven state During the period 1929-33, Florida were the only states to adopt ; is nature. In Alabama revenue mad trom this source contributes to the SC he o] indirectly thru the General Fund. In Florid ol revenues from this source are pract ! ib] -. TABLE 17.—ANNUAL YIELD OF NEW N, AND REVISED INHERITANCE. ES Mexico, revised their laws so that greater TATE, AND GIFT TAXES CONTRIB ’ = ’ UTING TO STATE SCHOOL SUPPORT school support could be expected. Deta 1929-33 ligible. “Two states, Michigan and these laws follow: Alabama. Alabama in 1931 adopted ince tax law contingent upon a favorabl the electorate on a constitutional amend: 32 a new law was enacted to correct the 1931 act. Revenues are placed in yeneral Fund.’ Michigan. In 1929 the inheritance tended to absorb the entire credit alloy Federal tax. Proceeds go to the S; es carrying property in perfect security over the great barrier which di places between man and man is perhaps the very highest achievement, the most signal proof of the power of civilized institution . and an instance capital of the great benefit conferred by law and civil institutions upon mankind and of the immense enlargement that comes to natu liberty thru the medium of the law, that I conceive nothing more rational than that, if taxes are to be raised at all, the state shall be at liberty to step in and take from him who is then forward to enjoy the whole in security that portion which may be bona fide nece sary for the public purpose.—William E. Gladstone, “Speech on Successi Duties,’ May 12, 1853. X. State Property Taxes Experts in public finance have long criticized Florida. A 1927 law levying a state tax heavy reliance on the general property tax as fourth mill on all taxable property in the st “a , crediting the proceeds to the Public Free Sc! commonly administered for state purposes. |... senesced in 0981: The present economic situation has served to Siiealn A 1088 enactment amends a: make more clear the reasons behind these criti- law, levying a state property tax of one-th cisms. Legislatures have attempted to solve the for the University of Illinois, so that the an ; . e 4: be so raised must be reduced by any amount problem by reducing or abolishing the state - Arvedyeen ‘ from the retail sales tax. Another 1933 ena general property tax, by reclassifying types of continuing for the years 1933 and 1934 the property, by adopting new rate schedules, as of raising annually, by means of a state well as by seeking other revenue sources. tax, the sum of $10,500,000 for the Common Fund, contains the same modification. A thi ‘ , sige enactment provides that, beginning March enacted property tax legislation affecting state the Common School Fund and the Unive school support either directly or indirectly.! Illinois each will receive from the retail sa Fourteen states * abolished certain property tax revenue, the amount to be raised by the tax.” : ‘ . : : Iowa. The state general property tax wv states * provided for reducing their state school duced by two mills in 1931 Revenue went During the period 1929-33, twenty states levies specifically earmarked for schools; three . - _ . ‘ . Correspondence with J. C. Compton, chief clerk, State Department of Public Instruction. © Correspondence with R. C. Williams, director of research, State Department of Public Instruction. of state auditor. 1931. U. S. Department of Commerce, Bureau of Census. Figures from Financial Statistics of States, p. 58-9. XI. State Tax Surveys and State y evs and ¢ M1PNISSLIONS , 1929-33, legislatures in states provided for special tax or p jue investigations. At least thirteen of 1 survey commissions ' included within the of their investigations the subject of stat of these have submitted legislatures in at least | finance. Nine omplete reports, ind states have enacted some of the recom ndations into law. A summary of these in igations in the state involved is given Alabama in 1931 survey of the Alabama. provided for a com 1ensive state government. The ey report was published in 1932 and included ecommendations concerning state support of ed on. A Budget and ontrol Act that recommended for Financial ¢ balancing expenditures 1inst revenues became law.' California. In 1929 the California the Study of Educational Problems was created Commission In 1931 this commission submitted its lealt with school costs and reve report, one chapter of which nues. Some of the recommendations wert nto law in 1933. Connecticut. Temporary State The legislature in [ax Commission to make ful investigation of the entire financial structu the state and local governments and to make re nendations. The problems to be studied ars ind local taxation, financing of municipalities, dis tribution of the tax burden with refe! particular ence to reducing or limiting the load borne by real estate, assessment and collection of taxes, and bor rowing of money by the state and | Kentucky. Kentucky in creation of an ’y municipalities 1932 provided for the educational survey commission California, Cont ind Utah excepted are Connect California, Missouri, North Carolina, and | ts, Regular ization and Administration of the State I, Part I. Washington, D. C.: Brooking tra Session, 1932, No. 37. Effective S. B. No. 48. California Commission for 1 and II. Sacramento, Calif.: State Departn ® Connecticut Special Laws, 1933, Vol. XXI, " Acts, 1932, Chapter 78. Effective March Vol. I, No. 8. Frankfort. Ky.: 318. * General Act 1labama, vernment titution } State Departmer Roderick ® General Laws o Mississippi, 19 ) of the Organization and Administrati mission of the State of Mississippi, 1 Information from E. E. 1 Missouri State Survey Commi 30, 1929. “Public School System ! Brookings Institution, Institute the State, County, and Town Govern ), p. 173-224 12 New Jersey Commission To In and Services. Report No. 8. Trentor Tax Administration of this Maine. Th of 1932-33 committe of revenus direct p way Mississippi ssion The included oo Tar as is recommendations enacted Missouri tax s 1929, pre t its final rvey for incre nal and corpot and for ilization law re 1 State arti tio! n school Support come taxes n 1 school equal iti adopted the legislature in 1931 New Hampshire. A survey and administration of state, « ernments was vl iture has not acted upon th New Je sey. New Jersey in 1929 create mission to il tigate the taxation system of tl several counties and The work of this commission was o1 in 193 I ime of the report deals tion. So ft is known, no legislation ba findings of report has yet been enacted AY New York. vision of the A Commission to Recommend Re- quent legislation extended the work to February 15, 1934. One of the reports dealt with education. North Carolina. North Carolina in 1929 created a committee to study the problem of the support and administration of public education. The com- 1931 and its were adopted by the legislature.” Ohio. A 1933 enactment provided for creating a special legislative committee to investigate the re- organization of the educational both the schools and colleges of the state and its mittee reported in recommendations system, including political subdivisions, with special attention to means of financing.” Utah. Utah in 1929 provided for creating the Utah I'ax Revision Commission and the Utah Legislative Committee. Recommendations in the report included proposed amendments for (1) a classified property tax, (2) a flat-rate corporation income tax and a graduated personal income tax, all of the revenues Laws of 1930, Chapter 726. Laws of 1931 in New York as Related to Tax Relief and Educational F sion for the Revision of the Tax Laws. (Seabury C. Mastick M Publi North Car ] 1 139 p Laws of 1929, Chapter 266 Laws of Ohio, 1933, p. 676-77 ® Laws of Utah, 1929, Chapter 99. Tax Revision Comn Lake City, Utah: State of Utah, November 30, 1929. 134 p 1* National S Jaws of Utah, 19 Tax Association. Proceedings, 19 31, Chapter 53 Tax Laws was created in 1930. Subse- Chapters 12 and 624 ypansion na Education Comm to be used for school support, and (3) a commission. Amendments based on thes mendations were adopted by the legislatu electorate in 1931.”° Tax administration—State tax adn tion legislation affecting the administ state school revenues was enacted in Dy and Utah. Delaware. In 1929 the State School Tax ment, which had charge of the administrati income tax and franchise tax became the St Department, and the personnel of the St Board, formerly comprised of the school missioner, the secretary of state, and audit counts, was changed to three citizens ap; the governor for terms of four years. Utah. Utah in 1931 created a state tax sion to administer the school equalization law new income taxes Support for Pul New York Sta and other St Albany, N. \ Mort, Paul R Memorandum No chairman). 81 p ission. Retort. Rale f the State of Utah (Harle , Sve were a few notable special investigations of taxes and upwards of half a century ago. There appears to be, however, — amount of interest in this manifestation of the scientific spirit. related matte an increasing . This is a promising development. It does not mean that each new law is to be pulled up by the roots every year or sc to ascertain whether it is vital or dead. Rather, it is an evidence of recognition of the fact that economic and social conditions are in a state of rapid change and development, and that only thru constant study can the outlines of the fiscal system be kept in approximate conformity to the new con ditions—Harley L. Lutz. Public Finance. p. 556. to 1 Bibliography In addition to the bills cited in the text, the llowing secondary sources have been useful. ALABAMA EpucaTion AssociATION (Frank L. Grove, secretary). High Points of the Warrant Act, High Points of the Income Tax Amend- ments, Why We Should Pass the Warrant Act, Why We Should Pass the Income Tax. Mont- gomery, Ala.: the Association (417-20 First National Bank Building), May 26, 1933. Mimeo graphed. 1 p., 1 p., 2 p., 2p. . Bartey, Beutan. “Review of Tax Legislation for 1929.” Proceedings of the Twenty-Second Annual Conference on Taxation Under the Aus- pices of the National Tax Association. (Edited by W. G. Query, secretary) Columbia, S. C.: the Association, 1930. p. 12-64. BAILEY, BEULAH. “Review of State Tax Legis- lation, 1930.” Proceedings of the Twenty-Third Annual Conference on Taxation Under the Aus- pices of the National Tax Association. (Edited by W. G. Query, secretary) Columbia, S. C.: the Association, 1931. p. 421-44. . “Full Text Allowing 3.2 Beer and Wine in This State.” The State (Columbia, S. C.), April 15, 1933. Groves, Haroip M. “Review of State Tax Legis- lation 1931-1932.” Proceedings of the Twenty- Fifth Annual Conference on Taxation Under the Auspices of the Nationai Tax Association. (Edited by W. G. Query, secretary) Columbia, S. C.: the Association, 1932. p. 9-35. MANNING, RaymMonp E. “State Tax Legislation, 1933.” Bulletin of the National Tax Assoctation 18: 176-8, March; 202-5, April; 240-43, May; 260-63, June, 1933. . MASSACHUSETTS TEACHERS FEDERATION. Concern ing 1933 Legislation, More on Legislation, Edu- cational Legislation. Boston: the Federation (15 Ashburton Place), January 23, February 14, May 8, 1933. . MonTANA Epucation AssociaTION. Legislative . NATIONAL EDUCATION Bulletins 1-7. Helena, Mont.: the Association (Box 217), January-March, 1933. ASSOCIATION, RESEARCH Division. The Corporation Income Tax and Its Relation to School Revenue Systems. Studies in State Educational Administration, No. 11. Washington, D. C.: the Association, August, 1932. 19 p. 25 cents. . NATIONAL EpucaTion AssociATION, RESEARCH DI vision. State School Legislation, 1929. Studies in . NATIONAI . SWIFT, 3. TAX RESEARCH FOUNDATION. . WASHINGTON W ash : the Association, December, 1929 State Educational Administration, No. 1 ington, D. ¢ Mimeographed. Out of print. NATIONAL EDUCATION ASSOCIATION, RESEARCH Division. State School Legislation, 1930. Studies in State Educational Administration, No. 6 Washington, D. C.: the Association, December, 1930. 11 p. 25 cents. EDUCATION ASSOCIATION, RESEARCH Division. State School Legislation, 1931. Studies in State Educational Administration, No. 10 Washington, D. C.: 1932. 19 p. 25 cents. NATIONAL EpucATION ASSOCIATION, DEPART MENT OF SUPERINTENDENCE AND RESEARCH Divi sion. State School Legislation, 1932. Educational Research Service Circular, No. 5, 1933. Wash ington, D. C.: the Association, April, 1933. 8 p 50 cents. the Association, February . New York Times. May 1, 1933. p. 1 and 3; May 2, 1933, p. 6, col. 5. “Public Finance Measures at the Elections.” Bulletin of the National Tax Associa tion 18: 38-40; November, 1932. Adopted, Invalidated.” National Municipal Review 22: 299; June, 1933 FLETCHER HARPER, AND ZIMMERMAN, Bruce Lewis. State School Taxes and School Funds and Their Apportionment. U. S. Depart of the Interior, Bureau of Education, Bulletin 1928, No. 29. Washington, D. C.: Government Printing Office, 1929. 431 p. 50 cents. (Prepared under the direction of the New York State Tax Com mission.) Federal and State Tax Systems; 1st, 2nd, 3rd, and 4th editions. Mayne S. Howard, editor. Chicago: Commerce Clearing House of the Corporation Trust Co., 1930, 1931, 1932, and 1933. 80 p., 91 p., 145 p., and 209 p. “37 States Increase Taxation for Year.” Eve ning Star (Washington, D. C.) June 1, 1933. November “Sales Taxes— 20. “Uniform Tri-State Sales Tax Plan Defeated.” National Municipal Review 22: 80; February, 1932. United States Daily. April 15-22, 1933; p. 2, col. 5, and p. 15, col. 2. United States News July 8-15, p. 17, col. 4. EDUCATION ASSOCIATION. Educa tional Legislation. Reports No. 1-9. Seattle, Wash.: the Association (707 Lowman Building), January 12-March 13, 1933. Files of state educational journals JOINT COMMISSION ON THE EMERGENCY IN EDUCATION ANNOUNCES Evaluating the Public Schools A manual for use by conference groups discussing problems of public education Published for the Joint Commission on the Emergency in Education by PHI DELTA KAPPA FRATERNITY FEBRUARY, 1934 Price, Fifteen Cents Discounts on Quantity Orders (Funds must be sent with orders amounting to less than one dollar) 48 pages NATIONAL EDUCATION ASSOCIATION 1201 SIXTEENTH STREET, N. W. WASHINGTON, D. C. RECENT PUBLICATIONS OF THE N.E.A. DEALING WITH SCHOOL FINANCE ®@ Report of the National Conference on the Financing of Education. Held under the auspices of the Joint Commission on the Emergency in Education of the National Education Association and the Depart ment of Superintendence. September 15, 1933. Price, 25 cents. 78 pages. ® Critical Problems In Schoo! Administration. Twelfth Yearbook of the Department of Superintendence. February, 1934. Price, $2.00. 383 pages. ® Teacher and Public. Eighth Yearbook of the Department of Classroom Teachers. Feb ruary, 1934. Price, $1.00. 240 pages. ®@ Finance and Business Administration. Review of Educational Research, Vol. II, No. 2. Official publication of the American Educational Research Association, a Department of the National Education Association. April, 1932. Price, $1.00. 88 pages. ® The Legal Basis of Education. Review of Educational Research, Vol. III, No. 5. Official publication of the American Educational Research Association, a Department of the National Education Association. December, 1933. Price, $1.00. 114 pages. ® Essentials of Taxation. Lutz, Harley L., and Carr, William G. A series of articles reprinted from THE JoURNAL of the National Education Association, October, 1933 thru June, 1934. Published by the Joint Commission on the Emergency in Education of the National Education Association and the Department of Superintendence. February, 1934. Price, 15 cents. 14 pages. @ Orders for the above publications may be submitted now. AXES are a necessary device for secur- oT ing many of the advantages of modern life. . . . In every civilized community 2 government does many things for the people for which they pay by means of * taxes. As an individual, you cannot afford to have a staff of engineers build you a sys- tem of private highways, or to employ a corps of teachers for the instruction of your children, or to hire a squad of policemen just to watch your prop- erty, or to keep a completely equipped fire depart- ment ready to dash to the rescue in case fire breaks out in your home. Such services are performed by government for all citizens. Government is a form of cooperation. It enables us to do many things as an organized group that we could not possibly do as individuals. The pay- ment of taxes therefore may well be considered as a form of cooperative buying.—Harley L. Lutz and William G. Carr, Essentials of Taxation, p. 4.