a JUN 8 1934 NARONAL EDUCATION ASSOCIATION RESEARCH BULLETIN VOL. XVII - No. 3 MAY - = 1939 Tax Legislation Affecting State School Revenues, 1934-38 Published by the RESEARCH DIVISION of the NATIONAL EDUCATION ASSOCIATION of the UNITED STATES 1201 Sixteenth Street, N. W., Washington, D. C. RESEARCH BULLETIN or 1 Published five times each year in January, March, May, September, and November President, REUBEN T. SHAW NATIONAL EDUCATION ASSOCIATION Executive Secretary, WILLARD E. GIVEN Director of Research: William G. Carr; Associate Director: Frank \W. Hubbard Assistant Directors: Richard R. Foster, lvan A. Booker, Hazel Davis, Charles R. Tupper Research Assistants and Section Heads: Frances G. Bradley, Louise B. Sease, Helen H. Cox, Anna Haddow, Madaline K. Remmlein, Mildred Wharton, and Theo C. Hartman Executive and Editorial Offices 1201 Sixteenth Street, N. W., Washington, D. C. Copyright, 1939, by the National Education Association of the United States 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. Subscriptions 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 the Research Bulletin. 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 per year offers an opportunity to maintain a complete file of future Research Bulletins. 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In other cases appli- cation for the release of materials is re- quired. Address communications to the Research Division, National Education As- sociation, 1201 Sixteenth Street, N. W., Washington, D. C. CONTENTS ForREWORD 1. INTRODUCTION Methods Used in Obtaining Data Plan of Organization of Bulletin Territories and Possessions JI. TENDENCIES IN STATE TAX LEGISLATION, 1934-38 Property Tax Relief Property Tax Replacement and the Search for New Revenues Overlapping Fields of Federal-State Taxation State-Collected, Locally Shared Taxes versus General Fund Appropriations III. Income TAXEs Personal Income Taxes Corporation Income Taxes IV. GENERAL SALES TAXES V. SeELecTive SALES TAXES Alcoholic Beverage Taxes Gasoline Taxes Tobacco Taxes Miscellaneous Sales Taxes VI. CHAIN-STORE TAXES VII. INHERITANCE, EsTATE, AND GIFT TAXES VIII. SevERANCE TAXES IX. CORPORATION TAXES X. License TAxXeEs XI. Property TAXES XII. Tax SuRVEYs AND COMMISSIONS Sources oF TAX INFORMATION FOREWORD IVE YEARS AGO in the Foreword to a similar summary of tax legislation F the statement was made: “With the weakening and coilapse of prevailing systems of taxation in some states, educational leaders have been forced to turn their attention increasingly to questions of public financial policy.” At that time new state revenue legislation was designed to offset declining property values, tax delinquency, and other effects of the depression. The primary goal during those critical years was to hold intact the financial support of the existing governmental activities. In the past five years the situation has become more complicated. Today state governments are faced with the problem of permanently supporting activities developed during the depression years or designed to complete federal social security legislation. Some states are finding it dificult to pay for these new services without curtailing the programs of long-established governmental agencies. Appropriations for relief and pension plans have particularly intensi- fied the search for new sources of revenue. So acute has the situation become in some areas that many are asking the question, “Must we choose between schools for the young and pensions for the aged?” It is to be hoped that this “either or” point of view will not become too widespread. As a social policy it is neither constructive nor necessary. Few would say that there should be no relief | easures; few would refuse humane treatment of the indigent and the aged. But when a state curtails education today, it is increasing the likelihood of large pension and relief rolls tomorrow. An adequate program of education is a state’s surest guarantee against unem- ployment, disease, crime, poverty, and similar social ills. It is inhuman to neglect presentday relief and pension problems; it is social suicide to neglect the education of tomorrow’s adults. Both areas of governmental service must be financed in a twentieth-century civilization. Today even more than during the depression years, educational leadership must concern itself with public financial policy. The present Research Bulletin will be of inestimable value because of the inclusive view which it gives of the experience of the forty-eight states. It should help materially in the develop- ment of sound and comprehensive systems of state taxation. Witrarp E. Givens, Executive Secretary National Education Association nesst A two the 1 taxe: 1938 seem mea: tain mp! lic e and imp¢ obse 1 gath used Tax spec in tl exar fron tron port I. Introduction A previous number of the RESEARCH BUL- ierin of the National Education Association, oublished in January 1934, reviewed changes ale in state tax laws, during the years 1929 +) 1933, inclusive, in their relation to state revenues for public education. This was Vol- yme XII, Number 1, entitled “Five Years of S:ate School Revenue Legislation.” The legis- lation reviewed affected taxes of two types: |) state taxes, all or a part of whose proceeds were earmarked by state legislatures directly for the support of schools or other public educa- tional institutions; (2) state taxes which pro- vided financial aid for public education indi- rectly, thru significant contributions to reve- nues in state general funds. No attention was siven to legislation affecting state taxes from which education derives little or no benefit, or to legislation pertaining to local taxation only. The present publication contains a review of the same kinds of legislation as those covered in the previous bulletin, but enacted in another five-year period, 1934-38. While 1929-33 were vears of ever deepening financial depression, the ensuing five-year period, 1934-38, wit- nessed a gradual, if still incomplete, recovery. A comparison of legislation passed during the two periods should be enlightening. What was the relative importance of the various types of taxes in the fiscal structure of our states in 1938, as compared with 1929? While there seems to be no clear pattern in the revenue measures passed in the intervening decade, cer- tain tendencies are discernible which may carry implications as to the future financing of pub- lic education. In a period of experimentation and change, such as the present, it is highly important that educators be on the alert to observe what is happening. Methods Used in Obtaining Data The facts presented in this bulletin were gathered by much the same methods as those used in connection with the previous report. Tax laws passed at the 114 regular, and 137 special,’ sessions of state legislatures which met in the five years, from 1934 to 1938, were first examined and information derived directly from the laws was checked with that obtained trom books, magazine articles, and official re- ports, and thru correspondence with state edu- cation and state tax departments. ‘The list of sources of general tax information, which ap- pears on page 154, includes some of the pub- lished sources which were found to be most helpful in connection with the compilation of data for this bulletin. Plan of Organization of Bulletin In order to facilitate comparisons between the two five-year periods, the plan followed in presenting the material of this bulletin has been little changed from that used in the earlier report. A separate section has been devoted to “Selective Sales Taxes” owing to the great volume of alcoholic beverage tax legislation, classified under that head, which was passed in the years 1934-38. In the earlier bulletin, all sales taxes, general and special, were in- cluded in the same part. The scope of the sec- tion on “License Taxes” is slightly more re stricted than formerly, and that of the section on “Corporation Taxes” is somewhat enlarged. The order of appearance of the parts dealing with the various types of taxes has been slightly revised. This bulletin treats the following topics in the order named: Income taxes—T axes on both personal and cor- poration incomes. Corporation income taxes, as de- fined in this bulletin, includes corporation excise and franchise taxes, if the tax is measured by the amount of net income. General sales taxes—T axes on gross income, or gross receipts, from sales of both goods and serv- ices, or on the value of the product sold, or on the wholesale or retail selling price, usually at propor- tional and sometimes classified rates. Selective sales taxes—Taxes on sales of spe- cific commodities. They may be imposed at a propor- tion of the manufacturers’ wholesale or retail sales, or on the selling price, or on the amount value of of the product sold. Chain-store taxes—Taxes specifically aimed at persons operating one or more stores or places of business, usually levied at graduated amounts on the number of stores. Severance taxes—Taxes on the severing natural resources from the soil or water, levied at proportional rates on the gross or market value of the product or on the gross income or gross receipts from production. Inheritance, estate, and gift taxes—The rates are usually graduated and applied to the value of the entire estate (in the case of estate taxes) or on the value of the transfer to the separate beneficiaries (in the case of inheritance and gift taxes). Rates privilege of 1 Some states held as many as four special sessions in a single year [ 101 ] are commonly differentiated with respect to trans- fers to “direct” or “collateral” heirs. Corporation taxes—Taxes on corporations not elsewhere included in the bulletin, such as capital stock, gross receipts, and corporate excess taxes on corporations including public utilities, banks and trust companies, and insurance companies. License taxes—Taxes required in lump-sum payments in return for the privilege of engaging in a specific activity, or occupation. Property taxes—Rates are proportional and may be applied to the value of real or tangible per- sonal property, and some classes of intangible prop- erty. They may be general on all classes of property, or differentiated according to the class of property taxed. State tax surveys and commissions statement is given of whatever information | able concerning the effect of legislation on , g and special state tax commissions and thei; work Territories and Possessions An attempt has been made at the end of , part of this bulletin to include changes jn ‘i laws of territories and possessions so far as th Os laws affect revenues for public schools. Sing, similar information was not presented jn +}, 1934 report and because of some delay jp ceiving replies, these changes are not inc! in the tables of the present report. re ce sul’ tion a di ing wo! encl med may Kno nres pre part of d I one aim dire catl of I Ala sota incr pers sissi sion clas cati autl Lou shir see, est | Nel ness mer Ne mer OT e; > IM tay as these Since In the In clude | II. Tendencies in State Certain tendencies revealed by the legisla- tion reported in the following chapters bear a direct relationship to methods used in financ- ing the public schools and thus appear to be worthy of special mention. Some of these tend- encies, no doubt, are only temporary, the im- mediate outgrowth of the depression, yet they may have far-reaching results. Others are known to have had their roots in the prede- pression era. Property Tax Relief States continued after 1934 to take steps, begun in the late years of the depression, to relieve the tax burden on real estate and to ease the payment of delinquent taxes. While some such action was probably taken, at one time or another, by practically every state, this tendency was especially noticeable in rural areas where the collapse of property values, after 1929, was particularly severe and where a large volume of delinquent taxes had accumulated. Twenty-three states and one territory passed one or more of the following types of measures aimed at property-tax relief and directly or in- directly affecting state revenues for public edu- cation, between 1934 and 1938: (1) provision of new or increased homestead exemptions— Alabama, Arkansas, Florida, Louisiana, Minne- sota, Mississippi, Utah; (2) provision of new or increased exemptions of tangible or intangible personal property—Georgia, Minnesota, Mis- sissippi, New Jersey, Pennsylvania; (3) exten- sion of exemptions to include property of special classes of taxpayers, such as religious and edu- cational institutions, war authorities, etc—Alabama, Florida, Georgia, Louisiana, Mississippi, Nebraska, New Hamp- shire, Pennsylvania, South Carolina, Tennes- see, Texas, Puerto Rico; (4) waivers of inter- est and penalties on delinquent tax payments— Nebraska, New Mexico, South Carolina, Ten- nessee; (5) allowance of delinquent tax pay- ments in installments—Arizona, Nebraska, New Mexico, Puerto Rico; and (6) postpone- ment of tax sales and liberalization of provi- sions for the redemption of land sold for taxes —Alabama, Nebraska, New Mexico, Tennes- see, Utah, and Puerto Rico. New or reduced limits were placed on state, or state and local, property tax rates by Nevada, Ohio, and Wash- veterans, housing Tax Legislation, 1934-38 ington, but in only one of these states, Wash- ington, were state property levies for educa- tional purposes reduced as a consequence. In addition to Washington, one other state, Ken- tucky, radically reduced its state property tax rate between 1934 and 1938 (repealing the provision which earmarked certain parts of the total for education) ; Indiana suspended for a number of years its levy for buildings and im provements at higher educational institutions ; Rhode Island abandoned entirely the use of the property tax for state purposes. Three states (Alabama, Arkansas, and Loui siana) provided for the replacement of state and local property taxes by other types of state tax revenues placed in “property tax relief” and “property tax reduction” funds. Proceeds of income taxes, general sales taxes, and alco- holic beverage excises were earmarked in part for the reduction of state or taxes by three states (Colorado, Louisiana, and Oklahoma), nine states (Alabama, Arizona, Arkansas, Illinois, Kansas, Louisiana, Ohio, Utah, and Wyoming), and two states (Idaho and Louisiana), respectively. local property Property Tax Replacement and the Search for New Revenues Measures such as those described above in- creased the need of states for new and larger revenues, both for the financing of their own state activities and as a means of extending aid to local governments. Figures I, II], and III and Tables 1, 2, 3, 5, 7, and 11 show the growth in the use of certain non-property taxes, as sources of state, and state school, revenues in the decade, 1929-38. Between 1934 and (Colorado, lowa, Kentucky, Louisiana, Penn- sylvania, South Dakota, and West Virginia) were added to the list of those taxing personal, or corporation net income, or both, bringing the total number up to thirty-six. Fifteen states (Alabama, Arkansas, Colorado, Idaho, Iowa, Kansas, Louisiana, Maine, Maryland, Mis- souri, New Jersey, New Mexico, North Da- kota, Ohio, and Wyoming) enacted new gen- eral sales tax laws in the years 1934-38. However, in four of these states (Idaho, Maine, Maryland, and New Jersey) the sales tax laws were repealed, rejected by popular referendum, or allowed to expire. Sales tax laws enacted 1938 seven new states [ 103 ] 5 SALVLS—II AANDIA 6€61 ‘| AMVOANVE ‘SHLVLS GULINN AHL NI SAXVL AO SAdMAL NIVLAAD AO @378780 10/pUs SsouBy}seqUl — O seroys UTeID = SeFe1940q OT TOYOOTS Jo seTUsS — J szonpord o998q03 jo seT8g — g Seles [e18Uuep — O ewoouy uoTyRrod109 = g ewoouy Teuceleg — ¥ ‘AD ve6t ‘IT AMUVANVE ‘SHLVLS GALINN AHL NI SAXVL AO SAdAL NIVL4H) AO SNLVLS—I FAaNDIA A Asa i USS\/ onpy PN] ng $240) e170 3Sse 10/pus eousz{zZeyuuy — oO seroys uyeug —d seFereasq DTTOMOOTS Jo seles — J Szonpord Od9BqQ03 JO SeTeS — g SeTes [es168usg — O ewooUy voy yeIod1090 — g ewoouy [eUOSIeg — ¥ ‘ADH using general sales taxes to eight. prior to 1934 by three other states (Kentucky, New York, and Oregon) were also repealed or allowed to expire during the 1934-38 period, reducing the net gain in the number of states Gasoline taxes which have been imposed all states since 1929 and which have bec, thru the levy of increased or additional] the greatest single source of state tax reve are used principally for financing the TABLE 1.—TAX PROVISIONS AFFECTING SCHOOL SUPPORT, 1933-38 Year Number of States i ens 1933 1934 1935 1936 1937 1938 1 2 3 4 5 6 7 Levying: Personal income taxes.. 27 28 32 32 34 34 Corporation income taxes. . ; 26 27 29 30 32 General sales taxes................. 17 20 25 25 2 23 Chain-store taxes................ ; 19 20 23 23 25 { CO A ee 16 15 19 20 21 1 Allocating all or part to public education: Personal income taxes.......... 12 12 14 13 13 14 Corporation income taxes..... . 7 7 7 7 7 S General sales taxes.............. 7 10 10 11 13 11 CP eer eee 9 9 10 10 9 ) NR a. 5 50g 4 MR iaaahe ca aaaiteainil ween So 020 4 6 5 6 6 6 In which tax contributes to education indirectly thru sig- nificant general fund appropriations: IE I NS SE vcs ncc cc ccdseccaned’s 11 12 14 15 15 15 Corporation income taxes........... ree 15 16 18 20 20 20 SE I NOI, 20 as waisiihlee s vm aes 7 8 11 i1 10 10 eS a ee ee 7 9 10 10 11 10 pA ae ee ee 6 6 8 10 11 if FIGURE III—NUMBER OF STATES LEVYING CERTAIN TYPES OF TAXES, 1933-38 4r 32 > Personal Income X2s ow ee e@ ee @ «= ation Income TSS ~ esTecoeeeor” General Sales Tax ves Sean Store ib - Number Ff Males BE i A. L 1935 1934 1935 L i 1936 1937 1938 ne pl th m: th Osed } DECOMms il Tates tenance and construction of highways. Never- theless, between 1934 and 1938 at least nine erates legislatures passed or continued measures which allotted gasoline tax revenues to state veneral or state educational purposes (Florida, Georgia, Massachusetts, Nebraska, New York, North Carolina, Ohio, Texas). Alcoholic beverage tax laws passed in nearly Pennsylvania, and all states as recently as 1933 are proving a fruitful source of revenue. Four states (Connec- ticut, Kentucky, Pennsylvania, and Vermont ) derive revenues from new tobacco tax laws. The number of states levying chain-store taxes rose from eighteen in 1933 to twenty-four in 1938. New chain-store tax laws were enacted in eleven states (California, Colorado, Georgia, lowa, Kentucky, South Dakota, Tennessee, and Texas) during the intervening years but laws of six states Mississippi, Pennsylvania, (Arizona, California, Delaware, Maine, New Mexico, and Vermont) were repealed or held unconstitutional. New or taxing chain stores increased taxes on corporations, on inheritances and estates, and on the severance of natural resources from the soil or water also provided needed state revenues during the years 1934-38. Each of the above types of taxes was em- ployed by at least as many states at the end of the five-year period as at the beginning and many of them were far more numerous. All of them increased in number during the decade 1929-38. Whereas in 1929 only about 80 per- cent of state tax revenues were derived from non-property tax sources, this percent had in- creased to over 93 percent by 1938. Only in the case of general sales and chain-store taxes does the number of laws recently repealed suggest the possibility that these taxes may have passed the zenith of their popularity. Overlapping Fields of Federal-State Taxation The tendency away from property taxation toward the increased employment of other sources of revenue in the financing of state governments does not imply that the states hold undisputed sway in these non-property tax fields. In many of these fields they are forced to compete with the federal government for the same economic Information pre- sented in the following sections shows that the states are drawing heavily from fields of tax- ation (especially income taxes, gasoline taxes, resources. and alcoholic beverage taxes) which also are important sources of federal revenue. Only in the field of death taxation has there been a par tial coordination of federal and state levies thru the 80 percent credit allowed on that portion of the federal estate tax collected under the 1926 revenue law. State-Collected, Locally Shared Taxes versus General Fund Appropriations The rival advantages of two methods used by the states in extending financial aid to their subsidiary governmental units have been argued at length by writers in public finance, and others. ‘These two methods are: (1) the prac tice of earmarking all or a specified proportion of the proceeds of taxes, levied and collected by the states, for distribution to local ments; and (2) the practice of making annual govern or biennial appropriations of money to local governments by legislative enactment from state general funds. ‘The question is one which is largely dependent upon circumstances exist ing in the individual state—the character of the state tax system, the budgetary setup of both state and local governments, and other con siderations. No attempt will be made to answer it here. The legislation reported in the follow ing sections of this bulletin, however, was scrutinized in an effort to determine, if possible, whether one of these practices was finding favor among the states, in the years 1934-38, at the expense of the other. The result of this scrutiny is far from con- clusive but possibly the weight of the evidence is slightly on the side of a tendency toward the second of the two procedures. For example, earmarking of revenue for educational purposes was done by only three states (Colorado, Loui- siana, South Dakota) of the seven imposing new personal income tax laws; by only three states (Colorado, Louisiana, South Dakota) of the six imposing new corporation income tax laws; by only nine states (Georgia, Idaho, Louisiana, Michigan, Nevada, Oklahoma, South Carolina, Wisconsin) out of twenty-four levying new alcoholic beverage excises; and by only three states (Florida, Texas, Pennsylvania, Texas) out of nine which passed new chain-store tax laws. Furthermore, reve- nues from income taxes, alcoholic beverage taxes, and marked for education, were diverted to general fund purposes by one state (Oklahoma), three chain-store taxes, formerly ear- [ 107 ] Michigan, Missouri, Oklahoma) were ;¢; rected to other uses and two more of these |») (those of Idaho and Maine) were repeal; Thus only five of the thirteen new sales +. laws which contributed directly, or indirec; thru state general funds, to school support which remained on the statute books had part of their proceeds earmarked for scho, purposes. states (Arkansas, New Mexico, and Tennes- see), and one state ( Florida), respectively. On the other hand, revenues of eleven (Alabama, Arkansas, Idaho, Kansas, Louisiana, Maine, Missouri, New Mexico, North Dakota, Ohio, Wyoming) out of fifteen such new general sales taxes were earmarked in whole, or in part, for public education, but revenues collected under four of these eleven laws (Louisiana, TABLE 2.—STATE PERSONAL INCOME TAXES AS RELATED 1929 1930 1931 SCHOOL SUPPORT, 1929-38 States having personal income taxes in specified years [CAPITALS indicate personal income tax revenues earmarked in whole or in part tor state school support; ifalics indicate per income tax revenues contributing to state school support indirectly thru state appropriations from genera! fund 1932 1933 1934 1935 1936 TO STATE 1937 1 2 3 4 5 6 7 8 9 DEL. MASS. Miss. Mo. N. Hamp.?® N.Y. N. Car. N. Dak. Okla. S. Car. Va. WIS. ARK. Ore. Tenn.° Ga. DEL. MASS. Miss. Mo. N. Hamp.? N.Y. N. Car. N. Dak. Okla. S. Car. Va. WIS. ARK. Ore. Tenn.? Ga. DEL. MASS. Miss. Mo. N. Hamp.? N.Y. N. Car. N. Dak. OKLA. S. Car. Va. Wis. ARK. Ore. Tenn.? Ga. Idaho UTAH VT. OHIO? DEL. MASS. Miss. Mo. N. Hamp.° N.Y. N. Car. N. Dak. OKLA. S. Car. Va. Wis. ARK. Ore. Tenn.” Ga. Idaho UTAH VT. OHIO* ILL.« WASH.* DEL. MASS. Miss. Mo. N. Hamp.? Ns 3s N. Car. N. Dak. OKLA. S. CAR. Va. Wis. ARK. Ore. Tenn.? Ga. Idaho UTAH 2 f OHIO* WASH.#« Ala. Aris. Kans. MINN. MONT. N. MEX. DEL. MASS. Miss. Mo. N. Hamp.? N.Y N. Car. N. Dak. OKLA. S. CAR. Va. Wis. ARK. Ore. Tenn.? Ga. Idaho UTAH VT. OHIO+* Ala. Ariz. Kans. MINN. MONT. N. MEX. lowa LA. DEL. MASS. Miss. Mo. N. Hamp.? N.Y. N. Car. N. Dak. Okla. S. CAR. Va. WIS. ARK. Ore. Tenn.® Ga. Idaho UTAH VT. OHIO? Ala. Ariz. Kans. MINN. MONT. N. MEX. lowa LA. PA.¢ Calif. S. DAK. W. Va. DEL. MASS. Miss. Mo. N. Hamp.?* N.Y we N. Car. N. Dak. Okla. S. CAR. Va. WIS. ARK Ore Tenn." Ga. Idaho UTAH VT. OHIO! Ala. Aris. Kans. MINN MONT. N. MEX. lowa LA. Caltf. S. DAK. W. Va Ky. DEL. MASS. Miss. Mo. N. Hamp.? N.Y. N. Car. N. Dak. Okla. S. CAR. Va. WIS. Ark. Ore. Tenn. Ga. Idaho UTAH VT. OHIO?° OHIO Ala. Ariz. Kans. MINN. MONT. N. MEX. lowa LA. Calif. S. DAK. W. Va. Ky. COLO. Md. * Held invalid. > Applies only to income from intangibles. Legislation affecting the Ohio tax which is levied as part of the classified prope: tax is included in Part XI of this bulletin. In 1931 Tennessee passed a law taxing personal income from all sources which declared invalid in 1932. III. Income Taxes Laws of thirty-six states and three territories, even of which were passed during the five-yeat seriod 1934-38, impose taxes on individual o1 corporation net income, or both. Income tax laws define the term “net income” only by im- plication, by listing those classes of taxpayers’ receipts which shall be considered as comprising ‘cross income” and those classes of receipts which may be deducted from “‘gross income”’ in computing “net income.’ While the concept of “net income,” thus defined, differs from state to state, in general it is roughly comparable to an accountant’s definition of the net income of a business. Exemptions and credits are usually allowed in determining the amount of net in- come which is taxable. Net income taxes produced one-eighth of all state tax revenues in the fiscal year 1938.‘ In addition, the federal government derived over two-fifths of its total tax revenues from this source.” In the years 1934 thru 1938 twenty-six states passed income tax legislation more or less di- rectly affecting state school revenues (‘Table 2, page 108). Personal Income Taxes Thru rate differentiation and changes in de- ductions, exemptions, and credits, taxes on per- sonal or individual net incomes are more highly adaptable than most other forms of taxation to the taxpayer’s economic status. Rates are usually progressive, increasing as the amount of income increases, so that the higher income recipient must make a larger proportionate con- tribution to the support of government than is required of his poorer fellow citizens. A dis- tinction may be made between earned and un earned income, by taxing the latter at a higher rate or by levying a tax on unearned income only, but neither of these practices is common in the United States. The majority of states tax personal income from all sources at the same rate and allow exemptions and credits which lighten the tax burden of the individual with large family responsibilities. Twenty-six states enacted or revised per- sonal income tax laws in the years 1934-38, in 1 Tax Policy League. Tax Policy. Vol. 6, Nos. 2-3 2 United States Treasury Department Fiscal Year Ended June 30, 1938. Washington. D. C 8 Arizona. Laws, 1935. Chap. 80. p. 366-68. March 10, 1937. * Arkansas. Acts, Approved 1937. No. 27 p. 964-65 December 1938. January 19 dnnual Report of the Secretary of the Government Printing Office March 25, Approved March 18, 1937. { Acts, such a way as to affect school revenues directly or indirectly. Three of the seven states which passed new personal income tax laws during that period allocated some part of the proceeds specifically for school support. In the other four states, schools share in income tax revenues indirectly thru general funds. Three states in- creased and four states reduced, at least tem- 1934-38 legislation, the part of income tax proceeds earmarked directly fo: porarily, by schools. Provisions governing the proportion of income tax proceeds credited to general funds from which the schools receive appro priations were amended in four states. Amend ments to provisions governing the distribution of income tax proceeds in two other states did not materially affect school revenues. The need for increased state revenues for school and other governmental purposes was reflected in legislation passed by 13 states and Puerto Rico, between 1934 and 1938, raising rates, or impos ing additional emergency rates. Personal ex emptions allowed under income tax laws were reduced by three states and Puerto Rico, and increased by two states. Constitutional amend ments permitting the levy of a tax on.income from all sources were approved by the voters of three states. Arizona. Provision made, by act of 1935, for setting aside + percent of income tax proceeds was for expenses of administration. A 1937 law amended the requirements for the filing of income tax returns Arkansas. Legislation in 1937 provided for the equal division of income tax proceeds, in excess of the amount needed to meet payments on state hos pital bonds, between the State Charities Fund and the State General Fund. This revenue, up to $750 000, was formerly earmarked, under a 1931 law, for school equalization purposes, but actually the had since 1932. A 1938 law restored to the Equalization schools received no income from this source Fund the half of the excess revenues earmarked in 1937 for the State Charities Fund.‘ California. A law enacted in 1935 taxed per- sonal net incomes at graduated rates, ranging from 1 percent on incomes up to $5000 in excess of ex- emptions, to 15 percent p!us $28,450 on incomes in excess of $250,000. A 1937 act amended provisions with respect to the determination of net income and 39. p. vi, 5 Treasury on the State of the Finance 1939. p § Laws, 1937 1935 Chap. 34, p Special Session, 1938 [ 109 ] the administration of the tax. Proceeds, after pro- viding for refunds and administrative are credited to the general fund of the state, from which transfers of money are made to state school funds.° expenses, Colorado. A law passed in 1937 imposed a tax on net incomes of individuals at graduated rates of from 1 to 6 percent and allocated the proceeds for the replacement of local school property taxes. An additional 2 percent tax was levied on unearned income. This legislation followed the approval by the voters, at the 1936 general election, of a consti- tutional amendment permitting the levy of a state income tax and a decision by the supreme court of the state upholding the constitutionality of a state appropriation for school purposes.” Delaware. Borrowing, for general fund and higher education purposes, of an amount not to ex- ceed $400,000 from the State School Fund and the State Highway Fund was authorized by a 1935 law. A large proportion of the State School Fund is made up of income tax proceeds. While this authority was not exercised, the legislature of 1937 further author- ized appropriations from the State School Fund for the University of Delaware, the Delaware State College for Colored Students, and for the operation and maintenance of the State Tax Department, not to exceed $445,000 in each fiscal year of the bien- nium 1937-39. Administrative provisions of the in- come tax law were revised in 1937.’ Georgia. Rates of the tax on individual incomes were raised, income brackets were revised, and per- sonal exemptions were lowered by 1937 legislation. Income tax proceeds are paid into the State General Fund. One-half of the revenues, not otherwise ear- marked, in the general fund are set aside, by law, for school purposes.* Iowa. The legislature in 1934 adopted a 1 to 5 percent tax on individual net incomes. From the combined proceeds of income, sales, and certain business taxes, the State General Fund was to re- ceive $6,600,000 after $3,000,000 was used for re- lief; any remaining proceeds to be distributed among counties on the basis of assessed valuation. Appropriations are made to schools from the State General Fund.’ Kentucky. A new income tax measure, passed by the first special session of the legislature, 1936, imposed rates on personal incomes, varying from 2 percent on incomes up to $3000 to 5 percent op comes in excess of $5000. Personal exemptions $1000 for a single person, $2500 for the head family, and $400 for each dependent were a All proceeds were made payable to the Stat eral Fund from which appropriations are mad school purposes.” Louisiana. Subject to approval later given the voters the 1934 legislature passed an income ta law, imposing a 2 to 6 percent tax on individ net incomes and allocating the proceeds to a new created Property Tax Relief Fund. Amounts in ¢} fund, which also receives revenues from other ta sources, are apportioned in the ratio of $3.50 to ¢ State School Fund for each $6.75 paid to state a; local governments to reimburse them for losses dy to homestead tax exemptions. A 1936 act revised the lowest personal income tax bracket, so that + 2 percent rate falls on that part of the first $1 of net income which is in excess of exemptions stead of on the whole of the first $10,000, over and above exemptions, as formerly. The income tax |ay was further amended in 1936 to allow an individua only that part of the prescribed personal exem, tions which the amount of his net income taxa! in Louisiana represents of his total net income. Massachusetts. The income tax, chief source: state reimbursements to towns and cities for scho expenditures, was revised in several respects dur ing the 1934-38 period, but only a few of thes changes materially affected school revenues. Th maximum amount which a town might receive fron income tax proceeds as supplementary reimburs: ments (school equalization aid) in any one year was raised from $15,000 to $25,000 in 1934. Ar emergency levy of 10 percent of the tax, as com- puted under the law, was added in 1935 and a sim- ilar levy was imposed in each year thru 1933 Proceeds go to increase general revenues of the com monwealth from which the towns and cities receive reimbursements for certain special educational ex penditures.” Minnesota. Rates on personal incomes were r vised by a 1937 law, to extend from 1 percent on the first $1000 of income to 10 percent on the amount in excess of $20,000, instead of from 1 percent on the first $1000 to 5 percent on the amount in excess of $10,000, as formerly. Income tax proceeds art paid into the Income Tax School Fund to be used, after paying expenses of administering the act, for distribution to school districts.” 5 California, Statutes, 1935. Chap. 329, p. 1090-1123. Approved June 11, 1935. { Statutes, 1937. Chap. 668, p Approved July 1, 1937. ® Colorado. Session Laws, 1937. Chap. 175, p. 677-746. Approved June 2, 1937. 7 Delaware. Laws, 1935. Chap. 14, p. 86-93. Approved February 28, 1935. § Laws, 1937. April 12, 1937. Chap. 26, p. 74 ® Georgia. Laws, 1937. No. 445, p. 109-48. Approved March 30, 1937. § Laws, Extra Session, 1937-38. No. 121, Approved December 29, 1937. * Iowa. Code of lowa, 1935. Chap. 329-F1, Divisions II-III, p. 999-1009. Effective March 9, 1934 1 Kentucky. Acts, Special Revenue Session, 1936. Chap. 7, p. 67-102. Approved May 8, 1936. 4 Louisiana. Session Laws, 1934. Act No. 81, p. 700-701. Approved July 13, 1934; Act No. 21, p. 109-75; Act No p. 266-70. Approved July 12, 1934. {| Session Laws, 1936. Act No. 143, p. 425-37. Approved July 9, 1936. 12 Massachusetts. Acts and Resolves, 1934. Chap. 143, p. 134. Approved April 13, 1934. { Acts and Resolves, 1935. Chap 480, p. 656. Approved August 13, 1935. { Acts and Resolves, 1936. Chap. 397, p. 481. Approved June 24, 1936; Chap p. 446-47. Approved June 10, 1936. { Acts and Resolves, 1937. Chap. 422, p. 534. Approved May 29, 1937. { Acts and Reso 1938. Chap. 502, p. 702-03. Approved August 24, 1938. 8 Minnesota. Session Laws, Ist Special Session, 1937. Chap. 49, p. 60-84. Filed July 15, 1937, without approval. [110] it on Hions scho » dur thes: The fron UT SE ve ar An com- sim- 1938 com celve it on hunt it on KCESS are ised, , tor Mississippi. The income tax law was re written in 1934. Administrative provisions were strength- ened. Rates were increased in 1938 to range from 3 percent to 6% percent, instead of 2! as formerly. Exemptions were increased percent to 6 percent, J to equal those allowed under the federal income tax Proceeds of income taxes are paid into the law. State General Fund which is the principal source of state aid for public schools.” Montana. The part of income tax revenues going to the Common School Interest and Income Fund and the Common School Equalization Fund was re- duced by a 1934 act to 40 percent, for the duration of the state fiscal emergency. According to the origi- nal act these two funds were to share equally in 50 percent of the proceeds. Acts of 1935 extended the emergency provisions relative to the disposition of income tax proceeds to March 1, 1937, and assigned all revenues allocated for school purposes, under the income tax and other state laws, to a newly created State Public School General Fund. It was provided that, after March 1, 1937, the allocation for schools from income tax proceeds should auto- matically revert to 50 percent. A surtax, levied in 1934, was declared Exemptions were revised in 1937.” unconstitutional. New Mexico. A 1934 amendment to the net in- come tax law left the rates unchanged but raised personal exemptions and eliminated the property tax offset. Seventy-five percent of the net proceeds from this tax is paid into state school funds.” New York. An additional emergency tax of 1 percent on personal net income was continued year by year thru 1938. Laws passed in 1934 and 1935 also continued previously doubled rates to apply to in- comes received in 1933 and 1934, but revised up- ward the regular schedule of rates, applicable to incomes received in 1935 and thereafter. Other laws passed during the 1934-38 period revised provisions of the law relating to the ascertainment of gain or loss, provided for taxing capital net gains at new graduated rates and broadened the definition of “gross income” by providing for the inclusion of salaries of judges and other public officials and by repealing the clause excluding income received from the federal government by federal government em- 14 Mississippi. Laws, 1934. Chap. 120, p. 185-204 116, p. 113-17. Approved March 8, 1938 1% Montana. Laws, Ex. Session, 1933-34. Chap. 40, p 117-21 Equalization et al. 33 Pac. (2d) 563. Decision rendered May 12, 1934. § Laws, 1935 Chap. 109, p ployees. Provisions governing the disposition of personal income tax proceeds were amended in 1935 by allotting to the general fund of the state all the proceeds resulting from the increase in rates and the balance, after allowing $250,000 for refunds and $100,000 for administrative costs, and distributing to county governments one-half the revenues col- lected under the original rates ot the act The pub lic schools are supported by means of general fund appropriations. The distribution to counties is further apportioned among cities and towns, and towns may allot not to exceed one-third of their receipts from this source to school districts, unless prohibited from doing so, by resolution of the town board.” North Carolina. A _ constitutional amendment which raised the limitation on state income tax rates from 6 to 10 percent was ratified at the November 1936 election. As a result, the 1937 legislature raised the rate on individual incomes above $10,000 from 6 percent to 7 percent. Proceeds from the state in- come tax are paid into the general fund of the state which is the source of support of the eight months’ school term.” Oklahoma. The 1931 income tax which was levied to provide reduction of the rates of local school ad valorem taxes, and which allocated three fourths of 95 percent of the proceeds for the sup port of common schools, was repealed in 1935 and a new law enacted, with higher rates and lower personal exemptions. Net proceeds were diverted to the General Revenue Fund of the state from which schools receive legislative appropriations.” Pennsylvania. A 1935 law which would have levied a graduated income tax and credited all revenues except 2 percent to the State School Fund was held invalid by the Pennsylvania Court.” Supreme South Carolina. The flat 5 percent tax on in- come derived from dividends and interest over $100 was changed in 1934 to correspond with the regular 2 to 5 percent income levy. These rates were revised in 1938 to a levy ranging from 3 percent on amounts from $500 to $800, to 5 percent on amounts in excess of $1200. Increased revenues from the tax were used for pupil transportation,” Approved March 14, 1934. § Laws, 1938. Chap. 115 Effective January 16, 1935. § Mills + Approved March 11, 1935; Chap. 175, p. 358-63. Approved March 14, 1935 16 New Mexico. Laws, Special Session, 1934. Chap. 29, p. 115-17. Approved April 27, 1934 1 New York. Laws, 1934. Chaps. 457-58, p p. 1841-44. Approved August 24, 1934, 9 Laws, 1935. Chap 1935, ¥ Laws, 1936. Chap. 127, p. 411-12. Approved March 18, 1937. § Laws, 1938. Chap. 66, p. 547-48. Approved March 3, 1938. § Laws, 1935 Chap. 542, p. 1144-45 1935; Chap. 35, p. 1041-46. Approved May 8, 1934. § Laws, Ex. Session, 1934 Chap. 89 34, p. 393-95; Chap. 364, p. 883-86 Approved February 16 1936. 1 Laws, 1937. Chap. 184, p. 656-57. Approved April 5, Appro ed April 4 395-403. Approved February 16, 1935. § Laws, 1937. Chap. 547, p. 1221-22 Chap. 549, ». 1 ' Approved May 22, 1937; Chap. 744, p. 1697; Chap. 719, p. 1610. Approved May 28, 1937. § Laws, 1938. Chap. 50 ‘, Approved March 1% North Carolina. Laws, 1935. Chap. 248, p Approved March 13, 1937 % Oklahoma. Laws, 1935. Chap. 34, 270-71 Article 5, p. 142-45 Chap. 66, Article 15, p. 333-35. Approved February 8, 1935 Approved January 6, 1937. *# Pennsylvania. Laws, 1935. No. 314, p. 970-92 Kelly et al. v. Kalodner et al. “South Carolina. Laws, 1934. No. 927, p. 1571-73 May 18, 1935. § Laws, 1938. No. 966 (1309), p. 1928-30. Approved June 1, 1938 Approved 1938; Chap. 511, p. 1290-1301. Approved April 6, 1938 Approved April 2°, 1935. § Laws, 1937. Chap. 127 Chap. 66, Article 6, p. 286-307. Approved April { Laws, Special Session 1936, Chap. 66, Article July 12, 1935. § Pennsylvania State Reports, Vol Approved April 16, 1' [ 111 ] South Dakota. A new tax was levied in 1935 on the net incomes of resident individuals at rates ranging from 1 percent on the first $1000 to 8 per- cent on the excess of $318,000. Thirty-two percent of the net proceeds was earmarked for schools. In 1937 the schools’ share in the proceeds from this tax was increased to 35 percent. Another 1937 act ex- tended the tax to the income of nonresident indi- viduals, derived from property located and busi- ness transacted within the state.” Tennessee. The rate of the tax on income from intangibles (stocks and bonds) was raised by 1937 legislation from 5 percent to 7 percent, and later reduced to 6 percent by 1937 legislation. Income from the stock of any corporation, 75 percent of the corporate property of which is assessable for ad valorem taxes in Tennessee, was taxed first at 5 percent and later at 4 percent. Such income was formerly exempt. The State General Fund which formerly received the remainder of taxes on the in- come from stocks and bonds, after 45 percent of the net revenue had been distributed to the counties and municipalities, wherein collected, now gets all the revenue from the 4 percent tax and five-eighths of the revenues from the 6 percent tax. One-third of the revenues in the State General Fund are ear- marked for public school support. A proposal to amend Section 28 of Article 2 of the state constitu- tion so as to permit the levy of a state tax on in- come from whatever source derived passed the legis'ature in 1937.” Utah. Graduated rates of the tax on individual net incomes were raised in 1935 and personal ex- emptions were lowered. After setting aside 5 percent of the proceeds to provide for refunds, 75 percent of the remainder, as far as needed, is earmarked for the State District School Fund.* Vermont. All the net revenues from income taxes for the years 1936 and 1937, in excess of a $300,000 appropriation to the ConsoJidated School Fund, were credited to the State General Fund, as *? South Dakota. Session Laws, 1935 p. 68-69. Approved March 3, 1937; Chap. ' p. 1260-62. Approved May 21, 1937. 2 Utah. Session Laws, 1935. Chap. 90, p. 181-82. Approved March 23, 1935. p. 420. Approved January 23, 1936. § Public Acts, *% Vermont. Public Acts, 1935-36. No. 1, Approved April 11, 1935. { Public Acts, 1937. Chap. 103, p. March 19, 1937. % Virginia. Amendments to the Tax Code of Virginia, 1934. Chap. 137, p. 4-6. Approved March 16, Chap. 205, p. 326-52. Approved March 251, p. 353-54. Approved March 9, 1937. 28 Tennessee. Public Acts, 1937. Chap. 117, p. 516-20. Approved March 5, 1937; a result of the two-year suspension of a §}; appropriation to towns and incorporated on the basis of road mileage. General Fund priations are used in Vermont to supplement \ revenues from earmarked sources. Laws and 1937 revised income tax exemptions. Virginia. A 1936 law made permanent th personal exemptions first provided for, as porary measure, in 1934. Income tax proceeds paid to the State General Fund from which priations are made for public school support West Virginia. Rates levied in 1935 on person, net incomes ranged from 1 percent on the first $| to 3 percent on the amount above $6000 in e of exemptions: for single people, $600; heads families, $1300; and each dependent, $200. In 1937 the rates were increased to a high of 4 percent any amount in excess of $3000 and exemptions w; raised to $1000, $2000, and $300. Proceeds are pa to the state treasury from which legislative app; priations are made for schools.” Wisconsin. A 1935 act imposed an emerg: surtax, equal to 60 percent of the normal tax personal net incomes, and a privilege dividends ty of 2% percent on dividends derived from busines. transacted in Wisconsin for the fiscal years 1935 and 1936. Revenues from these taxes were mad payable to the state treasury subject to appropria tion by the legislature for old age pensions and state school aids. Both of these taxes were continued by 1937 legislation to July 1, 1939. The act extend ing these taxes guaranteed payment of an appro priation of $1,385,000 for emergency high-schoo aid in full.” Puerto Rico. Rates were raised and exemptions lowered by a 1936 law which revised provisions 1 lating to the surtax on individual incomes. Al! in come tax proceeds are placed in the Insular Treas ury from which schools receive appropriations 14, 1935. Session Laws, 1937. Chap Chap. 297, p. 1158-61; S.J. R.N No. 35 106, p. 127-28 2, p. 102-103 Appi 19 7 140. Approved April 8, 1937; Chap 1934. § Act Assembly, 1936. Chap. 119, p. 200-209. Approved March 6, 1936. " 27 West Virginia. Laws, 1935. Chap. 89, p. 385-409. Passed March 9, 1935. § Laws, 1937. Chap. 111, March 12, 1937. % Wisconsin. Session Laws, 1935. Chap. 505, p. 866-73. Approved September 25, 1935; Chap. 552, p. 1179-80. Approved October 7, 1935. § Session Laws, 1937. Chap. 233, p. 379-80. Approved June 12 June 30, 1937; Chap. 249, p. 403. Approved June 16, 1937. 1937; Chap. 309, p. 480-83. Appr * Puerto Rico. Acts of 1936. No. 87, p. 460-64. Approved May 14, 1936. rates imposed under state income tax laws a1 hag . usually proportional, altho the federal govern ration Income taxes, as understood in : : "eg ment and six states (Arizona, Idaho, Missis- Corporation Income Taxes Lorpe secti include corporation excise and a= — . sippi, North Dakota, South Dakota, and Wis -anchise taxes measured by net income, as well | , ral . consin) of the thirty-three taxing corporatior as those levied on net income directly. ‘Taxis on ; ; ” Held invalid. TABLE 4—TOTAL YIELD OF PER- SONAL AND CORPORATION INCOME TAXES CONTRIBUTING* DIRECTLY TO STATE SCHOOL SUPPORT, 1937-38 Annual yield 2 Arkansas $700 , 906 Colorado 811,836 Delaware’. . ,469 420 Louisiana , 798 ,007 Massachusetts‘ 4,517,155 Minnesota , 115,900 Montana. . 992 043 New Mexico... 380,313 Ohio4 ‘ 238,474 South Carolina . 770,282 South Dakota 559 , 499 Utah.... 1,701,644 Vermont: 761,737 Wisconsin®. . cen ; int dom ogliace 24,955 ,739 Source: Tax Policy 6: 5; December 1938-January 1939 @ Revenues earmarked wholly or partly for school support > Levies only a personal income tax. © Schools receive direct benefit only from Incomes. 4 Levied on income from intangible property only tax on personal The earmarked share of the schools in cor- poration income tax revenues was increased in two states. One state law diverted revenues for- merly earmarked for schools to the State Gen- eral Fund, but in three other states schools were indirectly benefited by an increase in the proportion of corporation income tax revenues going to general funds. Higher or additional income tax rates were levied in six states; progressive rates were re- placed by proportional rates in two states. In addition, corporation income tax legislation was passed between 1934 and 1938, concerning ex- emptions, minimum taxes, types of corpora- tions subject to the tax, elimination of prop- erty tax offsets, and the administration and computation of the tax. Arkansas. Legislation in 1937 provided for the equal division of income tax proceeds, in excess of the amount needed to meet payments on state hos- pital bonds, between the State Charities Fund and the State General Fund. A 1938 law restored to the Equalization Fund the half of the excess revenues earmarked in 1937 for the State Charities Fund.™ California. Legislation in 1935 increased the rates imposed on incomes of nonfinancial corpora- tions, from 2 to 4 percent; and those on in banks and other financial corperations range of 2 to 6 percent to a range of 4 to 8 perro, Both types of corporations were required | minimum tax of $25. A law passed in 1937 public utilities doing an interstate business formerly taxed on the basis of gross recei operation, within the application of the 4 tax. Net proceeds of corporation income tax; credited to the general fund of the state, fro transfers of money are State Sc} Funds.” made to Colorado. The income tax law of 1937 im, a tax of 4 percent on net incomes of corp Proceeds, as is the case of individual incom: are allocated for the replacement of local sc} property taxes.” Connecticut. The 2 percent tax on the net | come of miscellaneous corporations was repealed j 1935 and a new law was enacted providing that a! corporations reporting to the Bureau of Revenue for federal income tax purposes, excep: certain insurance companies and public ut taxed on the basis of gross earnings, be required t pay a tax of 2 percent on their net income deriy in Connecticut, with a minimum tax of $10 or 1 mi per dollar on the value of capital stock and othe; intangible assets, whichever is greater. Anothe; 1935 law provided for taxing domestic insurai companies at the rate of 2 percent of net incon from premiums, interest, and dividends.” Inte rn Georgia. The corporation income tax rate was increased from 4 to 5% percent in 1937 and rules governing the interstate allocation of corporatio: income were amended. A provision for the redu tion of the state property tax rate in proportion t income tax receipts in the General Fund was re pealed. A further amendment of the income tax law, passed at the 1937-38 extra session of the legis lature, revised certain definitions, exempted cor- porate income in the form of dividends received from other corporations, and repealed provisions requiring the payment by corporations of a mini- mum tax of $10. Income tax proceeds are paid into the State General Fund. The law assigns 50 percent of general fund revenues, not otherwise earmarked for public schools.” Iowa. The legislature in 1934 imposed a 2 per- cent tax on the net incomes of foreign and domesti corporations. From the combined proceeds of in- come, sales, and certain business taxes, $6,600,000 was assigned to the State General Fund after ap- propriating $3,000,000 for emergency relief. Appro- priations are made to schools from the State Gen- eral Fund.” *t Arkansas. Acts, 1937. No. 274, p. 964-65. Approved March 18, 1937. § Acts, Special Session, 1938. * California. Statutes, 1935. Chap. 275, p. 959-84. Approved June 6, 1935; Chap. 281, p. 995-1001. Approved June 7, 19355 Chap. 353, p. 1245-50. Approved June 25, 1935. { Statutes, 1937. Chap. 765, p. 2184-2202; Chap. 836, p. 2324-49. Approved July 1, 1937. ® Colorado. Session Laws, 1937, (H. C. R. 13) Chap. 175, p. 677-746. Approved June 2, 1937. *% Connecticut. General Statutes, Supplement 1931, 1933, 1935. Chap. 74, p. 184; Chap. 66b, p. 164-77. Effective July 1935; Chap. 66a, p. 159-64. Effective October 1, 1935. * Georgia. Laws, 1937. No. 445, p. 109-48. Approved March 30, 1937. § Laws, Extra Session, 1937-38. No. 121, p Approved December 29, 1937. % Towa. Code of lowa, 1933. Chap. 329-F1, Divisions II-III, p. 999-1009. Effective March 9, 1934 [114] derived r 1 mil d other \nother surance income te was d rules oration reduc tion to as re le tax legis- 1 cor- ceived isions mini- d into -rcent irked per- lestic f in- 0,000 . ap- pro- wen- Kentucky. The new income tax measure, passed 1936, imposed a 4 percent tax on the entire net ome ot corporations. All proceeds collected under . act were credited to the State General Fund s« hool from which appropriations are made for rnoses pose Louisiana. The income tax law of 1934 taxed orporation net income in excess of $3000, at 4 per- ent. A 1935 amendment made minor changes in xemptions and provided for taxing, as foreign orporations, railroads doing business in more than ne state. Corporations doing business outside the sate were allowed, by a 1936 law, only that pro- ertion of the prescribed $3000 exemption which the amount of their net income taxable in Louisiana epresents of their total net income. Another 1936 ct exempted companies engaged exclusively in the isiness of water transportation. Corporation in- Tax yme tax proceeds are credited to the Property Relief Fund and disposed of, as are personal income tax proceeds.” Massachusetts. Corporations, as well as indi- viduals, were required to pay an additional tax equal to 10 percent of the regular income tax, as computed, beginning with 1935. Proceeds of the ad- ditional 10 percent tax were used to increase state general revenues from which the towns and cities receive reimbursements for certain special school expenditures.” Minnesota. A 1937 law replaced graduated rates on corporation income by a flat rate of 7 percent for the years 1937 and 1938 and 6 percent there- after. Proceeds of the tax on corporation income are paid into the Income Tax School Fund for dis- tribution to school districts.” Mississippi. Administrative provisions of the income tax law were strengthened in 1934. In 1938 rates, which are the same on both corporate and individual incomes, were increased to range from 3 percent to 6% percent, instead of 2’ percent to 6 percent. The exemption allowed corporations was increased from $750 to $1000. Corporation income taxes, like personal income taxes, are paid into the State General Fund.” Montana. The rate on the net income of corpora- tions was increased from 2 percent to 3 percent in 1937. Of the proceeds of this tax, 25 percent is allo- 87 Kentucky. Acts, Special Revenue Session, 1936. Chap %8 Louisiana, Session Laws, 1934. Act No. 21, p. 109-75 Act No. 21, p. 78-83. Approved July 2, 1935 p. 80. Approved July 2, 1936 %® Massachusetts. Acts and Resolves, 1935. Chap. 489, p. 664 , p. 442-45. Approved May 28, 1937. 9 Acts and Resolves, 1 # Minnesota. Session Laws, Ist Special Session, 1937. Chap {. Mississippi. Laws, 1934. Chap. 120, p. 135-204 , p. 113-17. Approved March 8, 1938 “ Montana. Laws, 1937. Chap. 92, p. 257-61 48 New Mexico. Laws, Special Session, 1934. Chap. 29, p 4 New York. Laws, 1935. Chap. 37, { Laws, 1936. Chap. 513, p. 1242-44. Approved May 11, 1936; Chap. 183, p. 653-56. Approved April 5, 1937. { Laws, 1938 499, p. 1155-56. Approved May 22, 1937; Chap. 905, p Approved March 29, 1938; Chap. 284, p Oklahoma. Laws, 1935. Chap. 34, Article 5, 7 p. 142-45; ( 66, Article 15, p. 333-35. Approved February 8, 1935. { Laws, January 6, 1937. 4 Pennsylvania. Laws, 1935. No. 91, p. 208-17 Approved August 7, 1936. § Laws, 1937. No. 54, p. 227-39 [1 7, p. 67-102 Approved July 12, 1 { Session Laws, 1936. Act No. 143, p. 425-37. Approved July 9, 1936 Approved March 14, 193 Approved March 12, 115-17 p. 405-12. Approved Fe Chap. 125, p. 405-407 Chap. 71, p 2058-60. 910-12. Approved March 31 “hap. 66, Article 6, p. 286-307 Approved May 16, 1935 Approved April 8. 19 S( hool purposes, 75 percent goes t I State General Fund.' New Mexico. A 1934 amendment to the net left the rates unchanged, eliminated cated for come tax law the property tax offset, and extended the provisions to include foreign corporations doing business 1 the state. Seventy-five percent of the net proceeds from this tax is paid into the state school funds New York. Acts of the corporation income tax from 4 to 6 percent 1936, and 1935 increased the rate of for one year beginning with November 1, revised the provisions governing the disposition of the proceeds, so as to place in the General Fund all of the revenues from the additional 1'4 percent tax as well as two-thirds of the revenue collected under percent rate. The required mini mum tax was also increased. The in rates were extended to apply to income received in the vears beginning in 1937, 1938, and 1939. Laws of 1937 deductions formula for allocating interstate income for taxation A 4 tax, levied on the net income of unincorporated 1935 the previous 4 above increases fiscal revised and the state purposes. percent businesses in was extended to apply to such income received it the calendar years 1936, 1937, and 1938, or in any fiscal vears ending in 1937, 1938, or 1939. All of the proceeds except $150,000 allowed for administra tion expenses and refunds were allotted for pu poses of the General Fund from which the schools receive appropriations. The definition of “gross in and the come of unincorporated business” basis of allocating for state taxation purposes the net in come from interstate business were revised by 1938 laws.“ Oklahoma. The graduated rates formerly incomes with a flat rate of 6 percent. Net proceeds, three-fourths of had been earmarked for schools, were placed in the General Revenue Fund from which schools receive legislative appropria 1935 law replaced the imposed on corporation new which tions.” A corporate net income tax was 1936 Pennsylvania. levied for two vears in 1935 and continued by and 1937 laws at rates of 6 percent, 10 percent, and 7 percent, respectively. During the first year of its effectiveness, proceeds were used for unemployment relief, but later were placed in the State General Fund from which the schools receive financial aid. Approved May 8, 1936 934. § Session Laws, Extra 67. Approved August 14, 1935. § Acts and Resolves 938. Chap. 489, p. 657-60. Approved July 15, 1938 Filed July 15, 1937, without appro 4. 7 Laws, 1938. Chap. 115, p. 112 49, p. 60-84 1937 Approved bruary 16, 1935 April 27, 1 Chap. 745, p. 1456-59. Approved } Approved March 18, 1936 Approved March 7, 1938. § Law 1027 @ 1937, Laws, 1938 561-63 Approved June 4, Chap 1938 d Approved April Spectal Session, 36. Chap. 66, Article 2, § Laws, Special Session, 1936. No 15 ] South Carolina. A 4% percent net income tax levied on banks in 1937 was earmarked: 10 percent to the State General Fund, from which the schools receive the bulk of their state aid, 60 percent to the counties, and 20 percent to the municipalities where the banks are located. This disposition was revised in 1938 to give 40 percent to the general fund of the state and 60 percent to the counties.” South Dakota. The income tax law passed in 1935 taxed the net income of corporations at the same rate as those applied to personal net income. Proceeds are disposed of as are personal income tax proceeds.” Tennessee. The rate of the excise tax based on the net income of corporations was first increased from 3 percent to 4 percent, and then reduced to 334 percent in 1937. Provisions allowing gross receipts and other state taxes paid by corporations as credits Approved April 30, 1938. * South Dakota. Session Laws, 1935. Chap. 205, p. 326-52. Approved March 14, 1935 3 ‘7 South Carolina. Laws, 1937. No. 349, p. 565-66. Approved May 15, 1937. 1 Laws, 1938. No. 862 against the net income tax were repealed. | from this tax are paid into state general one-third of which are appropriated fo: of public school support.” Utah. The property tax offset allowed the 3 percent tax on corporation net income w pealed in 1935. A 1937 act repealed the | allowing interest on obligations of the States, states, or political subdivisions as a tion from gross income. Proceeds of the cor; income are disposed of in the same way as | income tax proceeds.” Hawaii. The 10 percent net income tax on was repealed by a 1935 act which levied a « stock tax. Proceeds of both taxes were paya the territorial treasury from which funds ar: priated for school support.° (1154) { Session Laws, 1937. Cl 68-69. Approved March 3, 1937; Chap. 251, p. 35 -5 . Approved March 9, 1937. 5. * Tennessee. Public Acts, 1937. Chap. 99, p. 37 76. Approved March 4, 1937 ® Utah. Session Laws, 1935. Chap. 89, p. 179-81. Approved March 25, 1935. Chap. 90, p 181-82 Approved Mar { Session Laws, 1937. Chap. 109, p. 201. Approved March 22, 1937. *t Hawaii. Session Laws, 1935. Series A-41, p. 55-65 Approved May 10, 1935 IV. General Sales Taxes General sales taxes levied in twenty-three Some states make it mandatory upon retail rates! in 1938 supplied approximately 14 per- dealers to collect the tax on each sale from the at of all state tax revenues in that year. Sales consumer, but whether or not this is required 1] -ax rates, usually between | and 3 percent, may _ by law, sales taxes tend to be shifted from sel ipply to the gross income, or the gross receipts, to purchaser. Since the tax applies at the same ‘rom sales of goods and services, or to the re- proportional rate to all of a given class of sales rail selling price of tangible personal property. without regard to differences in the economic ong the groups of sales commonly taxed are _ status of the individual consumers, it tends to se by manufacturers, importers, wholesale rest most heavily upon the low income groups 7 nd retail merchants, and persons engaged in of the population by increasing the already large iT ref us the severance of natural resources from the proportion of their incomes which they n soil or water, and sales of services by public spend for consumption goods. itilities and by individuals engaged in trades Thirteen states and Hawaii supplement their - . . bd ia: ” ae nd personal and professional service occupa- general sales taxes with “use” or “‘compensat a ‘ , ns. ing’ taxes, usually levied at the general 1 See Table 5, page 117 his number is exclusive of mercantile license taxes m« rchases which have been levied, at relatively low rates in Delaware, Pennsylvania, a rginia since 1 ectively. A Connecticut gross income which is restricted to tl ; income from unincorporated inufact isement, and motor transportation business, and has been levied since 1921, is a ymitted from this total 1@ RTO TABLE 5.—STATE GENERAL SALES TAXES AS RELATED TO STATE SCHOOL SUPPORT, 1929-38 States having general sales tax laws in sj \PITALS indicate general sales tax revenues earmarked in whole or in part f sales tax revenues contributing to state school support indirectly thru stat 1929 1930 1931 1932 1933 1934 2 3 W. V. Ky. N. Car ()re.? S. DAK. TAH WASH I 1 lowa Vf VM VM N. MEX N. MEX N. MEX OHIO OHIO OHIO Colo Colo Col ARK ARK ARK N. DAK N. DAK, N. DAK WYO WYO WYO IDAHO IDAHO?® \ V. J Md Md * Exclusive of older type sales taxes levied at atively low rates in estricted to certain types of unincorporated business in Connecticut > Defeated by referendum vote. ¢ Two taxes. The new tax, levied in 1934, is allocated by law for public subject to legislative appropriations for schools and other purposes 4Schools benefit indirectly thru the general fund from the use tax only * Effective only from September 1, 1932, until February 28, 1933 { 117] TABLE 6.—TOTAL YIELD OF GENERAL SALES TAXES CONTRIBUTING® DI- RECTLY TO STATE SCHOOL SUP- PORT, 1937-38 State Annual! yie ield 1 Alabama. . hus $5, Arkansas... 4,73 Illinois 80, Kansas..... . New Mexico. North Dakota South Dakota... Ns 5 06rd ck wie Washington 1 Wyoming 3 2 50,! 3 3 g 1 Source: Tax Policy 6: 4; December 1938-January 1939. @ Revenues earmarked wholly or partly for school support. tax rates. These taxes, on the use, storage, or consumption within the taxing state of goods purchased in other states, are designed to dis- courage consumers from purchasing tax-free goods across state lines, for purposes of tax avoidance. Fifteen states adopted their first sales taxes during the 1934-38 period—five states in 1934, seven in 1935, and three in 1937. Eleven of these states earmarked all or a part of sales tax proceeds for educational purposes. The sales tax laws of two states contributed to school support indirectly by placing revenues in the State General Fund. In two states schools received no benefit from new sales taxes. New sales taxes in four of the above states were repealed, rejected by popular referendum, or allowed to expire, and laws of three other states which imposed sales taxes prior to 1934 were repealed or allowed to expire in the years 1934 thru 1938. On the other hand, sixteen states passed legislation reenacting or extending the life of sales taxes already in effect. Four states and Hawaii revised the basis of their sales taxes; four states raised sales tax rates; and two states revised rates on sales of specific prod- ucts. Four states directed funds previously ear- marked for educational support to general fund and other purposes; two states increased the allotment for education ; in seven states the ef- fect on school revenues of amendments to pro- visions governing the disposition of sales tax proceeds was unimportant or difficult t tain. All of the thirteen state laws imposi: taxes were enacted during the 1934-38 pe; Alabama. A 1% percent sales tax impos the second extra session of the legis! ature, 1936-37 was replaced later in the same session by a tax 2 percent on the gross proceeds of retail sales, R placement of losses, due to homestead exemp: in the State School Fund, Soldiers’ Relief Fund, a, General Fund are a first charge against the 1 nues from this tax. Of the balance, three-fourths \ earmarked for the Educational Trust Fund one-fourth is distributed among the counties. Arizona. A law passed in 1935 classified gross income tax and imposed in its stea a tax of 2 percent on sales of tangible person; property. Of the net proceeds 5 percent was ear marked for the Governor’s Relief Fund, and th: remainder for the State General Fund to be us in part for reducing or eliminating the annual sta: property levies. repealed Arkansas. An “emergency retail sales tax | passed in 1935 to be effective until May 30, 1937 allocated 65 percent of the net revenues for th Common School Fund. Legislation in 1937 repeal this law and enacted a new 2 percent retail! sales and use tax law, eliminating certain food and drug exemptions, and reducing the share of the Comm School Fund in the proceeds from 65 to 50 percent In addition, 7 percent of the net revenues, up t $350,000, was set aside for the purpose of proy die g free textbooks in the public schools, and 8 percent up to $500,000, for replacing losses in state pro; erty tax revenues, caused by homestead tax exem; tions. The remaining 35 percent was allocated t the charitable institutions and public welfare funds The Common School Fund was also to receive 17!. percent of any excess not needed in the textbook and homestead tax exemption funds. Amendments to the sales tax law in 1937 appropriated funds fo: the maintenance of a library service and diverted $45,000 for each of the fiscal years 1938 and 1939 for the payment of salaries of county examiners from sales tax revenues in the Common Schoo Fund; specifically exempted sales of cotton and cotton seed; and earmarked back taxes due unde: the “Emergency Sales Tax Law” of 1935 for prop- erty tax reduction purposes.‘ California. A 1935 amendment to the retail sales tax act of 1933 provided for an increase in the rate from 2% percent to 3 percent. A 3 percent tax on the use, or other consumption, of tangible personal property was also imposed in 1935. Certain defi- nitions and exemptions were revised and adminis- trative provisions were strengthened in 1937.° 2 Alabama. General Laws, Extra Session, 1936-37. No. 1, p. 1-3. Approved December 17, 1936; No. 126, p. 125-42. Appr February 23, 1937. 8 Arizona. Laws, 1935. Chap. 77, p. 310-41. Approved March 23, 1935. * Arkansas. Acts, 1935. Chap. 233, p. 591-605. Approved March 28, 1935. 9 Acts, 1937. No. 154, p. 513-29. Approved Fet ruary 26, 1937; No. 368, p. 1341. Approved March 25, 1937; No. 189, p. 680. Approved March 3, 1937; No. 243, p. 872-75 Approved March 12, 1937. 5 California. Statutes, 1935. Chap. 355, p. 2222-28. Approved June 29, 1937. p. 1252-54; Chap. 357, 1935. ¥ Statutes, 1937. Chap. 400, p. 1326. Approved June 15, 1937; Chap. 671, p. 1874-75. Approved June 30, 1937; p. 1256-66; Chap. 361, p. 1297-1312. Approved June Chap [118] sale 8. Re e€MPtions ‘und, an the reve Ourths i und a; es, aled the its Stead Persona Vas ear and the be use tal stat. 1X law O, 1937 for the epeal il sales id drug ommor re rcent up t rV iding ercent proy xem} ited t funds e 17, xtbook ments ds for verted 1939 niners schoo!) and under prop- sales rate x on sonal defi- inis- Idaho. A 1935 law which levied a 2 percent re- | sales tax and allocated a part of the proceeds tal the Public School Income Fund, was submitted to the voters at the November 1936 election and re je¢ ted.’ Illinois. The 1933 sales tax, which was to expire Iuly 1, 1935, was extended for an indefinite period. The 1935 regular session of the legislature in creased the rate from 2 to 3 percent on sales made between July 1, 1935, and January 1, 1937. Proceeds were earmarked one-third for emergency relief pur- noses and two-thirds for the Retail Occupational [Tax Fund. An act passed at the second extra ses- sion of the legislature, held in 1936, extended the 3 percent rate to May 1, 1937, and retained the pro yisions governing the disposition of the proceeds. Legislation in 1937 again extended the 3 percent rate to February 15, 1939. Since 1933, according to an act passed in that year, transfers have been made from sales tax proceeds in the Retail Occu- pational Tax Fund, to the State School and Uni- versity of Illinois Funds. The amount of such transfers, which are in lieu of former general prop- erty levies, are determined by legislative appro- priations.” Indiana. The gross income tax act of 1933 was amended by 1937 legislation with respect to exemp- tions and permitted deductions. The proceeds of the gross income tax, credited to the general fund of the state, are a source of state appropriations for the support of schools.* Iowa. A 2 percent sales tax was levied for three years, beginning with 1934, with the proceeds ear- marked for the State General Fund and relief. The sales tax was continued indefinitely and a tax of 2 percent was imposed on the use of tangible per- sonal property in 1937. All the net revenues from sales and use taxes are paid into the general fund of the state from which the schools receive appro- priations.® Kansas. A 1937 law levied a tax of 2 percent on gross receipts from sales of tangible personal prop- erty, services of public utilities, meals or drinks served in restaurants, and admissions to places of amusement. Net revenues are payable to the Retail Sales Tax Fund, out of which the 1937 act provided $2,500,000 for state aid for schools, after appropria- tions totaling $2,660,000 had been made for social 6 Idaho. Session Laws, Extra Session, 1935. Chap. 12, p. November 3, 1936. 7 Illinois. Laws of the Fourth Special Session of the Fifty-eighth General Assembly, November 19-23, 19 p. 3-4. Approved December 4, 1934. { Laws, 1935. S. B. 207, 1935-36. H. B. 94, p. 81-82. Laws, 1937. H. B. 246, p April 29, 1937. welfare purposes. Of any balance, 80 percent was directed to be distributed to county general funds to be used for general and tax reduction purposes A 1938 amendment provided an additional $350,000 for relief, and gave all the balance, in excess of specific appropriations, to the counties. A use tax was imposed at the rates of the sales tax by a 1937 law which directed that proceeds should be dis tributed in combination with sales tax proceeds Kentucky. The legislature of 1934 repealed the gross sales tax law of 1930, and in its ste ad placed a 3 percent tax on gross receipts from retail sales. Proceeds were credited to the State General Fund. The 1934 act was repealed in 1936." Maine. A law taxing at 1 percent the gross re- ceipts from retail sales of tangible personal prop- erty was passed in 1937. Proce ds were to be used for old age assistance and the financing of a mini mum educational program. This measure was de feated, however, by referendum vote in the August 1937 election. Michigan. Certain items of personal property were exempted in 1934 from the 3 percent tax on retail sales. This tax contributed directly to the sup port of public schools and state gducational institu tions thru appropriations from a special state fund By an act of 1935, sales tax proceeds were diverted to the State General Fund. General fund revenues now constitute the principal source of state educa tional support in Michigan. A tax on the privilege of using, storing, or consuming tangible personal property, purchased outside the state, was levied in 1937, at the rate of 3 percent of the retail selling price. Use tax proceeds, like those of the sales tax, are paid into the State General Fund.’ Mississippi. The emergency revenue act of 1934 rewrote the law taxing the gross proceeds of sales, eliminating the $1200 exemption and placing new levies on certain businesses. A proposed con- stitutional amendment, which would have made it mandatory upon merchants to shift the sales tax to the consumer, was defeated by the voters in 1936. A series of acts passed in 1938 revised rates on specific products and extended the list of exemp- tions. The use, storage, or consumption within Mis- sissippi of tangible personal property purchased at retail outside the state was taxed at the rates of the sales tax, by act of 1938. All proceeds of the 26-42. Approved March 20, 1935. Rejected at general election 034. House Bill No. 1, 1200-1201. Approved May 23, 1935. § Laws, 2nd Extra Session, 1052-57. Approved March 11, 1937; H. B. 563, p. 1058-60. Approved 8 Indiana. Laws, 1937. Chap. 117, p. 604-45. Approved March 9, 1937 ® Towa. Code of Iowa, 1935. Chap. 329-F1, Division IV, p 418-25. Approved April 12, 1937. © Kansas. Laws, 1937. Chap. 374, p. 610-19; Chap. 375, p. p. 102-104. Approved March 3, 1938. { Laws, Special Session, 101-102. Approved March 2, 1938. 4 Kentucky. Acts, 1934. Chap. 25, p. Approved January 13, 1937. 12 Maine. Laws, 1937. Chap. 242, p. 310-26. Approved April 24, 1937. 18 Michigan. Public Acts, Extra Session, 1934. No. 10, p. 78-80. Approved March 19, 19354. 1 Publi 119-21, Approved May 23, 1935. { Public Acts, 1937. No. 94, p 214-27. Effective June 15, 1934. { Acts, 1st Special Session, 1936-3 . 129-35. Approved June 18, 1937 1009-12. Effective March 9, 1934. § Laws, 1937. Chap. 198 619-21. Approved April 2, 1937. Chap. 78, p. 99-100; Chap 1938. Chap. 77, p. 99. Approved March 1, 1938; Chap. 79 Chap. 19, {cts, 1 [119 ] general sales and use taxes are credited to the State General Fund from which the schools receive ap- propriations.™ Missouri. A ™% percent tax was levied in 1934 on the gross receipts from retail sales of tangible personal property, services and admissions, effec- tive until December 31, 1935. Of the proceeds, after paying costs of administration, one-half was allo- cated to the Governor’s Relief Fund, and the bal- ance to the State School Fund.,The “Emergency Revenue Act of 1935” repealed the 1933-34 law and imposed a new tax effective to December 31, 1937, raising the rate to 1 percent and diverting all reve- nue to the State General Fund. The life of the sales tax was again extended and the rate further in- creased to 2 percent, by a law passed in 1937.% New Jersey. The 2 percent tax, levied in 1935, on retail sales of tangible personal property was repealed in 1936. Under the 1935 act all revenues were allocated to the general fund of the state. General fund appropriations have been used in New Jersey in recent years to supplement school revenues from earmarked sources.” New Mexico. An emergency general sales tax, levied in 1934, on the gross receipts of nearly all businesses at rates ranging from one-eighth of 1 percent to 2 percent was reenacted in 1935. The schools receive all proceeds except a deduction for expenses which was increased from 3 percent to 4 percent in 1937." New York. The 1 percent tax on retail sales of tangible personal property, adopted in 1933, ex- pired June 30, 1934. Revenue from this tax went to the State General Fund, from which educational appropriations are made.” North Carolina. An act of 1935 provided for the transfer from the State Highway Fund to the General Revenue Fund of a part of the six cent gasoline tax, equal to the amount of the retail sales tax on gasoline under the retail sales tax schedule. The same act continued the sales tax for two years, making it effective to June 30, 1937, and increased the rate of taxation on the gross sales of salers from 1/25 percent to 1/20 percent. T) legislature again continued the sales tax unt 30, 1939, as well as the provision allowing | diversion of a portion of the gasoline tax f; State Highway Fund to the General Revenue | The General Revenue Fund is the source of p; tically all state aid for schools in North Ca: North Dakota. Following the defeat at the , of the 1933 retail sales tax law, the 1935 legislat passed a law which taxed, at 2 percent, retail s of tangible personal property, services, and admis sions, and allocated $2,650,000 for the bienni 1935-37, for the equalization of public schoo! s port. This act expired May 1, 1937, but was ry enacted by the 1937 legislature for another bienniuy with only slight changes and a provision allocated a sum not in excess of $3,500,000 State School Equalization Fund.” Ohio. A law passed in 1934 taxed retail sale: of tangible personal property, during the calendar year 1935, at graduated rates and earmarked | percent of the net proceeds, after appropriating $16,000,000 for relief and old age pensions, for th State Public School Fund. Amendments passed the special legislative sessions of 1935-36 and 1935 extended the life of the sales tax to March 31, 1939 strengthened administrative provisions, revised +! lists of articles exempted, and gave the schools ( percent of the net proceeds after deducting speci! appropriations, totaling $8,000,000, plus an add tional appropriation of $750,000 for the State Sch Fund. Proceeds of a use tax levied by a 1936 law after deducting a total sum of $137,500 for various administrative departments of the state, wer: lotted to the State School Fund.” Oklahoma. The sales tax law of 1933, design to provide relief to the common schoo! districts, replaced in 1935 by a new law which levied sales and use taxes at 1 percent and credited the net p: ceeds to state general revenues. An initiated meas ure adopted in July 1936, which would have creased the rate to 2 percent, was later repeal 1 Mississippi. Laws, 1934. Chap. 119, p. 164-85. Approved March 1, 1934. § Laws, 1936. Chap. 353 (H. C. R. No. ! 622. Defeated by voters at general election November 3, 1936. { Laws, 1938. Chap. 113, p. 88-102. Approved April 4, 1938; C! 114, p. 102-11. Approved March 20, 1938; Chap. 126, p. 152-54. Approved March 10, 1938; Chap. 138, p. 179-80. Appr March 30, 1938; Chap. 158, p. 174. Approved March 26, 1938. { Laws, Extra Session, 1938. S. B. 104. Effective, September 1938. S. B. 36, H. B. 122. Effective August 20, 1938. 15 Missouri. Laws, Extra Session, 1933-34. H. B. 5, p. 155-66. Approved January 15, 1934. 1 Laws, 1935. Committee Substitu! for H. B. 198, p. 411-26. Approved June 5, 1935. { Laws, 1937. Committee Substitute for H. B. 6, p. 552-69. Approved Jul 1937. 18 New Jersey. Session Laws, 1935. Chap. 268, p. 850-74. Approved June 11, 1935. {| Session Laws, 1936, Preceded by A tional Acts of 1935. Chap. 329, p. 1323-24. Approved October 23, 1935. 17 New Mexico. Laws, Special Session, 1934. Chap. 7, p. 11-33. Approved April 25, 1934. 1 Laws, 1935. Chap. 73, p. 152-° Approved February 25, 1935. { Laws, 1937. Chap. 192, p. 513. Approved March 15, 1937. 18 New York. Laws, 1933. Chap. 281, p. 764-73. Approved April 19, 1933. 1 North Carolina. Laws, 1935. Chap. 371, p. 429-590. Approved May 9, 1935. § Laws, 1937. Chap. 127, p. 296-31 proved March 13, 1937. * North Dakota. Laws, 1935. Chap. 276, p. 401-11. Approved March 11, 1935. { Laws, 1937. Chap. 249, p. 464-77. Appr March 12, 1937. 1 Ohio. Laws, 2nd Special Session, 1934. H. B. 134, p. 306-21. Approved December 13, 1934. Laws, 1935. H. B. 12! 41-45, Approved March 27, 1935. 1 Laws, Special Session, 1935-36. H. B. $72, p. 69-83. Approved December 20, 1935; H. B. 6° p. 323-40. Approved December 30, 1936. { Baldwin’s Ohio Code Service, June 1938. Sec. 5546-18, p. 223-24. As amended H. B. 744, 2nd Special Session, 1937-38. p. 723-25. Approved January 7, 1938; and S. B. 486, 3rd Special Session, 1938. p. 855->° Approved June 9, 1938; Sec. 5546-2, p. 216-17. As amended by H. B. 760, 2nd Special Session, 1938. p. 761-67. Approved Janus 28, 1938. 9 Laws, Special Session, 1935-36. H. B. 590, p. 101-13. Approved December 23, 1935; H. B. 698, p. 346-52. Approw [120] December 30, 1936. tail sales 1 admis. lenni oo] s was rr 1enniun il sales alendar rked i riating for the ssed 1d 1935 1, 1939 sed the o0ls f specif addi- however, sales and use taxes were enacted 2 percent rate with proceeds from the sales -ax credited entirely, save for expenses, to the State \ssistance Fund, and the use tax proceeds paid into the General Revenue Fund from which the schools -eceive appropriations.~ Oregon. The sales tax law passed at the 2d Spe- cjal Session of the legislature in 1933, which placed all net revenues in the State Common School Fund yas rejected by the voters at a special election, May 18, 1934." South Dakota. The gross income tax law which allocated 50 percent of the net revenues for school jurposes was allowed to expire on June 30, 1935, jut was supplanted by a 2 percent tax on retail sales of tangible personal property, services of pub- lic utilities, and admissions to places of amusement. Thirty-two percent of the net proceeds was ear- marked by this act for public schools. In 1937 the sales tax rate was raised to 3 percent, and the share of the schools in the 2 percent tax was increased to 35 percent. Revenues from the additional 1 percent tax were earmarked for old age assistance.” Utah. Amendments to the sales tax law passed in 1935 and 1937 revised provisions relating to the disposition of the proceeds, for educational, relief, and other state purposes. In 1937 the appropriation for relief was reduced from $2,000,000 to $1,000,000. After appropriating this sum and paying costs of administration, schools were given as much of the remainder as needed for equalization and prop- erty tax replacement purposes, and also certain spe- cific sums totaling $830,000, after appropriating $3,530,000 for other state purposes. Proceeds of a use tax levied by act of 1937 are distributed in combination with sales tax proceeds.” Washington. In place of the sales tax act of 1933, which earmarked net proceeds for school pur- poses and which expired July 31, 1935, the 1935 legislature enacted a new law taxing retail sales at 2 percent and other sales of goods and services at one-fourth, or one-half, of 1 percent. Of the taxes collected under this act 58.51 percent was ear- marked for the State Current School Fund and 4.53 percent for institutions of higher education. Amend- ments passed in 1937 reduced the share of the schools to 49 percent and the share going to higher educational institutions to 3.23 percent. A law passed in 1935 taxing the use of tangible personal property at 2 percent of the purchase price was amended in 1937 to apply to property purchased at wholesale and to exempt property with a purchase ) préce of less than $50, instead of less than $20, as ] formerly.” West Virginia. A 2 percent consumer’s sales tax was placed on retail sales of tangible personal effective to June 30, 1935. The statute which provided that all proceeds should be property in 1934, placed in the State General Fund for appropriation to the public schools was extended in 1935 and made permanent in 1937. A surtax of three-tenths of each tax imposed under the gross income tax law of West Virginia, except those on certain public utilities and sales of tangible personal property, was added in 1935. Revenues derived from the gross income tax are paid into the general fund of the state from which the schools are benefited indi- rectly thru legislative appropriations ? Wyoming. A law imposing a 2 percent tax on retail sales of tangible personal property, sales of services of public utilities, and admissions to amuse ments, was imposed in 1935, effective to March 31, 1937, with $287,000 of the net proceeds earmarked for public schools, after appropriating $500,000 for relief purposes. Any balance in excess of these ap- propriations was designated for use in reducing the rate of the state property tax. The 1937 legislature reenacted the 2 percent tax, revising the provisions as to exemptions and requiring the use of the pro- ceeds, in excess of $500,000 allocated for public wel- fare and $287,000 for school purposes, to be used in reimbursing counties for losses in revenues due to homestead exemptions. A 2 percent use tax was also levied in 1937, proceeds of which were to be distributed in combination with sales tax proceeds.” Hawaii. General sales and use taxes were levied and a “business excise tax,” measured by net income from business, carried on within the territory plus operating costs, was repealed by acts of 1935. The sales tax applies to gross income from sales of goods by manufacturers, producers, and wholesale and retail dealers, and from sales of business, personal, and professional services at rates varying from 14 of 1 percent to 1 percent, according to the occu- » 2 pation of the taxpayer. The use tax is levied at 1% 2 Oklahoma. Laws, 1935. Chap. 66, Article 7, p. 308-14. Approved April 23, 1935. { Laws, Special Session, 1936. Chap 7 Article 4, p. 19-20. Adopted at primary election, July 1936. 1937; Chap. 66, Article 11, p. 456-61. Approved May 5, 1937 *8 Oregon. ‘““Referendum Vote, 1934,’ Laws, 1935 ( ** South Dakota. Session Laws, 1935. Chap. 205 68-69. Approved March 9, 1937. Chap. 253, p. 3 5 * Utah. Session Laws, 1935. Chap. 92, p. 183-84. Approved March 31, Chap. 113, p. 205-206; Chap. 114, p. 206-12. Approved March 2 Approved March *8 Washington. Session Laws, 1935. Chap. 180, p. 706-849 5, 326-52. Approved March 14, 1935. {| Session Laws, 1 6-57. Approved March 10, 193 Laws, 1937. Chap. 66, Article 10, p. 445-56. Approved May 1 1935. 9 Session Laws, 1937. Chap 5. teat. 25. 1935. 9 Session Laws, 19 143-46. Approved March 17, 1937; Chap. 227, p. 1138-67. Approved March 23, 1 27 West Virginia. Laws, Special Session, 1933-34. Chap. 66, p 65-75; Chap. 86, p. 376-81. Passed March 9, 1935. | Laws, 1937. Chap. 11, p. 92 Chap. 108, p. 439-49. Passed February 11, 1937 8 Wyoming. Session Laws, 1935. Chap. 74, p. 88-96. Approved February 18, 1 Approved February 28 3 433-34. Passed March 3, 1937; Approved February 24, 1937; Chap. 118. p. 218-29 146-52. Passed March 23, 1934. % Laws, 1? Passed March-13, 19 5. | Session La [121] percent of the value of tangible personal property Puerto Rico. Exemptions from the 2 pe,, imported into the territory. Collections under all sales tax were extended by an act of 1938. \j| sa these acts were designated as territorial realizations tax proceeds are used for insular purposes, Scho from which the schools of Hawaii derive support.” _ receive appropriations from the Insular Tr: isur * Hawaii. Session Laws, 1935. Series A-42. Act 119, p. 66. Approved May 9, 1936; Series A-43, Chap. 63a (Act 67-74. Approved May 13, 1935; Series A-44, Chap. 64a (Act 141), p. 75-89. Approved May 11, 1935 * Puerto Rico. Session Laws, 1938. Chap. 315, p. 556-57. Approved May 15, 1938 Most of the states, whether or not they im- pose general sales taxes, have passed separate laws taxing specifically the sale of alcoholic beverages. All states have special laws taxing vasoline sales. Special sales or excise taxes are also levied by many states on other articles, among them, tobacco products, oleomargarine, nonintoxicating beverages, tickets to places of amusement and automobiles. The incidence of special sales taxes within a more restricted field is similar to that of the general sales tax with respect to the economic classes of the population most affected, unless the articles taxed are of the so-called luxury class, which the consumer can refrain from pur- chasing at will. It is difficult to determine what taxes can be classed as luxury taxes, however, since the definition of the term “luxury” varies from year to year, from population group to population group, and from individual to indi vidual. Special sales taxes are sometimes imposed for other than revenue purposes. Altho alcoholic beverage taxes are good revenue producers, they are also levied for purposes of regulation of the liquor industry and control of liquor consump- tion.’ It is said that one purpose in levying oleo- margarine excise taxes has been to protect the dairy industry from adverse competition.” Alcoholic Beverage Taxes All but three states, Kansas, Mississippi, and Oklahoma, now have liquor tax laws im- posing excise taxes, or license fees, or both. None of these laws was enacted earlier than 1933, following the repeal of the National Prohibition Amendment, and the great bulk of liquor tax legislation, now on the statute books, occurred during the five-year period, 1934-38. This section is concerned only with excise taxes, or taxes on sales of alcoholic beverages. Changes in alcoholic beverage license fees are dealt with in Part LX. Legislation affecting taxes on sales of alcoholic beverages, imposed under general excise taxes dealt with in this section. V. Selective Sales Taxes 1 This statement is probably even more applicable to license taxes imposed under alcoholic beverage control law sales tax laws, is also omitted here, since it is covered in Part IV. However, this section re- ports legislation related to taxes on sales of nonintoxicating beverages—light wines, and ) 5 beer with an alcoholic content up to 3.2, 4, or 6 percent together with other alcoholic beverage tax legislation. Alcoholic beverage taxes contributed about $34 percent of total state tax revenues in the fiscal year 1938, but this percent is based upon a figure which includes license fees, fines and penalties, net receipts of state liquor stores, as well as the special alcoholic beverage excise taxes with which this section is concerned.*® ‘The federal government derived approximately one tenth of its total internal revenue collections from liquor excises in the fiscal year 1938." In all, twenty-eight states and two territories enacted or amended laws taxing sales of alco- holic beverages in the years 1934 thru 1938, n such a way as to affect school revenues in some degree. Schools benefited under these laws di- rectly in eleven states; indirectly thru revenues placed in general funds in fourteen states and the two territories. Three states diverted reve- nues, formerly earmarked for schools, to other noneducational purposes. “I'welve states and two territories took action increasing the rates of taxes levied on sales of alcoholic beverages, or adding new rates during the 1934-38 period ; in five states, tax rates were reduced. Arkansas. Laws of 1937 levied an additional liquor tax of 25 cents per gallon, increased the beer tax, 70 percent of which was formerly earmarked for schools, from $1 to $1.50 per barrel, and allo- cated the proceeds for agricultural extension and welfare purposes.” California. Voters in California in 1934 ap- proved a measure permitting state regulation of the manufacture, sale, possession, and transportation of alcoholic beverages. The liquor tax act of 1933 was replaced in 1935 by a new law levying excise (stamp) taxes of 62 cents per 31-gallon barrel on beer, 2 cents per gallon on wine, 3 cents per quart on champagne, and 80 cents per gallon on distilled 2 Twentieth Century Fund, Inc., Committee on Taxation. Facing the Tax Problem. New York: the Fund, 1937. p. 14¢ 434 * Tax Policy League. Tax Policy, op. cit., p. vi, 1. *U. S. Treasury Department, op. cit., p. 2 * Arkansas. Acts, 1937. No. 236, p. 847-51. Approved March 10, 1937; No. 274, p. 964-65. Approved March 18 spirits. A 1937 amendment to the 1935 law increased the tax on champagne and sparkling wines from 3 to 6 cents per quart. All excise taxes, after appro- priations have been made to various state depart- ments for carrying out the provisions of the act, are paid into the general fund of the state from which monies are transferred to state school funds.° Florida. The 1933 act, taxing sales of beverages of not more than 3.2 percent alcoholic content and crediting the proceeds to “unappropriated funds” in the state treasury for transfer to county school funds, was repealed in 1935. The new law which levied excise taxes on sales of malt, vinous, and spirituous beverages, at rates varying according to alcoholic content, placed all revenues in the general fund. A 1937 amendment increased the rates on all classes of liquor and appropriated proceeds, as far as needed, for emergency relief, with any remaining balance credited to county school funds.” Georgia. A tax imposed by a 1935 law on sales of malt beverages at the rate of $1.25 for each con- tainer of 31 gallons was increased by legislation passed at the 1937-38 extra session to $4.50 per 31- gallon container. The manufacture and sale of dis- tilled spirits and alcohol on a local option basis were legalized in 1938 subject to an excise tax of $1 per wine gallon on imported distilled liquor and $2 per wine gallon on imported alcohol with rates on domestic products equal to one-half of those on im- ported distilled liquors and alcohol. A 1937 law taxed sales of wines at rates ranging from 5 to 60 cents per gallon, according to alcoholic content. All wines of more than 21 percent alcohol were defined as distilled spirits. Proceeds of all liquor taxes are dedicated to the support of schools by constitutional provision.® Idaho. The beer tax law was amended in 1935 by making an appropriation from the general fund to take care of tax refunds. One half of the proceeds of the excise tax of $1.55 per barrel of 31 gallons is assigned to the State Public School Income Fund; the other half to the State General Fund to be used for property tax reduction purposes.’ Indiana. A 1935 measure reduced taxes on malt and vinous beverages and taxed spirituous liquors at the rate of 25 cents per quart. Proceeds from ex- cise taxes are paid into the general fund tribution, in part, to local school units.*° Kentucky. In 1934 a temporary additiona tax of 5 cents per gallon was levied on whis| law passed in 1936 repealed all former excise | levied at varying rates, and taxed sales of a beverages as follows: beer, $1.50 per 31-gal| rel; wine, 25 cents per gallon or fraction t distilled spirits, $1.04 per wine gallon. All | were credited to the general fund of the stat which appropriations are made for educationa poses. An amendment which provided fo: sales in '4-pint or 2-ounce containers at 7 cent 2 cents, respectively, was repealed by 1938 tion.” Louisiana. The malt tax adopted prior to revenues from which went to the Educational |} ization Fund, was repealed in 1934. Under the , law, alcoholic beverages were taxed as follows tilled liquors, 50 cents per gallon; still wines, 5 ¢ cents per gallon, according to alcoholic conten sparkling wines, 50 cents per gallon; and beer, $1 per 31-gallon barrel. Proceeds were assigned to th: Property ‘Tax Relief Fund from which transfers ; made to the State School Fund and for replacement of revenues lost due to homestead exemptions. Fy cise taxes imposed under the 1934 act on distilled liquors, sparkling wines, and still wines containing more than 24 percent alcohol, were increased to | cents per gallon in 1935 and again to $1 per ga in 1938. The tax on still wines was made to app| to all those with an alcoholic content greater tha 14 percent.” Maryland. The rate of the excise tax on win was reduced in 1935 by removing wines from the general classification of liquors containing mor than 14 percent alcohol which are taxed at $1.10 pe: gallon. A new rate of 20 cents per gallon was im- posed on all wines regardless of alcoholic content Proceeds of state liquor license and excise taxes g to the State General Fund from which the schools receive appropriations.” Michigan. A new excise tax of 50 cents per ga lon on wine made from grapes outside of Michiga: was added in 1937 by an act which allocated an balance from beer and wine excise taxes, after tak- ing care of appropriations totaling $1,102,000, fo: loans to needy school districts.” ® California. Initiative Measure No. 2. Submitted to the Vote of Electors, November 6, 1934. {] Statutes, 1935. Chap 1123-53. Approved June 13, 1935. {| Statutes, 1937. Chap. 2126-78. Approved July 1, 1937. 7 Florida, Laws, 1935. Chap. 16774, p. 21-46. Approved May 27, 1935. § Laws, 1937. Chap. 15015, p. 608-15. App: June 15, 1937. § Georgia. Laws, 1935. No. 267, Part 1, Title 2, p. 73-81. Approved March 28, 1935. 1 Laws, Ex. Session, 1937-38. No p. 1937-38. No. 395, p. 185-88. Approved February 16, 1938. 175-76. Approved February 16, 1938. { Laws, 1937. No. 378, p. 851-61. Approved March 30, 1937. { Laws, Extra S: ® Idaho. General Statutes, 1935. Chap. 132, p. 312-18. Approved March 19, 1935. 10 Indiana. Laws, 1935. Chap. 226, p. 1056-1197. Approved March 11, 1935. 1 Kentucky. Acts, Special Revenue Session, 1936. Chap. 1, p. 1-13. Approved April 9, 1936; Chap. 2, p. 13-14. Approved May 1, 1936. § Acts, 1938. Chap. 2, p. 48-133. Approved March 7, 1938. 12 Louisiana, Session Laws, 1934. Act No. 15, p. 67-91; Act No. 22, p. 175-76; Act No. 36, p. 215-17. Approved July 1? 1934, | Session Laws, Extra Session, 1934. Act No. 3, p. 7-10. Approved August 20, 1934. {] Session Laws, 4th Special Session 1035. Act No. 6, p. 9-22. Approved September 11, 1935. { Session Laws, 1938. Act No. 44, p. 152-57. Approved June 30, 1°38 138 Maryland. Laws, 1935. Chap. 322, p. 734-36. Approved May 17, 1935. 4 Michigan. Acts, 1937. No. 281, p. 509-22. Approved July 21, 1937. [124] hol equ anr Lat div Cha Effe » Minnesota. All rates of the excise tax on forti- New York. Liquor license and excise taxes were «oq still and sparkling wines and distilled liquors levied in 1934 with 50 percent of excise tax recei| raised by a 1937 act. Excise taxes are paid in excess of an amount allowed for refunds credite ts were nto the State General Fund. Schools receive legis- to the State General Fund from which the schools ative appropriations from general fund revenues. receive appropriations. The 50 cent per gallon rate of the excise tax was extended in 1935 to apply t Mississippi. A 5 cent per gallon tax levied in sales of liquor having an alcoholic content of 1934 on sales of beer and light wines was increased percent. The provision of a 1933 law for an appre n 1938 to 21.34 cents per gallon. Proceeds are cred priation of $50,000 for administrative expenses of ted to the State General Fund in which the schools local beverage control boards was continued share thru legislative appropriations.” 1936 law, but eliminated in 1938. North Carolina. Excise taxes on beer and wine Missouri. Excise taxes on wine were reduced and spirituous liquors were imposed by the Genera n 1935. Light wines were redefined as those con . ° c eo > : 27 } ev ¢ ’ lis raining less than 14 percent alcohol, instead of less Revenue Act of 1937. All revenues are credited to t r than 12 percent, as heretofore. Proceeds go to the the State General Fund which is the source of st eneral revenues, one-third of which is customarily school support : 7 : 17 ,ppropriated for public schools. ~, 4 : Oklahoma. The tax on nonintoxicating Nevada. A new liquor control act, passed in ages which is earmarked for school suppor 1935, which imposed a stamp tax on sales of liquors, wine, and beer earmarked $24,000 of the proceeds ios the Date Hnaversity Fund amd $200,000 for the Pennsylvania. A 4 percent tax, effective unt State Distributive School Fund. Legislation passed yay 31. 1937. was levied in 1936 on the price of dis in 1937 extended the life of these taxes and provided tilled, rectified, and blended spirits. An additiona for the distribution of the proceeds, after paying tax of 10 percent of the net price of all liquors sold costs of administration on a percent basis: 50 percent by the Liquor Control Board was imposed by an to the schools; 15 percent to the university; and 35 elkce CORE att ond octal be wu OKT act clit tate lowered in 1937 from $2.50 to $2.00 per barre] gallons. percent for payments on unemployment relief 4 4939 ‘The law taxing sales of malt and brewed - , 1939. ‘ g Si alt ; d bonds. beverages was revised in 1935 and 1937. The pre ‘ ‘ ceeds from these taxes are paid into the genera New Jersey. State gallonage taxes levied in 1934 on beer, liquors, and still and sparkling wines were revised in 1935. The tax on still wines was repealed in 1938. All proceeds of state liquor license Rhode Island. New excise taxes on still and and excise taxes are credited to the State General sparkling wines, distilled spirits, and brandy wert fund of the state from which fund the schools ceive financial aid.“ Fund, from which appropriations are made for imposed by a 1934 law. The rate on still wines was schools.” reduced from 20 to 5 cents per gallon in 1935. Provi- sions for the reciprocal taxation of imported bever- New Mexico. Proceeds of excise taxes on alco- ages were enacted in 1937 and 1938. Proceeds are holic beverages earmarked in 1934 for public school paid into the State General Fund from which monies equalization were transferred, up to $250,000 per are appropriated for the public schools.’ annum, to the State Relief Fund by a 1935 law. Later acts of 1935 and 1937 increased rates and South Carolina. Acts passed in 1935 imposed diverted all proceeds to the State Relief Fund.” stamp tax of 80 cents for each gallon of distilled 45 Minnesota. Session Laws, 1935. Chap. 130, p. 263-64. Approved April 5, 1935. 9 Session Laws, 1st Special Chap. 8, p. 12-16. Approved June 30, 1937 16 Mississippi. Laws, 1934. Chap. 127, p. 263 Effective August 19, 1938. 17 Missouri. Laws, 1935. S. B. 30, p. 267-85. Approved May 9, 1935 18 Nevada. Laws, 1935. Chap. 160, p. 340-48. Approved March 30, 1935 Laws, 1937. Chap. 170, p March 26, 1937. 1® New Jersey. Session Laws, 1934. Che 0 37-44. Approved June 5, 1934. § Session Laws, 1938. Chap. 319, 1 Approved June 14, 1938. 2 New Mexico. Laws, 1934, Special Session. Chap. 30, p. 117-19. Approved April 13, 1934. J Laws, 1935, Chap. 12, p Approved February 9, 1935; Chap. 112, p. 253-78. Approved February 25, 1935 ws, 1937. Chap. 130, p. 347-86. Approve March 15, 1937. “1 New York. Laws, 1934. Chap. 94, p. 510-22. Approved April 2, 1934. Laws, 1935 559, p. 1170. Approved Ap 1935. | Laws, 1936. Chap. 456, p. 1154-55. Approved May 5, 1936. § Laws, 1938. Chay i; 1181-82. Approved April 4 22 North Carolina. Laws, 1937. Chap. 127, p. 311-22. Approved March 13, 1937 % Oklahoma. Laws, 1937. Chap. 16, p. 15-19. Approved April 30, 1937. % Pennsylvania. Laws, 1935. No. 222, p. 628-36. Approved July 9, 1935. § Laws, 1936, Extra Session. No. 37, p Approved August 6, 1936. No. 4, p. 13-14. Approved June 9, 1936. § Laws, 1937. No. 58, p 51. Approved April 8 No. 119, p. 527-33. Approved April 29, 19 *% Rhode Island. Laws, Special Session, 1934. Chap. 2088, p. 39-63. Approved May 7, 1934. 9 Laws, 1936. Chap 5-307. Approved May 5, 1936. § Laws, 1937. Chap. 2523, p. 175-76. Approved April 27, 1937. 9 Laws, 1938. Chay p. 589-92. Approved April 23, 1938. -76. Approved February 26, 1934. 9 Laws Special Session, ) 5/ [125 liquors sold and gave 65 percent of taxes on sales of distilled liquors, beer, and wine until July 1, 1936, to the state for school purposes in addition to an appropriation of $24,000 from beer and wine taxes made available annually since 1933. After July 1, 1936, schools were to receive from beer and wine taxes, only the $24,000 appropriation and 50 percent of the collections in unincorporated places. In 1936 the rate on distilled liquors with an alcoholic content of 14 to 21 percent was reduced to 32 cents per gallon and in 1937 the rate on distilled liquors with a greater than 21 percent alcoholic content was raised from 80 cents to 96 cents per gallon. All the proceeds from the additional 16 cents were ear- marked for the state school account. Under a 1938 law, wine with an alcoholic content of 14 to 21 per- cent was taxed at 30 cents per gallon and wine with a greater than 21 percent alcoholic content was taxed with distilled spirits at 96 cents per gallon. Formerly, all wines were taxed at the same rates as beer.” Tennessee. The beer excise tax was extended in 1935 to apply to beer containing up to 5 percent instead of up to 3.2 percent of alcohol by weight. A 1937 act increased the rate from $1.20 to $1.70 per barrel of 31 gallons. While formerly two-thirds of the net proceeds was used for state and local elementary-school purposes, eight-seventeenths now goes to counties and municipalities, and the re- mainder to the State General Fund. One-third of the revenues in the general fund of Tennessee is used for public school purposes.” Texas. A law passed in 1935 repealed existing beer and malt liquor tax laws, levied new taxes on sales of spirituous, vinous, and malt beverages, and earmarked one-fourth of the net proceeds for the Available School Fund. Rates on spirituous liquors and still wines were increased in 1936. Administration and enforcement provisions were strengthened and clarified in 1937.” Vermont. Taxes of 314 cents per gallon on sales of malt and vinous beverages and 10 cents per pint on spirituous liquors were levied in 1934 and 1935, and increased by laws of 1936 and 1937 tw 4) cents per pint on fortified wines and 10 cents », gallon on malt beverages and unfortified wip. and 23 cents per pint on spirituous liqui Virginia. A new alcoholic beverage cont enacted in 1934, levied an excise tax on bee; the rate of $2.75 per barrel and credited th, ceeds to the State General Fund. In 1936 proyici, was made for paying this tax thru the us stamps.” West Virginia. The barrel tax levied on may facturers and distributors of nonintoxicating }, was increased in 1937 from $1 to $1.37'4. Proc are credited to the State General Fund from whj the schools receive financial aid.” Wisconsin. From proceeds of the occupations tax on sales of intoxicating liquors, the first $150, above the cost of collection, was earmarked { special aid to needy public elementary and hig schools by a 1934 law. Proceeds of an occupation tax on fermented malt beverages were credited | the State General Fund. The law taxing sales distilled liquors and wines was revised in 193 with respect to the provisions for refunds and | prescribing rates, varying according to alcoho! content, on sales in small quantities. Another 1935 law reserved the proceeds up to $175,000 of the tax on sales of malt beverages for emergency aid 1 high schools in a weak financial condition June 30, 1937." Alaska. Regulations of the Board of Liquor Con trol, effective since April 3, 1935, were revised in 1937 by repealing the excise tax on hard and dis tilled liquor levied at 5 percent of the invoice pri and imposing new rates of 5 cents per gallon or malt beverages; 15 cents per gallon on wine and other liquors with an alcoholic content up to 19 pe: cent; and 50 cents per gallon on liquors with a greater than 19 percent alcoholic content. Proceeds 60 percent of which were formerly refunded to towns where collected, were credited by the 1937 act to the territorial treasury for general territorial! including school, purposes.” ** South Carolina, Acts, 1935. No. 232, p. 325-41. Approved May 14, 1935; No. 204, p. 276-78. Approved April 20, | No. 329, p. 471. Approved May 18, 1935. No. 599, p. 1211-14. Approved June 21, 1935. § Acts, 1936. No. 972, p. 178! Approved June 15, 1936. § Acts, 1937. No. 339, Art. II, p. 546-47. Approved May 18, 1937. { Acts, 1938. No. 895 (1201 p. 1811. Approved May 7, 1938. * Tennessee. Public Acts, 1935. Chap. 170, p. 360-61. Approved April 22, 1935. { Public Acts, 1937. Chap. 303, p. 1183-87 Approved May 21, 1937. * Texas. Session Laws, 2d Called Session, 1935. Chap. 467, p. 1795-1842. Approved November 15, 1935. { Session Laws, 24 Called Session, 1936. Chap. 495, p. 2040-84. Approved October 31, 1936. {| Session Laws, 1937. Chap. 448, p. 1053-1118. Approved June 8, 1937. ” Vermont. Public Acts, 1935. Chap. 28, p. 34-35. Approved April 11, 1935. { Public Acts, Special Session, 1935-36. Chap. § p. 423. Approved December 14, 1935. ® Virginia. Acts of Assembly, 1934. Chap. 94, p. 100-36. Approved March 7, 1934. {§ Acts of Assembly, 1936. Chap p. 282-86; Chap. 166, p. 286-89. Approved March 12, 1936. *! West Virginia. Laws, 1937. Chap. 12, p. 94-108. Passed March 13, 1937. * Wisconsin, Laws, Special Session, 1933-1934. Chaps. 1, 3, 14. Approved July 12, 1934. { Session Laws, 1935. Chap. ! . 150-52. Approved May 29, 1935; Chap. 217, p. 333-38. Approved July 1, 1935; Chap. 470, p. 746. Approved September | 1935. * Alaska. Laws, 1935. Chap. 81, p. 169. Approved March 14, 1935. { Laws, 1937. Chap. 78, p 12, 1937. 167-80. Approved M [ 126 ] >. roceeds n whi Jationa 150 ced fo id hig dation lited t ales n 1935 and | coho! 'r 1935 the tax aid t 1 unt r Con sed in d dis » pric on Or e and 9 per ith a ceeds ed to 1937 » i Oria Puerto Rico. The new excise tax on alcoholic beverages levied by a 1935 act, at rates varying from 7 cents to 35 cents per liter, was revised later in the same year by the addition of a 50 cent per liter rate on alcohol. Under both 1935 acts, proceeds were assigned to the Insular General Fund. The 1935 act was repealed in 1936 by a law which taxed spirits, up to 185 proof, at $1.20 per gallon, above 195 proof at $1.45 per gallon; wines and ciders at 3) or 40 cents per gallon depending on alcoholic con- rent; champagne and sparkling wines at $1.40 to $1.80 per gallon; beer and other malt beverages at 15 to 20 cents per gallon. Of the proceeds, $60,000 was appropriated for relief and $75,000 for Public Hospitals Charities Service before placing the bal- ance in the Insular General Fund. An act passed at the third special session of the 1936 legislature ex- tended the $1.20 rate to apply to spirits up to 189 proof ; eliminated the 15 cent rate on beer; and in- creased the appropriation for administrative ex- penses to $103,056." TABLE 7.—TOTAL YIELD“ IN CERTAIN STATES OF ALCOHOLIC BEVERAGE TAXES CONTRIBUTING’ DIRECTLY TO STATE SCHOOL SUPPORT, 1937-38 State Annua! yield 1 2 Georgia $2 , 133,658 Idaho 4,963,750 243 , 807 , 709 462 786.157 200 ,928 576,668 815,837 905 Indiana Louisiana Michigan Nevada South Carolina Texas Wisconsin . 5.968 Source: Tax Policy 6: 1; December 1938-January 1939 “Includes both excise and license taxes > Revenues earmarked wholly or partly for school support Gasoline Taxes 1919, all the states had adopted gasoline tax laws prior to Beginning with Oregon in 1930. Rates vary among the states from 2 to 7 cents per gallon of gasoline sold. Differences in rates tend to encourage purchasing across state lines and complicate problems of tax ad- ministration. Taxes on sales of gasoline and other motor fuels were the largest single source of state tax revenue in 1938, yielding almost one-fourth of the total. Over 3 percent of total federal internal revenue receipts was also derived from a manufacturer’s excise tax on gasoline, in the Puerto Rico. Session Laws (2d Special Session), 1935. Chap. 1, p 610 Effective July 30, 1935. Session Laws, 1936. Act No. 115, p 1936. Act No. 6, p. 44-113. Approved June 30, 1936 ® California. Statutes, 1937. Chap. 141, p 3055-5 [1 7. Filed with the Secretary of State 77 a/ fiscal year 1938. In the early period of gasoline taxation, when the incidence of the tax was upon the relatively small class of the popula tion who used the highways for motor travel all the revenues were dedicated for pur poses of highway construction and maintenance. As gasoline tax rates have been raised and the yield increased, and as motorists on the highways have come to represent a very large proportion of the population, there has been a noticeable tendency to employ a part of the revenues for other, including school, uses. Six states levied additional gasoline taxes o1 earmarked additional proceeds for state school funds (one state) or for state general funds from which the public schools receive appro priations (five states). Additional rates already imposed and earmarked for school funds were continued by three states, but one state redi rected gasoline tax proceeds which had been earmarked for schools to other state and local purposes. One state cut in half the rate of a tax credited to the general fund in which schools customarily share. TABLE 8—TOTAL YIELD IN CERTAIN STATES OF GASOLINE TAXES CON- TRIBUTING* DIRECTLY TO STATE SCHOOL SUPPORT, 1937-38 State Annual! yield 1 2 Florida $22,709,617 Georgia 19,804,822 7 021,381 146 ,243 409 873 Louisiana li Ohio? 4] Texas 42 Tax Poli ; December 1938-January 1 arked wholly or partly for school support s in Ohio source @ Revenues earn » Gasoline and kerosene in Georgia; liquid fue California. A constitutional amendment approved by the voters in 1938 allocates the proceeds of all fuel clusively motor taxes, now or hereafter levied, ex for highway purposes, but reafirms the prior claim of the public schools upon state tax revenues in the general fund.” Florida. An additional 1 cent of the gasoline tax, bringing the total up to 7 1935. An 1937 cents, was levied in act of continued the tax in effect 2-44 Effective July 1 Approved May 15, 1936. § 1935; Chap Session Laws (3d Speci June 11 1937 ] until July 1, 1939, with provisions for distributing the proceeds equally between general revenues and county school funds.” Georgia. The use of $2,000,000 of state highway funds for the purpose of paying past due balances in appropriations for confederate pensions and the State School Fund was authorized in 1935. The legislature of 1937 strengthened provisions for en- forcement and collection and continued provisions allocating 1 cent of the total 6-cent gasoline tax and all of the 1-cent kerosene tax for the Public School Equalization Fund.” Illinois. One-third of the proceeds from a 3-cent gasoline tax was earmarked between July 1, 1934, and March 1, 1935, for the State Common Schoo! Fund. One-third of Chicago’s share in the gasoline tax proceeds was to go to the Chicago Educational Fund. The 1937 legislature amended the motor fuel tax law by omitting the clause giving one-third of the revenue to the Common School Fund. From Chicago’s share of the distribution, the city treas- urer was directed to pay one-half to the City Educational Fund but an act of 1938 required that $500,000 for the year 1938, $1,000,000 for the year 1939, and $1,000,000 for the year 1940 be deducted from the allotment to Chicago schools.” Massachusetts. A 1935 act directed the allot- ment of $9,500,000 of gasoline tax proceeds to the general fund of the state. Towns and cities are re- imbursed for certain special school expenditures from general fund revenues. An additional 1-cent gasoline tax was continued by act of 1936 to April 30, 1939.” Mississippi. The 1 cent per gallon tax on kero- sene and fuel oil was cut in half by a law passed in 1938. Proceeds are paid into the State General Fund.” Nebraska. An additional 1 cent per gallon tax on motor fuels was levied between March 1 and September 20, 1935, and credited to the general fund June 8, 1937. of the state from which appropriations for the support of public schools.“ New York. Two additional emergen levies on sales of motor fuel imposed in | the proceeds earmarked for the State Gen were continued from year to year to Jun Laws passed in 1937 gave one-half of th from these taxes and the regular 2 cent posed continuously since 1929 to the State G Fund from which appropriations are mad support of public schools.” North Carolina. An act of 1935 credited amount of the 6-cent gasoline tax, equal to th, sales tax on gasoline, to the General Revenue ! Ohio. Acts passed during 1934, 1935, an extended the 1 cent per gallon tax on liquid { to March 31, 1939, and continued the allo to the State School Fund of proceeds in excess of appropriation of $35,000 for administratiy: penses."* Pennsylvania. Proceeds of an additional tax 1 cent per gallon on sales of liquid fuels, levied 1935 and extended thru 1939 by a 1937 act, w used for unemployment in 1935-36 and thereat were placed in the State General Fund.” Texas. Enforcement provisions of the gas tax law were strengthened in 1935 and the port of the proceeds set aside to meet administrat expenses was increased. One-fourth of the net ceeds of this tax is earmarked for the State Aya able School Fund.” Tobacco Taxes Tobacco taxes, including taxes on tobac sales and license fees imposed on tobacco manu facturers and dealers levied by twenty-tw states, comprised slightly less than 2 percent ot total state tax collections in the fiscal yea: ending June 30, 1938.47 The federal gover: * Florida, Laws, 1935. Chap. 17033, p. 604-607. Approved May 28, 1935. 1 Laws, 1937. Chap. 18299, p. 1100-1104. Ap; * Georgia. Laws, 1935. No. 4, p. 5-6. Approved February 1, 1935. { Laws, 1937. No. 191, p. 167-207. Approved Ma 1937. % Tilinois. Laws, Special Session, 1934. S. B. 70, p. 227-30. Approved May 4, 1934. { Laws, 1937. H. B. 541, p. 1 Approved July 8, 1937. 3° Massachusetts. Acts and Resolves, 1935. Chap. 476, p. 628. Approved August 9, 1935. § Acts and Resolves, 193 398, p. 482. Approved June 24, 1936. * Mississippi. Laws, Ist Sp. Sess., 1938. H. B. 374. Effective May 1, 1938. “1 Nebraska. Laws, Special Session, 1935. Chap. 19, p. 132-33. Approved November 26, 1935. “New York. Laws, 1934. Chap. 413, p. 987-88. Approved May 8, 1934. { Laws, 1935. Chap. 40, p. 428-29; Cha p. 429-30. Approved February 16, 1935. § Laws, 1936. Chap. 869, p. 1815-16. Approved June 4, 1936. { Laws, 1937. Cha p. 645-46. Approved April 5, 1937; Chap. 316, p. 847-48. Approved May 6, 1937. § Laws, 1938. Chap. 63, p. 543-44; Cha p. 544-45. Approved March 3, 1938. * North Carolina. Laws, 1935. Chap. 371, p. 429-590. Approved May 9, 1935. * Ohio. Laws, 2nd Special Session, 1934. H. B. 136, p. 303-305. Approved December 8, 1934. § Laws, 1935. H. B. 34 422-36. Approved May 31, 1935. { Laws, Special Session, 1935-36. S. B. 361, p. 48-51. Approved December 12, 1935; H. B p. 344-46. Approved December 22, 1936. * Pennsylvania. Laws, 1935. No. 181, p. 412-14. April 8, 1937. Texas. Session Laws, 1935. Chap. 240, p * Tax Policy League, op. cit., p. vi, 12. {1 Approved June 21, 1935. { Laws, 1937. No. 57, p. 248-49. Ap; 558-75. Approved May 11, 1935. $] lso derived about 1U percent of its total ‘nal revenue collections from a tax on the les of tobacco manufacturers and importers.** State tobacco taxes are usually levied on the quantity of the products sold or on the retail ‘ lling price. Action taken by thirteen state legislatures luring the 1934-38 period, in creating or revis- ng laws taxing sales of tobacco products, ifiected school revenues, directly, in six states ; indirectly, in seven states. Four states enacted new tobacco tax laws, crediting the proceeds to general funds in which schools share. One state reenacted a law previously defeated by referendum. One state brought cigars within the application of the general sales tax, exempt- ing them from the tobacco tax. Another state 8U. S. Treasury Department, op. cit., p. 2 # Alabama. Laws, 1935. Act. No. 193, p. 530 30 Arkansas. Acts, 1937. No. 314, p. 1206-07 TABLE 9.—STATE TOBACCO TAXES AS RELATED diverted tobacco tax proceeds, tTormerly ea! marked especially for schools, to the State Gen eral Fund f: priations. Use taxes on tobacco pP um which schools receive roduc imposed by two states. Alabama. and a 10 The rate of the cigarette tax was tax levied chewing 1935 tor vised percent on Proceeds ot State Educa tobacco and snuff by a act. tobacco taxes are earmarked the tional Trust Fund.” Arkansas. A 1937 act removed cigars from the provisions of the tobacco excise tax and brought them within the application of the general sales tax, thus reducing tobacco tax revenues in the Equalization Fund. Another act of 1937 provided for strengthening the administrative and enforce ment provisions of the tobacco tax law of 1929 July 10, 1935 Appr TO STATE SCHOOL SUPPORT, 1929-38 States having tobacco ts “APITALS indicate tobac« 1 revenues contributing to state school support ind r thy rectly © tax revenues earmarked in whole thru state ix laws in spec or in part for st appropriat 1929 1930 1931 1932 1933 3 La. lowa Kans. N. Dak Kans. V. Dak. 5. Car. o. or. >. S. Dak. ; S TENN. Dak TENN Utah Mich Miss. OHIO TEX OHIO TEX La La. Ariz OKLA OHIO TEX * Defeated at referendum Car. . a .» Car » S. Dak. TENN. Utah tah tah Utah Miss. OHIO TEX. La Ariz. t riz \ 1934 Dak. . Car. d Mi OHIO OHIO TEX TEX La. La Zz Connecticut. Proceeds of a new tax imposed in 1935 on cigarette sales are placed in the general fund from which appropriations are made for school support.” Kentucky. A 10 percent tax on the retail selling price of cigarettes was imposed by a law passed at the first special session of the legislature in 1936. All proceeds from this tax go to the State General Fund.” Mississippi. The tax on cigars, cheroots, and stogies, as levied in 1934 was revised in 1938 to apply at rates varying from 75 cents to $13.50 per 1000, but was later restored to the former rate of 1 cent for each 5 cents of the retail price. The rate on cigarettes was changed to 1/5 cent for each cigarette sold. Tobacco tax revenues go to the State General Fund from which appropriations are made for public schools.” Ohio. Acts of 1935 and 1936 continued the ciga- rette tax at the rate of 1 cent on each ten cigarettes or fraction thereof to March 31, 1939, and allocated the proceeds, after deducting sums for adminis- trative expenses, to the State Public School Fund.™ Oklahoma. The cigarette stamp tax revised in 1935 imposed rates ranging from 1% cents on each package of ten cigarettes or less to $1.50 on each 1000 cigarettes sold. Net proceeds were allotted to the General Revenue Fund from which the schools re- ceive legislative appropriations. The 1937 legisla- ture repealed and reenacted the cigarette stamp tax, but with no changes in rates or disposition of the proceeds.” Pennsylvania. A stamp tax of 1 cent on each ten cigarettes sold was levied in 1935 and extended in 1937 to May 31, 1939. During the first year the proceeds were used for unemployment relief, and thereafter paid into the general fund of the state.” South Carolina. The tax on cigars was slightly revised and a use tax on tobacco products was levied in 1958.” Tennessee. Proceeds of a tax levied by 4 law on the use, storage, and consumption of to}, products at the same rates as those imposed o, tobacco sales are added to and distributed with 4, tobacco sales tax proceeds for public edu purposes. Rates of the excise tax on cigarettes anq cigars were revised temporarily until Ma; 1939. Texas. Revisions of the cigarette stamp in 1935 and 1936 reduced from 98 percent proportion of the revenues earmarked for the Stay Available School Fund, first to two-thirds and ¢ to one-third of the net proceeds. A 1937 am ment to the cigarette tax law strengthened en| ment provisions.” Vermont. A new law passed in 1937 im, a tax of %4 mill on each cigarette sold, effective | June 30, 1939. Proceeds are paid into the treasury from which the schools and institutions higher education receive appropriations.” Washington. Of the proceeds of a new tax of 1/20 of 1 cent on each cigarette sold, 58.51 percent was earmarked for schools by a 1935 act in addi tion to special appropriations to state educational institutions. The share of the schools was reduc to 49 percent in 1937." TABLE 10—TOTAL YIELD OF To. BACCO TAXES CONTRIBUTING: DI. RECTLY TO STATE SCHOOL SUP. PORT, 1937-38 Annual yield 2 Alabama , $2,977,760 Arkansas.... , 1,456,538 6a $69 ese , 8,175,524 , 747 , 536 ,006 , 492 , 103 , 526 Source: Tax Policy 6: 12; December 1938-January 1' @ Revenues earmarked wholly or partly for school support ®t Connecticut. General Statutes. Supplement 1931, 1933, 1935. Chap. 75a, p. 189-97. Effective July 1, 1935. 5? Kentucky. Acts, Special Revenue Session, 1936. Chap. 4, p. 28-35. Approved May 1, 1936. % Mississippi. Laws, 1934. Chap. 125, p. 226-42. Approved February 20, 1934. { Laws, 1938. Chap. 118, p. 136. Appr March 28, 1938. { Laws, 1st Special Session, 1938. H. B. 152. Effective August 25, 1938. % Ohio. Laws, 1935. H. B. 334, p. 336. Approved May 28, 1935. | Laws, Special Session, 1935-36. H. B. 581, p. 172-75 Approved March 11, 1936; H. B. 695, p. 341-43. Approved December 30, 1936. % Oklahoma. Laws, 1935. Chap. 66, Article 8A, p. 320-25. Approved February 5, 1935; Chap. 66, Article 8, p. 315 Approved March 20, 1935; Chap. 66, Article 9, p. 325. Approved April 27, 1935. Laws, 1937. Chap. 66, Article 7, p. 42¢ Approved May 3, 1937. 5° Pennsylvania. Laws, 1935. No. 155, p. 341-48. Approved June 14, 1935. § Laws, 1937. No. 53, p. 220-27. Approved Aj 8, 1937. ** South Carolina. Laws, 1938. No. 1356 (1339), p. 2925. Approved June 11, 1938; No. 861 (1151), p. 1761-62. Appr April 30, 1938. 58 Tennessee. Public Acts, Special Session, 1935. Chap. 46, p. 337-39. Approved February 19, 1935. { Public Acts, 1 Chap. 295, p. 1151-55. Approved July 1, 1937. | Public Acts, 3rd Sp. Session, 1937. Chap. 7, p. 336. Approved November |5 1937. % Texas. Session Laws, 1935. Chap. 241, p. 575-603. Approved May 11, 1935. § Session Laws, 3rd Called Session, 1 Chap. 495, p. 2050-84. Approved October 31, 1936. { Session Laws, 1937. Chap. 310, p. 621-36. Approved May 13, 1937. © Vermont, Public Acts, 1937. Chap. 38, p. 54-59. Approved April 10, 1937. ®t Washington. Session Laws, 1935. Chap. 180, p. 751-63. Approved March 25, 1935. § Session Laws, 1937. Chap p. 1138-67. Approved March 23, 1937. [ 130] sior pon rin stat A of 1 gar into Miscellaneous Sales Taxes School revenues were affected by legislation, in twelve states and two territories passed ‘1 the years 1934-38, inclusive, concerning the special taxation of sales of commodities other than those mentioned in the foregoing pages of this section. Among the commodities taxed under the new or amended laws were: admis sions (five states) ; soft drinks, candies, car- honic acid gas, etc. (four states) ; oleomarga- rine (three states) ; and motor vehicles (three states ). Alabama. An act of 1935 imposed a stamp tax of 10 cents per pound on certain types of oleomar- garine sold within the state. Revenues are paid into the State General Fund.” Georgia. An excise tax of 10 cents per pound on sales of certain types of oleomargarine was im- posed by 1935 legislation. Proceeds from this tax were credited to the State General Fund.™ Kentucky. A luxury excise tax law, enacted in 1936, which taxed sales of soft drinks, syrups, candy, ice cream, chewing gum, nuts, and cosmetics at the rate of one-fifth of the retail selling price was repealed later in the same year. A motor vehicle excise tax, equal to 3 percent of the retail selling price, was levied by a law passed at the first special session of the 1936. Admissions were taxed at graduated rates by act of 1936. In 1938 a law was passed taxing securities purchased on margin, at 10 percent of their cash value. Proceeds of all these were credited to the State General Fund.” legislature in taxes Louisiana. The first $1,500,000 of the net pro- ceeds of a new tax on sales of soft drinks was ear- marked by a 1936 law for a special fund to be used for construction and repair of buildings at state educational and charitable institutions. A 1938 amendment limited to $75,000 the amount set aside for administrative expenses, and provided that after making appropriations to state educational and charitable institutions, any balance should be placed to the credit of the Louisiana State Univer- ® Alabama. General Acts, 1935. No. 145, p. 183-84 sity and the Agricultural and Mechanical College Funds. Taxes of 2 percent on sales of cotton futures and gross receipts from advertising in newspapers 1934 tor the Fund in and periodicals were earmarked in newly created Property Tax Reliet which schools share.” New York. The stock first imposed for the period between March 1, 1932, emergency transfer tax and June 30, 1933, was continued from year to year to June 30, 1939. Rates of original and emergency levies on shares selling for less than $20 were re duced in 1935.” North Carolina. The revenue act was amended in 1937 to insure the shifting of the tax on admis sions to the consumer.” Oklahema. A tax of 1 the value of motor vehicles when first registered in the was levied in 1935 effective until July 1, 1937. The net proceeds went to the General Revenue Fund The 1936 special session of the legislature partially provided for the creation of the State Assistance: percent upon state Fund by increasing the motor vehicle excise tax to 2 percent and allocating 50 percent of the proceeds to said fund, 49 percent to the General Revenue Fund, and the remainder for expenses. The 1937 legislature provided for placing 97 percent of the proceeds of this tax in the General Revenue Fund Proceeds of paid into the General Revenue Fund, were allocated by an oleomargarine tax, formerly a 1937 act for the support of the common schools.” Pennsylvania. A temporary tax of 1 cent on each 25 cents charged for admissions was levied in 1935 to be effective for two years. Proceeds were earmarked during the first year for unemployment relief and during the second year for the State Gen eral Fund.” South Carolina. The exemption, provided in 1935, of crystallized and glazed nuts or fruits used for cooking purposes from the 10 percent tax on the price of candy retailing at 50 cents per pound and above was repealed in 1937. A 1937 act reduced the tax on ammunition from $4 to $2 per rounds. The list of exemptions from admissions taxes thousand was extended in each year of the 1934-38 period. from state, including public school, purposes Proceeds these taxes are used for general Approved June 15, 1935 % Georgia. Laws, 1935. No. 208, p. 81-82. Approved March 21, 1935 ® Kentucky. Acts, Special Revenue Session, 1936. Chap by the Governor. § Acts, 1938. Chap. 22, p ® Louisiana. Session Laws, 1934. Act. No. 23, 1936. Act No. 95, p. 288-307. Approved July 2, ® New York. Laws, 1935. Chap. 749, p. 1477-78 March 18, 1936. {| Laws, 1937. Chap. 181, p. 646-47. March 3, 1938. ® North Carolina. Laws, 1937. Chap. 306, p. 698 * Oklahoma. Laws, 1935. Chap. 66, Article 12, p Article 4, p. 13-22. { Laws, 1937. Chap. 50, Article 8, p. p. 89-90. Approved April 20, 1937; Chap. 16, p April 28, 1937. ® Pennsylvania. Laws, 1935. No. 183, p. 429-39 7 South Carolina. Acts, 1934. No. 934 (1178), p April 26, 1935. No. 273, p. 384-85; No. 254, p. 365 January 31, 1935. § Acts, 1936. No. 850, p. 1591-92 No. 1290, p. 2591-92. Approved April 30, 1936. No. 1293, p No. 378, p. 610-11. Approved May 17, 1937. Resolution No Effective May 6, 1938. No. 1356 (1339), p. 2925 328-30 3, p. 14-28; Chap. 14, p 1073-76. Approved April 21, 1938 p. 176-80; Act No. 24, p 1936. {| Session Laws, 1938. Act No. 18, p Approved May 6, 1935. { Approved April 5, 15-19. Approved April 30, 1937; Approved June 1577-80. Approved April 14, 1934 ; Approved May 11, 1935. Resolution No. 586, p. 1191 Approved May 20, 1936. No. 963, p. 1771-72. Approv 2594. Approved March i 447, p. 882 Approved June 11, 1938; No. 861 (115 Approved 151-55; Chap. 15, p. 155-64 180-84. Approved July 12, 1934. § Session Laws 106-107. Approved June 30, 1938 Chap 124, p. 402-405 Approved 540-4 Approved Laws, 1936 1937. { Laws, 1938. Chap. 62, p Approved March 22, 1937 Approved April 22, 1935. § Laws, Special Session, 1 362-66. Approved May 5, 1937. { Laws 1937 Chap Chap. 66, Article 5, p. 42 22, 1935 { Acts, 1935. No. 207, p ed June 1936. 9 Acts, 1937. No 37 Approved April 29, 193 t 1), p. 1761-62 Tennessee. A 1935 law permitted the taxing of Alaska. Taxes on purchases of fish in sales of carbonic acid gas at 2 cents per 16 ounces 400 pounds except for sale at retail and on when the tax is measured by the amount of carbonic _ sjons to pugilistic encounters were repealed acid gas in its solid state. Liquid carbonic acid gas passed in 1937. Both taxes were credited to | 4 ss : ay W ye tar s fo : "es. . ¢ . ould be taxed at 5 cents for each 16 ounces eral fund of the territory from which schools Texas. A tax of 1 cent on each 10 cents of the appropriations.” price of admissions, in excess of 51 cents, was levied in 1936, with one-fourth of the proceeds earmarked Puerto Rico. Proceeds of excise taxes oi for the Available School Fund. Exemptions from cent of winnings on horse races and prizes this tax were revised by a law enacted in 1937.” uted from receipts from sales of tickets to tl scription Fund are used to finance a schoo! room, according to an act passed in 1936 law earmarked a tax of 1/5 cent on all suga molasses sold, produced, or consumed for th: port of a faculty of industrial science at th: \ ‘Washington. By act of 1937, the tax on motor vehicles was converted from a personal property to an excise base at 1% percent of the fair market value of the vehicle. All revenues derived from this tax were credited, as far as needed, to the State School Equalization Fund.” versity of Puerto Rico.” 7! Tennessee. Public Acts, Special Session, 1935. Chap. 47, p. 340. Approved August 3, 1935 7 Texas. Session Laws, 3rd Called Session, 1936. Chap. 495, p. 2040-84. Approved October 31, 1936. § Session I Chap. 161, p. 311-13. Approved April 15, 1937. *8 Washington. Session Laws, 1937. Chap. 228, p. 1167-72. Approved March 22, 1937 % Alaska. Laws, 1937. Chap. 2, p. 2. Approved February 19, 1937; Chap. 56, p. 127. Approved March 11, 193 Puerto Rico. Session Laws, 1938. Chap. 254, p. 479-80. Effective August 15, 1938 VI. Chain-S [wenty-four states taxed chain stores in n t ith the number of stores. Formerly, there was 138. principally at graduated rates, increasing tendency to tax retail chains at progressive ites based on the volume of sales but such taxes ere found to involve constitutional difficulties were gradually abandoned or replaced. (Ine state taxes gross receipts | and one state, the aggregate value of goods offered for sale,” it at flat rates. One state levies a progressive vax, which enlarges with the increase in the number of square feet of floor space. One state ses the number of counters as the basis of progression of chain-store taxes. Progressive Florida. A flat rate on gross re Delaware. 4!] except North Carolina and Virginia tore Taxes taxes all yer of stores. + Ss rates of chain-store in other are based on the numl Revénues from chain-store taxes in twenty of the twenty-four st about two ates levving such taxes constituted ; percent of total state tax revenues in the fiscal year 1938. Chain-store tax laws enacted o1 revised in seven states during the years 1934-38, incl sive, contributed directly to the support of pub 1 lic schools. One ot these laws was later dec] ire a unconstitutional, however, and one is still in litigation, while in the case of a third, the pro ceeds were later diverted to the general fund of the state. Chain-store tax laws newly enacted TABLE 11.—CHAIN-STORE TAXES AS RELATED TO STATE SCHOOL SUPPORT, States having chain-store ta \PITALS indicate chain-store tax revenues earmarked in whole tax revenues contributing to state school support ndire« 1929-38 xes if or in part upport; tlalics indicate tly thru st riations from general fund 1930 1931 1932 1933 2 D Ga IND el. SO. Cé ALA Fla Wi LA IDAHO Me. Md MICH. MINN. MONT N. MEX. Vi W Fla. Wis. LA. IDA Ve Md. MIC VA Colo Ks “ Held invalid. » Repealed. © Defeated at election, November 1936 4 In litigation. 1934 6 MINN MONT N. MEX 7s 8 W.V 1936 1937 8 9 Del. IND No. Car. Va Miss. So. Ca ALA. FLA Wi LA IDAHO Me. Md. Mich Minn MONT. HO IDAHO Ma Mich MINN, MONT H A TABLE 12.—TOTAL YIELD OF CHAIN- STORE TAXES CONTRIBUTING * DI- RECTLY TO STATE SCHOOL SUP- PORT, 1937-38 State Annual yield 1 2 Alabama. $118,321 Florida. . . 2,930,058 Idaho 60,119 Indiana...... 568 ,610 Louisiana. .... 344,550 168,215 260,793 1,992,890 117,725 Source: Tax Policy 6: 2; December 1938-January 1939. * Revenues earmarked wholly or partly for school support. or revised in eight states during the 1934-38 period provided for placing the proceeds in general revenues of which the schools receive a share. One of these laws was later defeated by referendum vote. Of four state laws which levied taxes at graduated rates on the gross re- ceipts or gross sales of chain stores during the years 1934-38, one was repealed, one declared unconstitutional, and two were converted to the “number of stores” basis. Colorado. On November 6, 1934, the voters ap- proved an initiative measure which placed annual license fees on chain stores, ranging from $2 on one store to $300 for each store over 24. Proceeds go to the State General Fund, from which the state now appropriates money for public schools.‘ Florida. The graduated license tax imposed on chain stores by act of 1931 was repealed and a new law was enacted in 1935 taxing gross receipts from chain stores at rates ranging from % of 1 percent to 5 percent, and imposing graduated license fees of from $10 to $400. Net receipts were allocated for County School Fund purposes. Under the 1931 law, receipts from the chain-store tax were credited to the General Revenue Fund. The graduated tax on gross receipts was held unconstitutional; only the minimum rate is therefore imposed.° Iowa. A law imposing sales and license taxes on chain stores was passed in 1935. The excise tax ranged from a $25 minimum on chains whose gross receipts are not in excess of $50,000, to $1000 on each $10,000 of gross receipts in excess of $9,000,000. License taxes imposed by this act vary from $5 per store on chains of 2 to 10 stores, inclusive, to ¢ on chains of 50 or more stores. All proceeds te credited by this act to the State General Fund, 7), gross receipts tax imposed under this act wag 4, clared unconstitutional by a decision of the Unis. States Supreme Court, November 9, 1935." Kentucky. An annual tax was placed on ¢| stores in 1934 ranging from $2 on one store to $j; on each store over 50. Proceeds were to go to ¢h, State General Fund, from which appropriations a,;, made for educational purposes. A 1936 amendme, provided for a steeper graduation of the taxes jy posed, extending from $2 on the first store to $35) plus an additional $300 on each store in excess of s on chains of 51 stores or more. A further amen ment passed in 1938 eliminated the $2 tax on store, so as to tax only those firms operating 2 9, more stores.” Louisiana. Graduated rates of the chain-sto, tax were revised in 1934 to range from $10 each o; the first 10 stores in excess of one, to $550 on ea) store in excess of 500. After bonded indebtedpes of parishes is taken care of the balance is distribyted to the parishes wherein it was collected on the basis of population, for the use of parish school funds Michigan. The chain-store tax of 1933 wa amended in 1935 by the addition of a “counter tax ranging from $10 on each of the first 10 counters jj excess of one to $25 on each counter in excess of 25 Proceeds of the chain-store tax which, after paying costs of administration, were formerly distributed school districts on a teacher-unit basis, were diverted by this act to the State General Fund.’ Minnesota. The law taxing chains of stores on two bases, (1) number of stores, and (2) the amount of gross sales, was repealed in 1937 and a new tax was imposed based on the number of stores only. The tax levied by the 1937 act extends from $10 on each of the first 2 stores in a chain to $35 on each store in excess of 150. Special high rates were imposed on mail order establishments rang ing from $200 on the first store to $1200 on each store in excess of 10. All proceeds of the chain store tax are paid to the general fund of the stat Schools receive general fund appropriations.’ Mississippi. A new chain-store tax was imposed by act of 1936. The rdnge in rates is from $3 on each of the first 2 stores to $300 on each store in excess of 40. Proceeds are credited to the Stat General Fund, chief source of state school appro priations. A 1938 act clarified provisions with r spect to the application of rates.” * Colorado. Laws, 1935. Chap. 216, p. 1090-95. Approved by people at election, November 6, 1934. 5 Florida. Laws, 1935. Chap. 16848, p. 193-206. Approved June 1, 1935. State ex rel. Adams v. See, 122. Fla. 639, 166 S * Iowa. Session Laws, 1935. Chap. 75, p. 89-98. Approved April 29, 1935. Valentine et al. v. Great Atlantic and Pacis Co. et al. U. S. Supreme Court, November 9, 1936. T I 7 Kentucky. Acts, Ex. Session, 1934. Chap. 26, p. 227-32. Approved July 3, 1934. § Acts, Special Revenue Session Chap. 11, p. 132-34. Approvéd by the Governor. J Acts, 1938. Chap. 66, p. 403-404. Approved March 12, 1938. 8 Louisiana. Laws, 1934. Act No. 31, p. 251-55. Approved July 12, 1934. ® Michigan. Public Acts of 1935. No. 177, p. 278-81. Approved July 6, 1935. 10 Minnesota. Session Laws, 1st Special Session, 1937. Chap. 93, p. 170-75. Approved July 24, 1937. 11 Mississippi. Laws, Ist Sp. Sess., 1938. H. B. 100. Effective August 20, 1938. [ 134] Schoo proce [his Mexii No chain highe yn th store at the n ex tions to 5 | Reve whic fund: 1935 was Marcl super! Coun supre 1 I 1 I Appr > to $15 O tO the ions are endmer IX€S In to $352 3s of § amet! ] mM each tedness ributed e basis nds of 25 aying ind a tores trom Montana. A 1937 amendment to the chain-store law, which would have raised the rates and ail all of the proceeds in the State General Fund, was invalidated because of a defect in the wnacting clause. Provisions of the 1933 law ear- narking 50 percent of the proceeds for school pur- noses continued in effect thruout the years 1937 and 1938." New Mexico. The 1933 chain-store tax based in gross retail sales was increased in 1934 and the jisposition of proceeds was changed to give one- half of the proceeds from the tax on gross annual sales in excess of $150,000 to the State Public School Equalization Fund. Formerly, the State Common School Current Fund received one-third of the proceeds from the tax on businesses over $100,000. This law was declared invalid in 1936 by the New Mexico supreme court.”® North Carolina. In 1935 the graduated tax on chain stores was revised with an increase in the higher brackets. The former rates ranged from $50 in the second to the fifth stores up to $150 on each store in excess of 50 while the new rates started it the $50 rate and ranged up to $225 on each store in excess of 200. Under this act, chain filling sta- tions were taxed separately at rates from $10 on 2 to $ stations to $85 on each station in excess of 100. Revenue is credited to the general fund of the state, which with the exception of certain endowment funds is the sole source of state school support. The 1935 provision which taxed chain filling stations was repealed in 1937 and a tax on wholesale dis- 12 Montana. Laws, 1937 N. M.) 57 P. (2a) 287. 44 North Carolina. Laws, 1935. Chap. 371, p. 513-17. Approv March 13, 1937. % Pennsylvania. Laws, 1937. No. 344, p superintendent of education states that this tax was County in a case entitled Commonwealth of Pennsylvania supreme court. 1656-5¢ Chap. 199, p. 608-13. Approved Marx 183 New Mexice. Laws, Special Session, 1934. Chap. 33, p. 127 declared American Stores Compan tributors of motor fuel at the rate of $4 per pum was substituted.”* Pennsylvania. A tax, earmarked for the State School Fund, was levied in 1937 on chains of stores and theaters at a range from $1 on one store or theater to $500 on each store or theater in excess of 500. The net proc eeds from this tax were used to carry out the provisions of Act No. 345 of 1937 fix ing the minimum salary schedule of teachers Tennessee. Net revenues of a new chain-store tax of $3 per 100 square feet of floor space, on each store in excess of one, were credited to the State General Fund in 1937. Schools receive one-third of the revenues in this fund."® Texas. One-fourth of the proceeds of tax imposed in 1935 on chain stores, rates graduate from $1 on the first store and $6 on the second store to $750 on each store in excess of 50, was allocated to the State Available School Fund. } Vermont. The law taxing chain stores at grad ated rates on the basis of gross retail sales was rv pealed in 1935. Proceeds of this tax were paid into the State General Fund from which appropriations are made for the public schools. Wisconsin. The chain-store tax act of 1933 was amended in 1935 and again in 1937. Taxes were reduced under the 1937 law, as compared with those required to be paid in 1933. Revenues from the chain-store tax are credited to the State General Fund.” h 18, 1937 34. Approved April *d May 9, 1935. § Laws, 1937. Chap Approved June 5, 1937. In a letter dated April unconstitutional by the Court of Common which is now under 16 Tennessee. Public Acts, 1937. Chap. 108, p. 403-95. Approved March 5, 1937 17 Texas. Session Laws, 1st Called Session, 1935. Chap. 400, Approved March 29, 1935 18 Vermont. Public Acts, 1935. Chap. 36, p. 41 1589-94. Approved October 16 1 Wisconsin. Session Laws, 1935. Chap. 545, p. 1068-76. Approved October Approved October 16, 1937. VII. Inheritance, Estate, and Gift Taxes Every state, with the exception of Nevada, levies an inheritance tax, an estate tax, or both. Up to the present the inheritance tax, which is laid at separate, usually progressive, rates upon the value of the transfer to each heir or beneficiary, has found greater favor among the states than the estate tax. Twelve states and the federal government rely upon the estate tax, which is levied as one tax upon the value of the entire estate, in preference to the inheritance tax. Some of the other states supplement inherit- ance taxes with estate taxes in order to take full advantage of the credit allowed on the fed- eral estate tax under the Federal Revenue Act of 1926. The federal government allows a credit for any state inheritance and estate taxes paid, up to 80 percent of the federal estate tax imposed by the 1926 law. Rates of both estate and inheritance taxes are usually progressive, increasing with the value of the property transferred. Taxes are also levied by six states (Colorado, North Carolina, Minnesota, Oregon, Virginia, and Wisconsin) on “transfers by gift in contem- plation of death.” In the fiscal year 1938, the states derived approximately 5 percent of their total tax revenues from inheritance, estate, and gift taxes.' About 7 percent of federal internal revenues came from the federal estate tax in the same year.? Schools benefited directly in three states and indirectly in eight states and one territory from action taken in the years 1934-38, raising the rates of inheritance taxes. One state diverted inheritance tax proceeds previously earmarked for schools to general revenues. One state aban- doned its inheritance tax in favor of an estate tax. Two states imposed new gift taxes during the 1934-38 period. Arizona. The former inheritance tax law was repealed in 1937 and a new estates tax law was en- acted, imposing a graduated tax of from 2 to 20 1 Tax Policy League, op. cit., p. vi, 6. 2U. S. Treasury Department, op. cit., p. 2. percent on the value of net estates of deced taxes collected under the 1937 law, less ex; collection, are used for general fund pur; California. By act of 1935, graduated the inheritance tax, varying according to thy of relationship between the heir and the d and the market value of the property transf; were increased. All proceeds received under | go to the State General Fund but with 5 of them credited to the teachers’ permanent tirement) fund. Administrative provisions amended in 1937.‘ Connecticut. Inheritance tax rates, levied graduated scale depending upon the valuation the property transferred and the relationshi tween transferor and transferee, were increa 1937.” Kentucky. An amendment passed in 193) duced the exemptions and raised the rates on classes of beneficiaries under the inheritance ; law. The one-half of the proceeds from the inher; ance tax, formerly allocated for building purpose: at state institutions of higher education, was allot to the State General Fund.° Massachusetts. An additional 10 percent crease in the computed amount of the inheritan tax was levied for 1935 and extended from year ' year thru 1938. Proceeds are paid into the Stat General Fund from which are derived a small | portion (about one-seventh in 1938) of reimburs ments to towns and cities for educational expend tures.’ Michigan. Rates in the lower brackets on valu of transfers by gift or inheritance to both direct and collateral heirs were raised by act of 1935 range from 2 to 8 percent, instead of 1 to 8 p cent, on direct heirs, and from 10 to 15 percent instead of 5 to 15 percent, on collateral heirs Inheritance tax proceeds are used, first, to pa interest owed by the state to certain education funds; second, for interest and principal payment on noneducational state debt; third, to increas¢ revenues in the Primary School Interest and In Fund.* Minnesota. The inheritance tax law was amended in 1935 with respect to the part of the transfer o! property held jointly by decedent and one or mor 8 Arizona. Session Laws, 1937. Chap. 27, p. 47-77. Approved March 5, 1937. * California. Statutes, 1935. Chap. 358, p. 1266-93. Approved June 25, 1935. {| Statutes, 1937. Chap. 296, p Approved May 12, 1937; Chap. 333, p. 731-32. Approved May 22, 1937; Chap. 421, p. 1380. Approved June 17, 1937. 5 Connecticut. General Statutes, Supplement, 1937. Chap. 77, p. 157-65. Effective April 7, 1937. ¢ Kentucky. Acts, Special Revenue Session, 1936. Chap. 8, p. 103-27. Approved April 24, 1936. 7 Massachusetts. Acts and Resolves, 1935. Chap. 480, p. 656. Approved August 13, 1935. {| Acts and Resolves, 193¢ 397, p. 481. Approved June 24, 1936. {] Acts and Resolves, 1937. Chap. 422, p. 534. Approved May 29, 1937 Resolves, 1938. Chap. 502. Approved August 24, 1938. e § Michigan. Public Acts, 1935. No. 161, p. 253-54. Approved July 6, 1935. [ 136] 193/ nee t inhe rit uTy Oses att allotte rcent heirs fon cher persons, which is taxable. The scale of -aduation of rates on both direct and collateral -¢ was extended in 1937. Provision was made or taxing proceeds of life or accident insurance licies in excess of $32,500. A new gift tax law «as also passed in 1937. The State General Fund from which appropriations are made to Minnesota ls, receives 90 percent of the proceeds; the hools s¢ remaining 10 percent is distributed to local gov- ernments.. Mississippi. The exemption allowed on taxable estates was reduced from $100,000 to $50,000 in 1934. Estate tax revenues contribute indirectly to educational support thru general fund appropria- ions. Montana. Inheritance tax rates were doubled in 1934. Proceeds of this tax, until January 1, 1935, were assigned: 15 percent each to the Common School Interest and Income Fund and the Common School Equalization Fund; 30 percent to the State Emergency Relief Fund; 40 percent to the State General Fund. Formerly the two funds shared equally in 50 percent of the proceeds. In 1935 the distribution of inheritance tax proceeds to the State Public School General Fund was reduced to 30 percent until March 1, 1937. After March 1, 1937, provisions of the original law which gave 50 percent of the proceeds to the schools and 50 percent to the general fund were automatically to become 11 school effective. New Hampshire. The tax on the value of in- heritances of collateral from 5 to 744 percent in 1935, and to §'% percent in 1937. inheritance tax state treasurer to the credit of the heirs was increased are paid to the State General! Proceeds of the Fund, from which public schools receive biennia] appropriations.” New Jersey. Acts of 1937 (1) extended to trans- fers to stepchildren, and children to whom the decedent had stood in the ® Minnesota. Session Laws, 1935. Chap. 50, p. 84-89. Approved July 15, 1 Chap. 70, p. 116 1 Mississippi. Laws, 1934. Chap. 129, p. 278-80. Approved 11 Montana. Laws, Extra Session, 1933-34. Chap. 48, p. 143 Approved March 11, 1935; Chap. 175, p. 358-63. Appro. relation of parent for Chap 34, p. 612-14. Ay August 20, 1937. 13 New Jersey. Session Laws, 1937 1937. 1 Session Laws, 1938. Chap. 136, p 44@ New York. Laws, 1935. Chap. 39, March 18, 1936. § Laws, 1937. Chap. 182, March 3, 1938. % Oklahoma. Laws, Approved February 8, 1935. § Laws, Special Session, 1936. Chap 16 South Carolina. Laws, 1936. No. 960, p. 1768-69. Approve 7 Tennessee. Public Acts, Spe ial Session, 1935. Chap 41, 18 Virginia. Amendments to the Tax Code, 1934. Chap. 137 Approved March 6, 1936. ® Puerto Rico. Session Laws, 1935 370-71. Approved May 12, 1936 287-88. Approved M p 24-38. Approved I 1935. Chap ed Mare % New Hampshire. Laws, 1935. Chap. 130, p. 294. Approv Chap 7, p. 32-33 Ap] Approved Chap. 66, Article 5, p. 274-85 more than ten years, the same exemptions as those allowed on transfers to the decedent’s own childre and (2) of penalties on authorized the abatement and revision inheritance taxes past due for period of not more than sixty days. Provisions of this act were continued in effect until June 30, 1939 by 1938 legislation. New York. Rates of estates taxes, increased Estate tax 1 1939. State General Fun 1933, were continued to July 1, to the from which the schools receive appropriations revenues are assigned Oklahoma. A new inheritance and transfer tax in 1935 generally lowered rates on large estates and waived penalties accrued on inheritance taxes du¢ prior to July 1, 1931, and paid in full by July 1, 1935. This provision was later extended to July 1 1937. paid to the general revenue fund from which schools Net proceeds continued to be receive legislative appropriations.” South Carolina. An additional tax was imposed in 1936 on inheritances sufhcient to bring the t t aggregate tax up to the 80 percent federal credit allowed. Proceeds of this tax are paid into the general fund of the state from which the schools receive financial aid.’ Tennessee. Rates on the value of transfers to direct heirs in excess of $100,000 and to collateral heirs in excess of $50,000 were raised in 1935 Virginia. A gift tax was adopted and exemy tions were reduced under the inheritance tax law in 1934. A 1936 law continued and made permanent the lower exemptions from the inheritance tax Proceeds from the inheritance and gift taxes go to the State General Fund from which Virginia schools receive appropriations.” Puerto Rico. Inheritance tax rates were raised in 1935 and again in 1936. Inheritance tax proceeds go to the Insular Treasury for general insular, in- cluding s¢ hool, purposes.” yproved April 1 5. 1 Session Laws 25 Approved July February I 47 j h 14, 1 ed July yrroved April 6, ay 5, 1938 ebruary 16, d 5 Chap ved Januars Approved 66, Article d June 5, 19 : 292.9 p. 323-24 VIII. Severance Taxes Laws of eight states and one territory, tax- ing the severance of natural resources from the soil or water, were amended in the years 1934- 38 in such a way as to directly affect school revenues. Severance taxes may be levied at a percent of the gross or net proceeds from pro- duction, or of the gross or market value of pro- duction. They are also sometimes levied in the form of a specific monetary sum for each unit (as defined by law) of the amount produced. Severance taxes imposed by sixteen states pro- duced slightly less than 2 percent of all state tax revenues in the fiscal year 1938. TABLE 13.—TOTAL YIELD OF SEVER- ANCE TAXES CONTRIBUTING’ DI- RECTLY TO STATE SCHOOL SUP- PORT, 1937-38 State Annual yield 1 2 $297 ,997 550,360 12,274 9,267 ,067 10,339,315 595 ,659 749 ,908 13,210,470 21,558,851 Alabama. . Arkansas Idaho... . Louisiana. . Minnesota Montana. New Mexico Oklahoma. Texas..... Source: Tax Policy 6: 11; December 1938-January 1939. @ Revenues earmarked wholly or partly for school support. New severance taxes were levied in two states and one territory and rates of already existing taxes were raised in four states in the years 1934 thru 1938. Some part of the pro- ceeds of each of the state taxes is directly ear- marked for school support. One state passed a law diverting revenues previously allocated for common school purposes to other educational and noneducational purposes. One state law which earmarked severance tax proceeds di- rectly for schools was repealed. Arkansas. An act of 1937 diverted proceeds of the severance tax on timber from the Common School Fund to the State Forestry Commission. Other 1937 laws earmarked part of the severance School Fund f blind and ; tax proceeds in the Common Arkansas schools for the deaf and the State Textbook Fund.’ Idaho. A 1935 act taxed at 3 percent th of ores mined and earmarked the proceeds for ¢), Public School Income Fund. Louisiana. The tax on sulfur was increased { 27 to 60 cents per ton in 1934, to $2 in 1936. a, reduced to $1.03 in 1938; that on natural gas wa. increased from 1/5 cent to 3/10 cent per 1000 cy feet in 1935; that on gravel was reduced from | cents to 114 cents per ton in 1935 and again raised + 112 cents in 1936. All pine timber, both seco growth and virgin pine, was made subject to th, same rate of 12 cents per 1000 feet in 1935. With ¢) exception of the increases in rates levied on suli and natural gas in 1936, severance tax proceeds a; by constitutional provision, after returning « third of the tax on sulfur and one-fifth of the tax o; other products to the parishes of origin, used for t purchase of free school textbooks and schoo! su; plies. The additional rates imposed in 1936 we: earmarked for state educational, charitable, and correctional institutions. A 1938 amendment to th constitution limits the rate of the tax on sulfur ¢ $1.03 per long ton.* Minnesota. The tax on the value of iron production and royalties was increased from 6 to | percent for the year 1937 and 8 percent thereafte: Fifty percent of the proceeds goes to the State Gen eral Fund; 40 percent to the Permanent Schoo! Fund; and 10 percent to the permanent fund of the University of Minnesota.‘ Montana. Fifty percent of the proceeds of a ¥% cent tax on natural gas, formerly credited to the State General Fund, was allotted for schools by a 1935 act, after March 1, 1937.° New Mexico. The severance tax on oil and gas was repealed with the adoption of the general sales tax which imposed taxes on gross receipts from ex- tracting natural resources. One-third of the sever- ance tax had gone to the Common School Fund.” Oklahoma. Ten percent of the proceeds of the tax on the gross production of oil, gas, and certain minerals was, by a 1935 act, allotted to the counties where severance was made for the maintenance of common schools. Formerly one-third of the proceeds was divided equally between schools and construc- tion of roads and bridges. Rates of the gross produc- 1 Arkansas. Acts, 1937. No. 158, p. 581-84; No. 163, p. 609-10. Approved March 1, 1937; No. 192, p. 683-86. Approved March 3, 1937; No. 202, p. 729-38. Approved March 8, 1937. 2 Idaho. Session Laws, Extra Session, 1935. Chap. 65, p. 182-84. Approved April 1, 1935. _ one er $ Louisiana. Session Laws, 1934. Act No. 53, p. 263-66. Approved July 12, 1934. {1 Session Laws, 2nd Extra Session, 199). Act No. 24, p. 47-56. Approved April 20, 1935. | Session Laws, 1936. Act No. 119, p. 381-83. Approved July 6, 1936. { Constituti n, Article 10, section 21, as amended by Session Laws, 1938. Act No. 395. Ratified by voters at general election, November 8, 1° 38 1 Constitution, Article 12, section 14, paragraph 4 (b), as amended by Session Laws, 1936. Act No. 89, p. 89-90. Ratified by voters, November 6, 1936. {| Session Laws, 1938. Act No. 395. Approved by popular vote, November 8, 1938. * Minnesota. Session Laws, 1st Extra Session, 1937. Chap. 84, p. 151-52; Chap. 85, p. 152-53. Approved July 23, 1937 5 Montana. Laws, 1935. Chap. 109, p. 194. Approved March 11, 1935; Chap. 175, p. 358-63. Approved March 14, 1935 ® New Mexico. Laws, Special Session, 1934. Chap. 7, p. 11-33. Approved April 25, 1934. [138 ] yn tax were raised in 1937 and penalties accrued orjor to July 1, 1931, were waived and released on raxes paid in full by July 1, 1935, later extended to tuly 1, 1937." Texas. One-eighth of 1 percent of the proceeds of the occupation tax on oil were required by a 1935 act to be set aside for meeting administrative ex- penses, before distributing 50 percent of the balance to the Public School Fund. The rate of this tax was raised from 2 to 234 percent and that on the produc- tion, storage, and importation of gas in Texas from 2to 3 percent of the market value, in 1936. The oc cupation tax on sulfur producers was raised from cents to $1.03 per long ton produced. Fifty-five cents of the total tax is earmarked for the Available School Fund. One-fourth of a new tax on the produc 75 7Oklahoma. Laws, 1935. Chap. 66, Article 4, p. 271-74 Approved February 8, 1935. {| Laws, Special Session, 1936. Chap. 66, Appro Chap. 353, p. 898-905. 1936. 74, p ® Texas. Session Laws, 1935. Chap. 495, p. 204-84. October 31, ® Alaska. Laws, 1935. Chap 1937. | 15 2-54 Approved to ] after Gen chool f the tion of carbon black was earmarked in 1936 for the State Available School Fund. An occupation tax, im posed on the production of ores at 5 cents per ton and marble and cinnabar at 10 cents per ton in 1935, also contributes one-fourth of its proceeds to the Available School Fund.$ of 1 percent to Alaska. A tax ranging from + percent on income derived from mining was im posed by a 1935 act and credited to the general fund of the territory. The graduation of rates was revised in 1937 to extend to 8 percent, instead of 4 percent, on the amount of income in excess of $1,000,000. Certain minerals are taxed under the 1937 act at 3 percent of the cash value of their gross production in excess of $10,000. Approved April 1, 1935; Chap. 66, Article Article 2, p. 56-57. Approved January 6, 1937 May 3 Laws, 3rd Called | Session ed Chap. 20, p. 57 IX. Corporation Taxes Changes in laws taxing corporations, not elsewhere reported in this bulletin, which di- rectly or indirectly influenced school revenues in twenty-two states and two territories, are briefly described in this section. Among the types of taxes affected by this legislation are capital stock taxes and taxes on the value of the corporation franchise measured by capital stock ; gross receipts and gross income taxes not included as parts of general sales taxes; public utility and insurance company taxes on what- ever basis levied; and corporate organization taxes and filing fees. In only five states did legislation relating to the above types of corporation taxes affect school revenues directly. One state provided for the allotment of specific sums for other state purposes from corporation franchise taxes ordi- narily earmarked for schools. Two states pro- vided for new or increased appropriations for educational purposes from corporation fran- chise taxes and taxes on the gross receipts of public utilities. One state permitted the expira- tion of provisions which shifted proceeds of public utilities taxes earmarked for schools to noneducational purposes, but another state per- manently placed monies from this source for- merly earmarked for schools in the State Gen- eral Fund. Laws passed in seventeen states and two territories had only an indirect effect on school revenues. Capital stock taxes going to general revenues were enacted or revised in eight of these states and one territory; taxes on insur- ance company premiums in four states ; taxes on gross receipts of utilities in nine states and one territory ; and other types of taxes in four states. Alabama. An act of 1935 imposed license taxes on express companies, varying according to the num- ber of miles operated within the state, in lieu of the 2'4 percent tax on gross receipts, if the former are larger. Proceeds of both types of taxes are placed in the general fund. Schools in Alabama re- ceive general fund appropriations.’ California. Public utilities doing an ip business and formerly taxed on the basis . receipts from operation were brought u: provisions of the corporation income tax 1937. A constitutional amendment revising on gross premiums of insurance companics respect to the deduction of certain reinsura: miums, was approved by the voters in Noy 1938. Proceeds of these taxes are paid into ¢| eral revenues of the state upon which th: have a prior claim.” Connecticut. Under a 1935 law, companies cept domestic insurance, transportation, and munication, and electric and power compani ject to a tax on their gross earnings) must minimum tax of $19, or 1 mill per dollar of th of capital stock and certain other intangible ; whichever sum is larger. Capital stock and « license taxes required of domestic insurance panies were abolished. The tax on the gross rec of steam and electric railroads was imposed at | graduated rates varying according to the rati net operating income to gross earnings. All cor; tion taxes go to the State General Fund from w! the schools receive appropriations.* Delaware. Payment of $419,529 out of co: tion franchise tax proceeds for higher and y tional education, in each of the fiscal years 193: 1937, was provided for by 1935 legislation. The « poration franchise tax, levied at graduated rates based on the number of shares of stock, had hithert been earmarked solely for the support of sc! In 1937 the governor was further authorized divert corporation franchise tax proceeds to the g eral fund for specified purposes; $220,000 was ¢! diverted for the year 1937-38.‘ Georgia. The basis of determining the propo tion of total capital stock of corporations taxable i Georgia was revised in 1935. Proceeds from this tay go to the general fynd of the state, thus indirect! contributing to school revenues.” Kentucky. Under a 1938 law, the tax on banking and financial corporations was reduced from 1)! to 1/20 of 1 percent of the aggregate price of secu! ties to be sold in the state. A 1936 law imposed a tax of 3 percent on the aggregate gross receipts of pul lic utilities. The State General Fund, from which a) propriations are made for schools, receives proceeds of these taxes.” 1 Alabama. Acts, 1935. No. 194, p. 331-33. Approved July 10, 1935. . * California. Statutes, Extra Session, 1936. Chap. 9, p. 15-16. Approved May 28, 1936. 1 Statutes, 1937. Chap 2324-49, Approved July 1, 1937. ] Statutes, Extra Session, 1938. Chap. 20, p. 101-106. Approved April 11, 1938; Senate stitutional Amendment 1, p. 160-61. ® Connecticut. General Statutes, Supplement, 1931, 1933, 1935. Chap. 66a, p. 159-64. Effective October 1, 1935; p. 164-77. Effective July 1, 1935; Chap. 70, p. 178-80. * Delaware. Laws, 1935. Chap. 15, p. 94-95. Approved March 20, 1935. 1 Laws, 1937. Chap. 24, p. 69-70. Approy 14, 1937. Chap ; 4 j 5 Georgia. Laws, 1935. No. 360, p. 25-33. Approved March 28, 1935. ® Kentucky. Acts, 1938. Chap. 172, p. 777-820. Approved March 11, 1938. {| Acts, Special Revenue Session, 17, p. 167-72. Approved May 12, 1936. { 140] Louisiana. One-fourth of the proceeds of the poration franchise tax levied on capital stock, rplus, and undivided profits, and any excess in rhe $400,000 earmarked for the Charity Hospital of New Orleans, was allotted to the Louisiana State niversity and Agricultural and Mechanical Col- ge by an act of 1935. A further amendment in 1938 ovided that the University and Agricultural and \fechanical College should receive one-fourth of the tire tax proceeds only after the payment of (a £8 (0 to the New Orleans Charity Hospital, (b ne-fourth of the entire tax proceeds to the state rd of education to meet obligations on PWA the vans, and (c) costs of administration of tax. [he university also receives any unused surplus in allocation to the state education. A iw of 1934 taxed public utilities at the rate of 2 ercent of their gross receipts. Proceeds were ear for the Tax Relief Fund from vhich transfers are made to state and parish school board of narked Property nds.’ Maryland. Shares of stock of foreign insurance companies were exempted from taxation by a 1937 ict which classified such companies as “ordinary isiness corporations.” The rate of foreign com- anies writing fidelity, surety, casualty, liability, ind compensation insurance, and on domestic fire ind marine companies was increased from 1 to 2 ercent of gross from Shares of stock of domestic life companies were also xempted from taxation and a tax of 1% net premiums was imposed. Taxes on insurance pre- premiums such business. percent of miums are paid into the general fund which is the sole source of state educational support.* Massachusetts. As the porate excess measure of the excise tax on manufac- turing and business corporations, a minimum of $5 yn each $1000 of the value of tangible property (in- cluding machinery) exempt from local taxation was provided in 1936. Provisions governing the disposi- tion of the proceeds of the manufacturing and busi- ness corporation excise tax, measured by net income and corporate excess, were revised in 1936, and again in 1937, by setting aside for the use of the commonwealth specific sums ($1,290,383.56 for 1936 and $1,801,258.38 for 1937 and each year thereafter) plus one-sixth of the balance after distributing other specific sums (totaling $8,037,136.36 for 1936 and $9,006,291.88 for 1937 and thereafter) to towns and cities. Formerly one-sixth of proceeds of these taxes an alternative to cor- was assigned to the commonwealth; five-sixths to towns and cities. Towns and cities are reimbursed for certain special school expenditures from the gen- eral revenues of the commonwealth.” ‘ Laws, 1934, Act No. 13, p. 27-31. Approved July 12, 1934 8 Maryland. Laws, 1937. Chap. 225, p. 418-20. Approved ® Massachusetts. Acts and Resolves, 1936. Chap tesolves, 1937. Chap. 108, p. 85-87. Approved March 16, 1937 10 Minnesota. Session Laws, Extra 1937. Chap. 3, 14-16. Approved July 2, 1937. 1 Montana. Laws, Extra Session, 1933-34. Chap 193-94. Approved March 11, 1935; Chap. 175, p 1935. { Laws, 1937. Chap. 83, p 2 New Hampshire. Laws, 1935. Chap. 58, p. 102-104; 18 New Jersey. Session Laws, 1935. Chap. 144, p. 357-61 $21-26. Approved June 26, 1936. { Session Laws, 1937. Chap hap. 245. Effective July 1938 Sé ssion, 51, p 358-63 7 Louisiana. Laws, Extra Session, 1935. Act No. 10, p. 44-54 May 18, 362, Sections 3, 5 6: p 5 Approved June 149-53. Approved March 14, 1935 193-94. Approved March 5 Chap. 32, p. Approved March 25. p. 44-61 1937 taxed shares of stock ot their Minnesota. .\cts of investment companies at one-third of true value and added taxes of 1 percent to those on gross earnings of freight line, sleeping car, express, and trust companies. All taxes on investment companies and one-sixth of the gross earnings taxes by a 1937 law, are placed in the General Revenue Fund which schools receive appropriations. Montana. A 1934 law levied taxes of 1 per on the gross receipts of telegraph companies an of 1 percent on the gross receipts trom sale 8S oT el trical energy. The 2 percent in 1935 and the latter to 1 percent in Only 5 percent of the proceeds of earmarked fot 1934 March 1, 1937, which the former rate was increas respe ctively f and after dat fund were to rec j vercent each. Fifty percent of the proceeds oi taxes was schools by laws until schools and general 1 ! 1'4 percent tax, levied on the gross incom phone companies in 1937, was earmarked State Public School General Fund New Hampshire. A 1935 act added bonds, notes or debentures guaranteed by the federal government to the list of deductions tax paid by banks and trust companies on savings allowed in computing tl deposits. The tax collected on deposits of nonresi dents of New Stat Literary Fund. A 4 percent tax was imposed in 1935 Hampshire is credited to the on gross premiums paid on insurance policies from companies not authorized to do business in the state Proceeds were credited to general revenues fron which the schools receive appropriations.’ New Jersey. Gross receipts taxes on hydroele tric companies levied in 1935 and franchise taxes levied on the capital stock, employed within the state, of foreign corporations by a 1936 law made payable to the general fund of the state from which appropriations have been made for public schools. A 1937 law exempted from the franchise tax those foreign corporations, 90 percent of whose total assets consists of intangible property located in New were Jersey and whose principal business consists in buy- ing, selling, and holding such intangible property. A 1938 law changed the basis of taxing domesti stock insurance companies, other than life, from gross premiums to intangible property. New York. Water, gas, electric light, heat, and power companies were required to pay a minimum gross earnings tax of $25, by a 1935 law. The same act differentiated, according to the type of business written, the former 1 percent rate imposed on the gross premiums of all insurance companies. Rates were further revised in 1937 and 1938. An addi Approved Ma 35. 7 Law 1938 t No 1937 Approved June 6-9; Chap. 5, 1 )-10 Approved January 1934. J Laws, Chap. 157, p. 3 94, p. 263-66 Approved Approved March 26, 1935. 9 Session Lai April 14, 19 1937; Chap 56-60 p é t Approved { 141! tional 2 percent tax on the gross earnings of public utilities was first imposed for one year, 1937-38 only, but was later extended to June 30, 1939. Acts passed in 1937 and 1938 provided for the adjustment of the capital stock tax in the case of companies converting shares of stock into shares with par value and shares without par value. Proceeds of all of the above cor- poration taxes are credited to the general fund of the state. The State General Fund is the principal source of state support of public schools. North Carolina. The capital stock tax on do- mestic and foreign corporations was increased in 1935 from $1.50 to $1.75 per $1000. An act of 1937 lowered the rate on the first $25,000 of gross receipts of gas companies and of total gross receipts of pri- vately owned water companies from 6 percent to 4 percent; changed the $7 tax on each mile of poles owned by telegraph companies to a graduated tax on gross receipts; revised the basis of allocating capital stock of foreign corporations for taxation within the state; and reduced the tax on express companies whose net income on average capital in- vested is 6 percent or less. The proceeds of these taxes are paid into the general fund of the state which is the source of state school support.” Oklahoma. Net proceeds from the 4 percent tax on gross earnings of freight car companies which had been placed in the Common School Fund were earmarked for the General Revenue Fund in 1937.” Pennsylvania. The allocation formula for deter- mining the amount of capital stock tax on foreign corporations payable in Pennsylvania was revised in 1935. Exemptions of manufacturing assets of cer- tain corporations were lifted and $18,000,000 of the proceeds for the year 1935 were allocated for relief purposes, with the remainder payable to the general fund of the state from which the schools receive financial aid. The above provisions were made per- manent by a 1937 act which has been declared un- constitutional subject to appeal to the state supreme court. By acts passed at the 1935 and 1937 regular sessions and the 1936 special session of the legis- lature the tax on the gross receipts of public utilities was raised from 8 to 14 mills and then to 20 mills with a provision that, after December 31, 1938, the ™ New York. Laws, 1935. Chap. 38, p. 412-24. Approved February 16, 1935. § Laws, 1937. Chap. 321, p. 1937; Chap. 530, p. 1197-1202. Approved May 22, 1937; Chap. 632, p. 1465-66. Approved May 26, | Approved May 7, 8-mill rate should be restored. Except for $2 used for unemployment relief purposes from to December 31, 1935, all monies collected un act were to be paid to the general fund of th, Capital stock taxes were increased as follow, title insurance and trust companies from 5 to in 1936 and then extended indefinitely by a 193 on banks and savings institutions from 4 to for a period of one year; and extended by act until December 31, 1938. The 4-mill tax capital stock of building and loan associations repealed by a 1937 act. The proceeds of these taxes are paid into the general fund of the state fro which the schools receive financial aid.” South Carolina. An act of 1935 revised the basis of allocating for state taxation the capital stock domestic corporations doing an interstate business Proceeds from this tax are paid into the gene: fund from which the schools receive legislatiy: propriations.* Tennessee. The capital stock of corporatio doing business in Tennessee was taxed at the rat of 15 cents on each $100 of value under a 1935 law Offsets were allowed for taxes paid on corporatio income, insurance gross premiums, and state ban\ ing fees. A 1937 amendment revised exemptions. Ne: proceeds were made payable to the State Gene: Fund. One-third of the revenue in the State Gene: Fund is appropriated for public schools.” Texas. Taxes were increased, in 1936, on th gross receipts of public utilities and on the gross premiums received by insurance companies othe: than life, fraternal benefit and mutual companies One-fourth of the revenues from these taxes wer earmarked for the State Available School Fund. I! rate of the gross receipts tax on telegraph companies was again reduced to the old rate in 1937. An add tional tax of 1 percent on the gross premium receipts of foreign mutual insurance companies was levied by a 1937 law.” Vermont. A 1935 act cut in half the additional tax on the assets of domestic life insurance com panies. This tax is paid to the State General Fund General fund appropriations supplement schoo! revenues from earmarked sources in Vermont.” 856 1 Laws, 1938. Chap. 67, p. $49. Approved March 3, 1938; Chap. 710, p. 1012. Approved July 1, 1938; Chap. 128, p. 646-48 Approved March 14, 1938; Chap. 685, p. 1853-55. Approved April 13, 1938. “ North Carolina. Laws, 1935. Chap. 371, p. 532-35. Approved May 9, 1935. § Public Laws, 1937. Chap. 127, p Approved May 13, 1937. 1% Oklahoma. Laws, 1937. Chap. 66, Article 8, p. 435-36. Approved May 1, 1937. 7 Pennsylvania. Laws, 1935. No. 86, p. 184-90; No. 89, p. 200-203. Approved May 16, 1935. | Laws, Extra Session, ! No. 29, p. 76-77; No. 28, p. 73-75. Approved July 28, 1936; No. 35, p. 87-90. Approved August 6, 1936. { Laws, No. 22, p. 62. Approved March 15, 1937; No. 55, p. 239-45; No. 56, p. 245-48; No. 59, p. 251-54. Approved April 8, | No. 60, p. 254-55. Approved April 6, 1937; No. 181, p. 704-13. Approved May 18, 1937; No. 520, p. 2657-59. Approved July 1, 1937. 8 South Carolina. Laws, 1935. No. 104, p. 135-37. Approved March 23, 1935. 1 Tennessee. Public Acts, Special Session, 1935. Chap. 5, p. 91-104. Effective July 29, 1935. | Public Acts, 1937. Chap. | p. 379-89. Approved March 4, 1937; Chap. 133, p. 587-99. Approved March 5, 1937; Chap. 295, p. 1151-55. Approved May 1937. {| Public Acts, 3rd Special Session, 1937. Chap. 7, p. 336. Approved November 18, 1937. 2° Texas. Session Laws, 3rd Called Session, 1936. Chap. 495, p. 2040-84. Effective October 31, 1936. Session Laws, Called Session, 1937. Chap. 36, p. 1918-19. Approved October 27, 1937; Chap. 33, p. 1913-14. Approved November 1, 1957 2 Vermont. Public Acts, 1935. Chap. 28, p. 34-35. Approved April 11, 1935. § Public Acts, Special Session, 1935-) Chap. 2, p. 421. Approved December 14, 1935. [142] Virginia. A law passed by the general assembly , 1936 continued as an annual levy the 3 percent rate imposed for the years 1934, 1935, and 1936 on the gross receipts of heat, water, light, and power companies. The tax imposed on the transmission of natural gas by means of pipe lines was revised to require the payment of $250 for each county thru which lines are run, instead of $120 for each mile of line as hitherto. Taxes on gross receipts of tele- phone, telegraph, and water transportation com- i 1 panies were reduced in 1936. Proceeds from all of these taxes go to the State General Fund.” Virginia. Tax Code. Chap. 16, Section 216-a, 228-29. Chap. 329, p. 534. Approved March 27, 1936. § Acts } Alaska. Laws, 1935. Chap. 58, p. 124-25. Approved Mar Appro * Hawaii. Session Laws, 1935. Series A-41, p. 55-65 icts of {sseml h j a Alaska. The« and power plants, tele] gross receipts tax on electric light yhone companies, and water works was raised by a law passed in 1935 from of 1 of 1 excess $1,500, vercent On gross receipts in and $2 $2, Territorial Fund percent to of $ Proceeds are 2,500, 500 respectiy ely pavable to the Hawaii. A tax on the capital stock of banks, levied at a rate sufhcient to produce $ dU,K an nually, replaced the existing bank tax measured by net income in 1935. Collections of this tax are desi nated as territorial realizations, from which schools derive support Assembly, ly, 1938. Chap X. License Taxes The term “‘license tax” is so variously used in state laws, court decisions, and writings on finance that it is difficult for the layman to define. Paid usually in a lump sum, there are those who contend that the so-called “license tax” is not a tax at all, but a fee paid to the government in return for the issuance of a permit to engage in a specific activity. How- ever, the higher the charge made by govern- ment for the issuance of such a permit or li- cense, the more that charge takes on the nature of a tax, especially when it is high enough to produce revenues over and above the cost of its administration and to be recognized by government as a means of raising funds for general purposes. Laws imposing beer, wine, or liquor license taxes, all or a part of which were allocated specifically for public educational support, were enacted or amended by nine states between January 1, 1934, and December 31, 1938. Two states diverted proceeds formerly earmarked for schools to funds for relief purposes. Liquor license taxes contributing indirectly to school support, thru proceeds placed in state general funds, were imposed or revised in eleven states and Puerto Rico. New or additional license taxes on tobacco dealers, earmarked for schools, were levied in two states; in four states new or revised tobacco license taxes were an indirect source of school revenue. Twelve states required the payment of- license taxes by persons engaged in other businesses and credited the proceeds to school funds or to state general funds, of which the schools receive a share. Arkansas. Seventy percent of beer excise and license taxes, formerly placed in the Common School Fund, was earmarked for agricultural extension and welfare purposes in 1937. In attempt to restore school revenues lost as a result of this action, the special session of 1937 allocated for the Common School Fund beverage tax permit fees formerly ear- marked for public welfare purposes.* California. The Alcoholic Beverage Cont of 1933 was replaced in 1935 by an act license taxes varying according to the type « ness of the licensee. These rates were again : (generally upward) in 1937. The State G Fund, from which transfers are made to stat funds, receives half of the proceeds. The | tion of motor vehicle license taxes going to {} State General Fund was reduced in 1937 fron to 20 percent.” Connecticut. License taxes based on capacity, paid by theaters and other places of amy. ment, were reduced in 1935. The 1935 law tax cigarette sales also required the payment of |i fees of $25 by wholesale dealers in cigarettes $1 by retail dealers, renewable annually at half of the above amounts. The operation of ci, rette vending machines was taxed at $1 per mac! by a 1937 law. Proceeds of all of these taxes placed in the State General Fund from which (Co necticut schools receive appropriations.” Florida. License taxes imposed by the Alcolh: Beverage Tax Act of 1935 varied from $15 $1250. Proceeds are disposed of as excise tax p ceeds. Occupational license taxes, payable to th general revenue fund of the state, were revis in 1937.‘ Georgia. The wine tax law of 1937 impo: license taxes of $250 on manufacturers, wholesaler: and jobbers and $15 on retailers. At the 1937-3 extra session the legislature provided for the pa ment of the following state liquor licenses: mar facturers and wholesalers, $1000; retailers, $100 constitutional provision all liquor taxes levied i: Georgia are used for the support of public schools Idaho. The beer tax law was amended in 193 by raising the license fee required of retailers fro $1 to $5 and by making an appropriation from ¢! general fund to take care of tax refunds. One-hal! of the proceeds of the beer tax is distributed county school funds. Permits to purchase liquor: were provided under the Liquor Control Act o! 1935 upon payment of 50 cents annually by in- dividuals; $3 annually by physicians and others requiring special permits. Twenty-five percent of all revenues collected from any source under this act are earmarked for the Public School Incom Fund.° 1 Arkansas. Acts, 1937. No. 274, p. 964-65. Approved March 18, 1937. * California. Initiative Measure No. 2. Submitted to the Vote of Electors, November 6, 1934. { Statutes, 1935. Chap p. 1123-53. Approved June 16, 1935. { Statutes, 1937. Chap. 758, p. 2126-78. Approved July 1, 1937; Chap. 6, p Approved January 29, 1937. 1 i ® Connecticut. General Statutes, Supplement, 1931, 1933, 1935. Chap. 76, p. 197-98; Chap. 75a, p. 189-97. | General Statut Supplement, January Session, 1937. Chap. 75a, p. 148-56. * Florida. Laws, 1935. Chap. 16774, p. 21-46. Approved May 27, 1935. § Laws, 1937. Chap. 18015, p. 608-15. Approved June 5, 1937; Chap. 18011, p. 595-606. Approved June 8, 1937. 5 Georgia. Laws, 1935. No. 360, p. 11-72. Approved March 28, 1935; No. 267, p. 73-81. Approved March 28, 1935. { / 1937. No. 336, p. 547-63. Approved March 29, 1937; No. 378, p. 851-61. Approved March 30, 1937. § Laws, Extra Ses 1937-38. No. 297, p. 103-24. Approved February 3, 1938; No. 404, p. 175-76. Approved February 16, 1938. * Idaho. Session Laws, Regular and Extra Sessions, 1935. Chap. 103, p. 222-52. Approved March 18, 1935; Chap 312-18. Approved March 10, 1935 12 [144] tron L N in Lice plac tail mu! Lice wel in Alcoholic payment amendment to the 1935 Indiana. A 1937 Control Act of taxes in verage required annual license varying amounts by wine, and liquor manufacturers and dealers License taxes paid by beer manufacturers and wholesalers are placed in the general fund of the state. Of each other license tax collected, one-third . distributed to local school units. distillers and License charges on Kentucky. retailers levied under the Alcoholic Beverage Con- trol Act of 1934 were reduced in 1938 and those equired of wholesalers were raised. Special license taxes were required for privileges of transporting distilled spirits and wine within the state and selling distilled spirits and wine on dining cars and in pri- vate clubs. All proceeds, formerly partly used for relief, under the 1938 act go to the State General Fund. A 1936 law revised the basis of graduation of rates imposed on race tracks. Motor vehicle oper- ators were first required to pay an operator’s license fee of $1 by a 1936 law. A 1938 act imposed new or increased license taxes on dealers in securities and real-estate brokers and salesmen in first- and second-class cities. All taxes on race tracks, real- estate and securities brokers, and 80 percent of motor vehicle operators’ fees go to the State General Fund from which appropriations are made to the schools.* Louisiana. Proceeds of liquor excise and license taxes levied under a 1934 law, in excess of adminis- trative expenses up to $75,000, go to the State Prop- erty Tax Relief Fund in which schools share.” Mississippi. License taxes imposed on dealers in tobacco products, under the Business Privilege License Tax Law, were repealed in 1935 and re- placed by new wholesalers’ fees of $50-$100 and re- tailers’ fees of $5-$10 according to the size of the which the business is located. municipality in Licenses imposed on other occupations by this law were revised in 1936 and 1938. Revenues are placed in the State General Fund.” Missouri. New annual license taxes of $100 for the on-premises retail sale of intoxicating liquor, and $15 for the sale of packaged 3.2 to 5 percent malt beverages by grocers and other retail mer- chants were required by a 1935 law. The same law 7 Indiana. Laws, 1935. Chap. 226, p March 11, 1937. 5 Kentucky. Acts, 1934. Chap. 145, p. 613-64. Approved March 17, 1934 Approved by the Governor. § Acts, 1938 27.3 27-32. Approved April 24, 1936; Chap. 13, p. 135-51 * Louisiana. Acts, 1934. No. 15, p. 67-91 August 20, 1934. ” Mississippi. Laws, Extra Session, 1935 134-35. Approved March 24, 1936; Chap. 153, p. 135 Chap. 20, p p. 117-33. Approved April 8, 1938; Chap. 123, p. 149-51 1938. | Laws, Ist Sp. Sess., 1938. H. B Missouri. Laws, 1935. S. B May 6, 1935. § Laws, 1937. Committee Substitute for House April 10, 1937, Montana. Laws, 1937. Chap. 84, p 18 Nebraska. Laws, Special Session, 1935. Chap. 19, p 4 New Jersey. Session Laws, 1934. Chap. 85, p. 218-56. Approved April 13, 1934 1934. ¥ Session Laws, 1935. Chap. 257, p. 787-826. Approved June 8, f Session Laws, 1936. Chap. 125, p. 310-11. Approved May 30, 1936. { Session Laws, 1937 ' New Mexico. Laws, 1935. Chap. 93, p. 202-203. Approved February 25, 1935 347-86. Approved March 15, 1937. 1935. § Laws, 1937. Chap. 130, p 1056-1197. Approved March 11 ? March 7, 1938; Chap. 32, p. 224-40. Approved March 10, 1938; Chap Approved July 12, 1934. 9 Acts, First Ex §2-133 Approved March 26, 1936 1936; Chap. 154, p. 136-49. Approved March 26, 1936. | Laws, 1938. Chap. 158, p. 174 Approved March 11 103. Effective August 19, 1938. H. B. 217 30, p. 267-85. Approved May 9, 1935; Committee Substitute for S. B. 54, p. 395-402 Bills Nos. 128, 129, 130, 131, 132, 2 132-33. reduced the license fees req uired of dealers in malt liquors and beer manufacturers from $50 to $35 and from $500 to $250, tax on liquor manufacturers were differentiated a respectively. In 1937 rates of th cording to the tvpe and alcoholic content of liquors manutactured. Fees imposed on wholesalers and for i the privilege of selling to wholesalers were cut half Montana. Retail sales of liquor by the drink other than “state stores’’ were permitted by a 193 law. License fees charged for the privilege of mak ing such sales were fixed at amounts, varying ac cording to the size of the town or city in which the business is located, and divided evenly between the state school and public welfare funds. Nebraska. license taxes of $1000 on manufacturers of distilled A law passed in 1935 imposed state liquors; $500 on wine manufacturers; $100 to $800 on brewers based on daily capacity; wholesalers of alcoholic liquors, $500; beer wholesalers, $250; and retailers $5 to $250. By constitutional provision all state license fees are credited to the State School Fund." New Jersey. Plenary brewery and rectifiers’ and blenders’ license taxes imposed under the alco holic beverage control act were raised in 1934 and lowered Ad supple limited distillery license fees were ditional classes of licenses (limited brewery, mentary limited distillery, winery wholesale, state beverage distributor, plenary and limited export warehouse) were added by ‘ wholesale, and public 1934, 1935, 1936, and 1937 acts. New Mexico. A 1935 amendment to the moto: vehicles license tax law decreased the allowance for expenses from 10 to 6 percent, and after paying 15 percent each to county treasurers and the State General Fund, and 25 percent to county and district school funds, placed any balance in the State School Equalization Fund. The Alcoholic Act of 1935 imposed ten classes of license fees at new Beverage varying rates and credited the net proceeds in excess of $250,000 for relief to the State Public Schoo! Equalization Fund. By a 1937 amendment all monies were used for other than school purposes 1935. © La Chap. 197, p Special Revenue Session, 1936. Chap. | Chap. 2, p. 48-13 Appro Approved March 11, 1938 Session, 1934. No. 3, p. 7-10, Appre " Acts 299 > 172, p. 777-820 Approved December 4, 1935. { Laws, 1936. Chap. 152 Chap. 156, p. 151-63. Approved March Approved March 26, 1938; Chap. 1 1938; Chap. 124, p. 151. Approved March Effective August 20, 1938 Approve and 133, p. 527-34. Appro 194-207. Approved March 5, 1937 Approved November 26, 1935 Chap. 242, p. 687-90. Approved June 1006-1009; Approved June 29, 1935 p. 271-75. Approved June 1, 1937 Chap. 112, p. 253-78. Approved February 25 1935; Chap. 316, p [ 145 ] New York. The Alcoholic Beverage Control Act of 1934 increased the license fees required for the privilege of selling beer at retail, and imposed new fees on wine and distilled liquor manufacturers, wholesalers, and retailers.” North Carolina. A 1935 law permitted the manufacture of 5 instead of 3.2 ;-ercent beer with no change in the $500 license fee charged. A license fee of $1000 on dealers in scrap tobacco, levied in 1935 for the “benefit of the state,” was continued by the 1937 legislature. The general revenue act of 1937 included the new beverage control act which im- posed the license fees on manufacturers, bottlers, wholesalers, and various classes of retailers of alco- holic liquors. The proceeds are paid into the general fund, which is the main source of state school sup- port.” Oklahoma. License taxes were levied in 1935 on wholesalers and retailers of cigarettes at $25 and $10 per annum, for each place of business. In 1937 manufacturers were included under the $25 tax, and a tax of $1000 per annum was levied upon distribu- ting agents. Each cigarette vending machine was licensed as a separate place of business. A 1937 law earmarked the net proceeds from oleomargarine license taxes formerly credited to the General Reve- nue Fund for school support. The annual tax on retail dealers in nonintoxicating beverages was re- duced in 1937. The proceeds from this tax are ear- marked for distribution to school districts.” Pennsylvania. Money collected from public serv- ice license taxes. under the Alcoholic Beverage Con- trol Act was shifted, in 1935, from the general fund, from which schools receive appropriations, to the State Stores Fund. Taxes of $1 on cigarette whole- salers and retailers and on proprietors of places of amusements were levied in 1935, with proceeds up to June 1, 1936, earmarked for relief, and thereafter for the State General Fund. A 1937 law continued the tax on cigarette dealers to May 31, 1939.” Rhode Island. The Alcoholic Beverage Tax Law of 1934 increased license fees and placed the proceeds in the state treasury. License taxes were placed by a 1934 act on races where pari-mutuel wagering is not involved.” South Carolina. The Alcoholic Beverage 4 Act of 1935 levied license taxes on manufacty,, wholesalers, and retailers. Until July 1, 193, percent of beer and wine license taxes went ¢,, state public school account. After that time the oa)... share of the proceeds was placed in the State G., eral Fund. Sixty percent of the money collected {5,, the alcoholic beverage license taxes in unineor: rated places goes to the state public school ac as ' Acts of 1934 and 1935 imposed license taxes on yy, ing picture theaters based on the size of the city seating capacity, and a $10 tax on operators of , lic bathing places, proceeds of which are paid | the State General Fund. The $10 tax was raised. $15 in 1938." Tennessee. New annual license fees of $5 5 $2 were required of tobacco wholesalers and reta ers, respectively, for each place of business. }, 1937 act. All net revenues collected from tola, license taxes are earmarked for the support of py}! education.” Texas. License fees imposed on proprietors coin-operated vending machines were doubled 1935. The $1 fee on penny machines was eliminated Rates were again raised and further differentiated in 1937. The State Available School Fund receiyes one-fourth of the fees collected on vending machines The Alcoholic Beverage Control Act of, 1935 whic! imposed license taxes on beer, wine, and liquo; manufacturers and dealers placed one-fourth of th: proceeds in the Available School Fund, but all rev nues from liquor tax permits were earmarked {, old age assistance in 1936. A revised cigarette tax law enacted in 1935 required fees of cigarette dis tributors, wholesale and retail dealers, and ear marked 97% percent of the proceeds for the Avail able School Fund until September 1, 1935, afte: which date the Available School Fund would receiv: two-thirds. Cigarette machines were exempted i 1935 from the license tax on coin-operated vending machines, and made subject to the retail dealer's license fee, under the cigarette tax law.” Vermont. Annual license taxes were imposed in 1934 for the privilege of manufacturing and se! ing malt and vinous and spirituous beverages, the proceeds to go to the state. License taxes on bottlers 16 New York. Laws, 1934. Chap. 478, p. 1074-1130. Approved July 1, 1934. 17 North Carolina. Laws, 1935. Chap. 315, p. 376. Approved May 7, 1935; Chap. 360, p. 421-22. Approved May 9, | { Laws, 1937. Chap. 127, Article VI, p. 311-22. Approved March 13, 1937; Chap. 249, p. 466-73. Approved March 20 Chap. 414, p. 860-61. Approved March 23, 1937. 18 Oklahoma. Laws, 1935. Chap. 15, Article 3, p. 15-17. Approved April 30, 1935; Chap. 66, Article 8, p. 315-20. Appr: March 20, 1935. 1 Laws, 1937. Chap. 66, Article 7, p. 426-34. Approved May 3, 1937. Chap. 24, Article 27, p. 89-90. Approved April 20, 1937; Chap. 16, p. 15-19. Approved April 30, 1937. # Pennsylvania. Laws, 1935. No. 399, p. 1246-83. Approved July 18, 1935; No. 155, p. 341-48. Approved June 14, | No. 183, p. 429-39. Approved June 22, 1935. { Laws, 1937. No. 53, p. 220-27. Approved April 8, 1937. ® Rhode Island. Laws, 1934. Chap. 2088, p. 39-63. Approved May 7, 1934; Chap. 2086, p. 22-36. Approved April 27, 1 { Laws, 1937. Chap. 2496, p. 27-45. Approved April 17, 1937; Chap. 2539, p. 231-33. Approved April 27, 1937. § Laws, 1 Chap. 2611, p. 601-20. Approved April 23, 1938. * South Carolina. Laws, 1935. No. $99, p. 1211-14. Approved June 21, 1935; No. 329, p. 471. Approved May 18, | No. 232, p. 325-41. Approved May 14, 1935. § Laws, 1936. No. 794, p. 1477. Approved April 30, 1936. § Laws, 1935. No. 207 282. Approved April 26, 1935. { Laws, 1934. No. 934 (1178), p. 1577-80. Approved April 14, 1934. 9 Laws, 1938. No. 705 (7¢ p. 1569. Approved February 26, 1938; No. 887 (1188), p. 1799-1801. Approved May 6, 1938. * Tennessee. Public Acts, 1937. Chap. 133, p. 587-99. Approved March 5, 1937. *3 Texas. Session Laws, 1935. Chap. 354, p. 905-908. Approved May 30, 1935; Chap. 241, p. 575-603. Approved May 17 i 1935. { Session Laws, 2nd Called Session, 1935. Chap. 467, p. 1795-1842. Approved November 15, 1935. % Session Laws, 3rd ( Session, 1936. Chap. 495, p. 2040-84. Approved October 31, 1936. § Session Laws, 1937. Chap. 14, p. 16. Approved March 1 [ 146 ] Softy Maid ins I aised + tors bled inated Ntiated ECElVeEs chines whicl liquor of the | reve ed for cholesale dealers, and hotels and restaurants sell + spirituous liquors were raised in 1935 and a new im pie on manufacturers and rectifiers was imposed. rhe $25 fee required for the privilege of selling oleomargarine which formerly covered all places of business was made to apply individually to each store of a chain, by a 1935 act. Small loan companies were required to pay a license privilege tax of $100 by a 1937 act.” Virginia. The Alcoholic Beverage Control Act of 1934 imposed license fees on the manufacture of alcoholic liquors and on wholesale and retail dealers in wine and beer, with the proceeds in excess of a $1,000,000 reserve fund credited (1) to the State General Fund, and (2) for apportionment to cities and counties. New retail off-premises wire and beer licenses and on- and off-premises licenses to hotels, clubs, restaurants, boats, and dining cars were added by 1936 laws which provided for appropria tions of $950,000 for relief, and $580,000 for a governor’s emergency fund in the fiscal year 1937 38. These 1936 provisions were eliminated by a 1938 act. Business and occupation taxes, proceeds of which are credited to the State General Fund, were slightly revised in 1938. West Virginia. The alcoholic liquor license taxes levied by a 1935 act range from $10 to $500. Proceeds from these license taxes are paid into the general revenue fund of the state and thus benefit 1935. | Public Acts, 1937. Chap. 30, p { Public Acts, Special Session, 1935-36. Chap. 13, p. 436 % Virginia. Acts of Assembly, 1934. Chap. 94, p. 100-36 374-77. Approved March 23, 1936. § Acts of Assembly, 1938. Chap Passed February 22, 1935; % West Virginia. Laws, 1935. Chap. 4, p. 9-36 Chap. 71, p. 303-309. Passed March 8, 1935 ** Wisconsin. Session Laws, 1935. Chap. 217, p. 333-38 Approved July 1, 1937. % Puerto Rico. Session Laws (2d Special Session), 1935 Approved July 15, 1935; Chap. 38, p. 438-86. Effective July May 15, 1936. § Session Laws (3d Special Session), 1936. Act Act No. 155, p. 414. Approved May 15, 1937 Approved July 1 Chap. 1, p. 2-44 schools indirectly. A former tax of 3 percent of the total contribution to pari-mutuel pools, which was earmarked for schools, was changed in 1935 to flat fees of $250 or $500 per day, depending on the length of the track, payable to the State General Fund Wisconsin. License taxes imposed under the Alcoholic Beverage Tax Law were revised to pro- vide fees varying according to the occupation of the whole in place of the flat fee formerly licensee—whether manufacturer, rectifier, saler, retailer, et required. A 1937 law repealed the requirement for a special $500 tax on foreign corporations selling liquor in the state. Revenues go to the State General Fund, thus contributing indirectly to school support Puerto Rico. Alcoholic beverage license taxes required by acts of 1935 were revised upward in 1936 and new first-, second-, and third-class licenses were provided for (1) bottlers and canners, and (2) public bonded warehouses. Proceeds are disposed of as are those of excise taxes. A 1935 law earmarked 30 percent of license fees collected by the Insular Racing Commission for use as follows: 70 percent for the maintenance of school lunchrooms; 30 per cent for charitable institutions. Proceeds of an an nual $60 tax levied on every loudspeaker or ampli fier, used for broadcasting any kind of industria! o1 commercial propaganda, go to the general revenues of the Insula: in 1937. Treasury, according to a law passed % Vermont. Public Acts, 1935. Chap. 191, p. 194-95. Approved February 12, 1935; Chap. 196, p. 199 27-28. Approved February 17, 1937 Approved December 14, 1935 Approved March 7, 1934. § Acts of Assembly, 1936 Chap. 184, p. 206-15. Appr Chap Approved March Passed February 232, p. 364-71 251, p. 388 39-50 Chap Chap. 6, p 1935. 9 Session Law Chap Effective July 1, 1935; Chap 1935. § Session Laws, 1936. Act No. 115, p 6, p. 44-113. Approved June 30, 1936. © Sessi XI. Property Taxes Most of the changes in state property tax laws, which took place during the years 1934 thru 1938, were aimed at the relief of the tax- payer. The collapse of property values under the weight of the depression made property tax collections difficult and resulted in a large vol- ume of tax delinquency. Property taxes con- tributed less than 7 percent of total state tax revenues in 1938,' as compared with around 20 percent in 1929,* but in spite of the decline in collections, they were still the main fiscal reliance of local governments. Property taxes vary in scope among the states. In some states the tax is entirely, or almost entirely, a real-estate tax. In others, tangible personal property and some forms of intangible property are taxed. While general practice has been to tax all forms of property at the same rate, six states in 1937 had adopted comprehensive schemes of classifying property and taxing the separate classes at differentiated rates. General property tax rates vary widely from state to state, as do the assessment valu- ations upon which they are based. Where as- sessed values represent a relatively small pro- portion of true values, it is to be expected that tax rates would be high, and in any compari- son of tax rates, this fact must be taken into account. Efforts directed, in the years 1934-38, to- ward the relief of the taxpayer, in states where state property taxes are a direct or indirect source of school support, took the form of tax exemptions allowed on the value of homesteads (seven states); increased personal property exemptions (five states) ; increased or extended exemptions on other types of property (eleven states). State property taxes were reduced, suspended, or abandoned by four states, and the reduction of state and local levies was pro- vided for thru the substitution of revenues from other sources placed in state property tax relief funds in three states. Five states placed new or revised limits on the maximum prop- erty tax rates that could be levied. Seven states 1 Tax Policy League. op. cit., p. vi, 10. ® National Industriai Conference Board. Cost of Government p. 112. 1937; No. 107, p. 113. Approved February 20, 1937. in the United States, 8 Alabama. Acts, 1935. No. 194, p. 256-574. Approved July 10, 1935. Nos. 525, 526. p 1935. 9 Acts, Extra Session, 1936-37. No. 81, p. 91-92. Approved February 3, and one territory passed measures permit; one or more of the following: (1) extensio, the period for payment of delinquent (2) payment of taxes in installments: waiver of interest and penalties on delinguep; taxes for specified periods; (4) liberalize) terms under which land sold for taxes might }y redeemed. Seven states and one territory levied creased or additional property tax rates—in thy case of three states, for education, specifical! In two states the increased rates applied intangibles only; and in the territory to pe: sonal property only. Alabama. The 1936-37 extra session of the leg lature created a “Property Tax Relief Fund” {, the purpose of replacing losses in receipts from th: state school tax, the soldiers’ relief tax, and +| state levy for general purposes due to homestead exemptions. Any remaining surplus in this fund was to be used in reducing the state ad valorem |e) Sources of the Property Tax Relief Fund are any excess above $750,000 in the general fund aft taking care of all appropriations; (2) any sury in the Educational Trust Fund; (3) earmarked sales tax proceeds. Homesteads were exempted fro: ad valorem taxation, up to $2000 of their valu State property tax exemptions had been extended by legislation passed in 1935. Acts of 1935 and 193 liberalized the provisions for the redemption of |and sold for taxes.® Arizona. A 1935 law continued to apply to taxes delinquent in 1934, provisions permitting the pay- ment of delinquent taxes in twenty semiannual! i: stallments. The state property tax rate was raised in 1935 to provide for an increase in the appropria tion, for common and high-school education, fro: $20 to $25 per pupil in average daily attendance Arkansas. Voters in 1934 approved a measur prohibiting the levy of new or increased taxes except by popular vote or by a three-fourths’ vot of both houses of the legislature. A constitutiona! amendment permitting homestead exemptions, up to $2500 of value, from state taxation was approved by the voters in 1936. A 1937 law exempted home steads up to $1000 of value. State revenues ea! marked for the replacement of losses due to home stead exemptions were credited to a Property Jax 1929-1930. New York: the Board 1112-13. Approved September 1937; No. 127, p. 142-43. Approved February * Arizona. Laws, 1935. Chap. 30, p. 111-16. Approved March 4, 1935. § Revised Code, Supplement, 1936. Article 10, S« 1088 (H. B. 100), p. 1087. Approved March 28, 1935. { 148 ] rom the nd _ the nestead nd w larked | trom 1 1937 f land Reduction Fund for distribution to state funds other than the Common School Fund in the proportion in which each shared in the state property levy.” Colorado. Laws passed in 1937 increased the ynnual state levies for the University of Colorado and other state institutions of higher learning.’ Florida. Homesteads were exempted from prop erty taxes except levies for the retirement of in- debtedness, up to a value of $5000. Motion picture studios and plants were granted an exemption for 15 years.” Georgia. A 1937 law exempted property of housing authorities from city, county, and taxation. Property was classified for tax purposes by legislation passed in 1937 and special rates were levied on intangible property. Another 1937 law exempted clothing and household and kitchen furni- ture used within the home, up to $300 in value, from all state, county, municipal, and school taxes.* Indiana. A 1935 continued for vears the suspension of a state tax of 2 cents per $100 of the valuation formerly levied to finance building and improvements at state educational in- state law two more stitutions.” Kentucky. The real-estate tax was reduced in 1934 from 30 cents to 5 cents per $100. Proceeds were credited to the State General Fund. Formerly 69 percent of state property tax revenues were ear- marked for common and amounts for institutions of higher education. A 1936 law which would have abolished the state tax on real estate was declared unconstitutional.” schools other specific Louisiana. Laws passed in 193+ created a Prop- erty Tax Relief Fund from earmarked special taxes to be used in reimbursing state aad local funds, including parish school funds, for losses in property tax revenues due to homestead exemptions and to increase gradually the State School Fund up to $10,000,000. Homesteads up to a value of $2000 and 160 acres were exempted from state, parish, and special district, but not municipal property levies. A 1936 law exempted, as instrumentalities issued for * Arkansas. Constitutional Amendment, No. 25, 1936; No 866-72 ® Colorado. Session Laws, 1937. Chap 7 Florida. Constitution. Article X, Section * Georgia. Laws, 1937. No. 411, p. 210-30 Approved December 14, 1937: No. 36, p. 145-50 * Indiana, Laws, 1935. Chap. 190, p. 928-29 ” Kentucky. Acts, 1934. Chap. 25, p. 70-109. Approved * Acts, 1936, Chap. 98, p. 315-17. Approved February 25 11 Louisiana. Session Laws, 1934. Act No. 54, p. 266-70 Constitution, Article 10, Section 4 general July 9, 1936. 2 Minnesota. Session Laws, 1933-34 p. 901-903. Approved April 17, 1934 Approved April 29, 1935. 9 Session Laws, 1937 8 Mississippi. Laws, 1934. Chap. 191, p. 439-95 Approved November 20, 1938; Chap. 28, p. 147 " Laws, 1936. Chap. 184, p. 342-54. Approved March Chap. 248, p. 561. Approved March 25, 1938 4 Nebraska. Laws, 1935. Chap. 159, p. 582-83. Approved 1935; Chap. 41, p. 158-60. Approved February 27, 1935. § Laws Chap. 1 1935. § 77, p. 240-42 7. 1 Laws, 1936. 9 Passed at $41, p. 897-98 Chap Chap § Session Laws, 1935 Chap. 86, p 26. 1936 167, p. 635-37. Approved March 19, 1937; Chap. 93, p. 325-26 247 Approved March 11, 1937; No. 243, p. 872-75. Approved March 1 s I Approved March Approved December 16, 1' Approved March 11, 1935 March 17, 1934 ay p 1 Act No. 78 election November 6, 193+ S¢ 153-54. Approved July Approved March 19, 1934. § La Approved December { Laws, 1938 March 6, 19 1937 | Approved May 18, 1937 Approved a public purpose, the bonds, notes, and other evi dences of indebtedness of housing authorities from state and local taxation. Minnesota. All household goods, and certain types of farm machinery, and other personal prop erty up to $25, were exempted from taxation by laws of 1934 and 1935. A 1936 act increased this exemp- tion to $100. In 1937 the first $4000 of unplatted real estate tor empted from state property taxes, except those levied Ihe limit placed on the state property tax rate that may be levied for teacher retirement outside of cities of used purposes of a homestead was ex- for servicing previously incurred indebtedness the first class was changed in 1934 from 15/100 of a mill to a rate sufficient to produce $250,000 Mississippi. The value of homesteads up to $1000 and 40 acres of homestead property owned by residents of the state were exempted from state ad valorem levies by 1934 legislation. This exemp tion was increased to $2500 and 160 acres in 1935, and to $5000 in 1938. Laws passed in 1935 and 1938 extended the list of personal property exemptions. The 1935 provision exempting property of electri power cooperatives was repealed in 1936, but re enacted in 1938 law required combined re Nebraska. A 1935 turns of tangible and intangible property for taxa their separate continued provisions for \nother 1935 act permitted the payment tion but assessment. without interest and penalties of real and personal property taxes, delinquent for more than one year prior to September 1, 1935, in ten and five annual installments, respectively. Postponements of real and tax sale foreclosures until after 1935 estate mortgage March 1 of and 1937 laws. Acts of 1937 waived penalties and interest on delinquent taxes until December 31, 1938, the current vear were effected by and exempted property of housing authorities from taxation." amendment, ratified local Nevada. A constitutional in 1936, all and to $5 per $100 of assessed valuation. The rate of the annual levy was increased from 60 to 68 cents on the limited state property taxes March 13, 1937 p. 886-96. Approved 2, p. 575-77. Approved June 4, 1937 3. 123. Approved May 20, 30, 1937. § Laws, Extra 7: No. 68, p. 156-70 1935 Session, 1937-38. N Approved Decer 665-66. Approved Mar plint Coal Co., 268 Ky. 11, 103 S. W Approved July 12, 1934. Amends 1936. Act No. 275 fartin % { ssion Laws, April 1 1934; Chap. 442, p. 899-900 301, p. 543-44, Approved April 24, 1935 23, 1937 s, Extra Session, 1935. Chap. 23, p Chap. 22. p. 136-43 Approved November 14 Chap. 128, p. 157-59. Approved March Chap 85 7, 1935 Cha 15, p. 93-126. Approved No Approved February 16, | Chap. 4 ». 183-87 [ 149 | $100 in 1935. Levies for educational purposes re- mained unchanged save for a decrease from '4 cent to 13/100 cent in the levy for the state university. The total state levy was again increased from 68 cents to 73 cents in 1937, and that for the university from 13/100 to 35/100 of a cent. The teacher’s re- tirement fund levy was increased from ™% cent to 1% cents.” New Hampshire. Personal property can be taxed in the organized place where the owner re- sides only when such property has not already been taxed with real estate in unorganized territory, according to a 1935 law. The real-estate tax levied in unorganized parts of the state is earmarked for public school purposes. Laws of 1935 and 1937 added to the list of property tax exemptions.” New Jersey. By a 1934 act railroads were di- rected to remit taxes which were in litigation and were guaranteed refunds for tax payments proved to be excessive. This facilitated the payment to school districts of $1,500,000 from the state railroad tax, distribution of which had been delayed. The rate of the state school tax was increased in 1938 from 234 to 29/10 mills. Monies in banking insti- tutions were exempted from personal property taxes by another 1938 law. The basis of taxing domestic stock insurance companies, other than life, was changed from gross premiums to the value of in- tangible property.” New Mexico. A 1937 act provided for the redemption of land deeded to the state by the pay- ment of delinquent taxes on or before June 30, 1937, without interest and penalties or with interest in installments extended over a period ending Septem- ber 1, 1940." Ohio. The aggregate tax rate that may be levied in any taxing unit was limited in 1934 to 10 mills for each $1 of valuation. The tax on productive investments under the intangible property tax law, which contributes directly to school support, was increased.” Oregon. A proposed constitutional amendment which would have limited property tax rates to 20 mills for all purposes except existing debt charges was rejected at the November 1934 election. The 15 Nevada. Laws, 1935. Senate Joint Resolution, No. 17. property tax levy for the use of the state educatio, institutions was lowered for the biennium 193; from 2.04 to 2 mills. The 2.04-mill rate was restor., for 1938 with the guarantee that the rate ine|), led in the annual state levy thereafter should not be |e. than that so included for 1930.” Pennsylvania. An additional 1-mill tax, Jey). on certain classes of intangible personal proper; and vehicles in 1935, was increased to 4 mills }, acts of 1936 and 1937. The rate on scrip, bonds, and other evidences of indebtedness was fixed at & mj)\, for the years 1938 and 1939, and at 4 mills for 194 Proceeds were to be used for unemployment relic; thru 1936 and thereafter paid into the State Genera Fund, the source of state appropriations for schools An act of 1937 exempted the property of housing authorities from all except school taxes, and in decision of the state supreme court such property js held to be exempt from school taxes also.” Rhode Island. A 1935 act repealed the property tax of 4% cents on each dollar of amount assessed.” South Carolina. Acts of 1935 added to th list of exemptions from the state property tax and provided that securities which banks are allowed to deduct from returns of taxable property must hay: been held in good faith for at least six months. In 1938 the 2%4-mill tax levied upon all taxable prop erty within the state was repealed, and all count treasurers were ordered to keep open the tax books for the year 1937 until the 30th of April without further increase in penalties on unpaid taxes.” Tennessee. Suits for the collection of state county, or special ad valorem taxes were postponed and the period allowed for the redemption of prop erty sold for taxes was extended by a 1935 act Measures passed in 1935 and 1937 waived interest and penalties for specified periods on taxes due for the years 1934 and 1935. A 1937 act exempted prop- erty of housing authorities from all state, county, and special taxation.” Texas. Exemptions from property taxation al- lowed under laws enacted in 1937 include: (1 property used exclusively in connection with the threefold religious, educational, and physical de- Ratified at general election, November 3, 1936. { Laws, / Chap. 189, p. 398-99. Approved April 2, 1935. { Laws, 1937. Chap. 215, p. 530-31. Approved March 30, 1937. 16 New Hampshire. Laws, 1935. Chap. 33, p. 60. Approved April 2, 1935; Chap. 71, p. 116. Approved May 8, 1935. { Lau 1937. Chap. 175, p. 366. Approved July 28, 1937. 17 New Jersey. Session Laws, 1934. Chap. 5, p. 41. Approved January 25, 1934. { Session Laws, 1938. Chap. 9. Approved February 25, 1938; Chap. 245, p. 554-55. Approved May 25, 1938. Chap. 390. Approved July 16, 1938. 18 New Mexico. Laws, 1937. Chap. 127, p. 341-44. Approved March 15, 1937. 1 Ohio. Laws, 1934. H. B. 9, p. 412-22. Approved June 29, 1934; S. B. 49, p. 341. Approved December 13, 1934; S. B p. 279-80. Approved December 7, 1934. \> 2 Oregon. Bulletin of the National Tax Association 20:34; November 1934. { Laws, 1935, Chap. 357, p. 565. Approved March 18, 1935. § Laws, 1937. Chap. 182, p. 239. Approved March 2, 1937, 21 Pennsylvania. Public Laws, 1935. No. 182, p. 414-29. Approved June 22, 1935. | Public Laws, Special Session, 1936. No p. 51-66. Approved July 17, 1936. 1 Public Laws, 1937. No. 171, p. 633-52. Approved May 18, 1937; No. 265, p. 955-72. Approved May 28, 1937. Dorman v. Philadelphia Housing Authority, 331 Pa., 209, 200 Atlantic 384. 2 Rhode Island. Laws, 1935. Chap. 2252, p. 154. Approved May 31, 1935. , 23 South Carolina. Laws, 1935. No. 98, p. 129. Approved March 22, 1935; No. 248, p. 358-59. Approved May 11, ! { Laws, 1938. No. 1340 (981), p. 2907-2908. Approved March 30, 1938; No. 972 (1160), p. approval, May 3, 1938. 1939-2018. Returned without 2 Tennessee. Session Laws, 1935. Senate Joint Resolution, No. 20. Effective February 25, 1935. {| Session Laws, 1937 Chap 101, p. 390-96. Approved October 1, 1937; Chap. 214, p. 843-45. Approved May 21, 1937. [ 150] ropert nills | ids, an 5S mil] yr 194 t relis sCnera schools xX and ved to have hs. In prop ounty books ithout State oned Trop act erest “ for rop- \ 8 { velopment of youth; (2) property of fraternal benefit societies; (3) real property of a authority ; and (4) stocks of nurseries. A constitu- tional amendment approved by the voters in 1937 prohibited the assessment of property at a greate: than fair cash market value and provided for dis counts on taxes paid when due.” housing Utah. A constitutional amendment, ratified by the voters at the November 1936 election, authorized an increase in exemption from $250 to $2000 of the value of homesteads and from $100 to $300 of the value of personal property. The period for the re- demption of property sold for taxes was extended by a 1935 act.” Washington. The maximum levy was reduced from 5 mills for all educational purposes to 2 mills for higher education only, in 1934. The previously enacted 40-mill limitation law was continued for two years. The voters defeated a proposed constitutional amendment which would permissible state % Texas. Session Laws, 1937. Chap. 201, p. 401-402 Approved June 8, 1937; Chap. 14, p. 16. Approved March 1 Sec. 20. 9 Session Laws, 1937. p. xxxii. Vote on August 23, 1937 Approved November 3, 1937 % Utah. Session Laws, 1935. S. J. R. No. 2, p. 257 1935 p. 8-10. Passed by voters at general election November 6, 1934 28 Hawaii. Session Laws, 1937. Series A-45, Chap. 61 (Act 172), p. 73-74 2” Puerto Rico. Session Laws, 1936. Act No. 87, p. 460-64 1936. Act No. 23, p. 160-61. Approved June 30, Approved May 10, 1937; Act. No. 121, p. 274. Approved May May 15, 1938. Filed without § Session Laws, 2nd Called Session, 1937 Ratified November 2 Washington. Session Laws of the Twenty-fourth Session, January 1 1936. § Session Laws (4th Special 13, 1937 have allowed the state to impose taxes on a wide basis and return proceeds equitably to tax divisions. Hawaii. Personal property tax rates were raised and provision was made for dividing personal prop between the territorial and 1937. Formerly all tax collections were designated as ter realizations are a erty tax collections county treasuries in personal property 1 torial realizations. Territorial principal source of school revenue.” Puerto Rico. Laws passed in 1936 extended, until April 1, 1937, the time foi in 1934-35 and preceding years, permitted payments in 20 annual installments and exempted homesteads up to a value of $500 from forced sale. An addi tional year was granted, by a 1937 law, for redeem sold for taxes. Property tax ex 1937 paying taxes due ing real property extended by passed in emptions were laws and 1938. approval April 26, 1937; Chap. 455, p 1937; “Amendments to the Constitution of Texas Chap. 41, p Approved J Chap. 85, p. 177-78 14-March Chap. 2, Initiative Meast ed May 8, 1937 { Session Laws (3d Spe Session), 1936. Act. No Chap. 242, Appro Approved May 13, 1936 p. 457 § Session Laws, 1938 XII. Tax Surveys and Commissions Legislation reported in this section is of two types: (1) laws making changes in the tax ad- ministration setups of the several states; and (2) laws or resolutions recommending, author- izing, or directing the establishment of special committees or commissions to study the tax problems of the states in question and report, with recommendations, to governors and legis- latures. Three states passed laws of the former type, between 1934 and 1938, designed to promote greater efficiency in state tax administration. One state enlarged and one state reduced the size of its tax commission. The third state set up the administrative machinery providing for state supervision of property assessments. Legislation passed in fifteen states, during the five-year period 1934-38, provided for the investigation of their tax problems by special commissions. Some information is given below concerning the investigation, or the commission charged with the investigation, in each state. As far as possible, footnotes in the following pages include citations not only to laws provid- ing for the creation of special tax investigating commissions but also to the published reports of these commissions as well. Reports had not been published by some commissions, as far as could be discovered. In the case of a few com- missions which have published reports, copies of the laws responsible for their creation could not be obtained; therefore, only reports have been cited. Alabama. An act of 1935 replaced the one- member tax commission with a commission of three members to be appointed by the governor.’ Arkansas. A 1937 measure aiming at a more efficient assessment and equalization of property taxes created a tax supervision department in the Arkansas corporation commission, staffed | supervisor and seven assistant supervisors. \ | Supervision Fund was created in the state ¢; to be made up of payments by county tax co . of 7/100 mill for each $100 in taxes collected ay) the sum of $11,250 appropriated from genera nues.” Colorado. An interim committee on schools reported to the 1935 legislature.’ Georgia. A 1938 law provided for an inteyrate; tax administration by abolishing the three-mem)|, state revenue commission and establishing in ; stead a state department of revenue headed } single state revenue commissioner.’ Indiana. A resolution passed in 1935 fayores the appointment of a joint legislative committee ; study taxes in their relation to the financing of social security program.” Kansas. The report of the legislative coun issued in December 1934 anticipated reduction oj local school levies, more equitable distribution 0; school costs, and provision for a minimum educa tional program.°® Massachusetts. Resolutions adopted in 1935 1936, and 1938 authorized the creation of specia tax investigation commissions to study the distrib tion of the tax burden.’ New Jersey. A 1938 act provided for a con mission consisting of seven ex-officio members ( in cluding the commissioner of education) and others for the purpose of studying and recommending th: revision of the tax system.” New Mexico. A taxation and governmenta commission was authorized in 1934 to study publi expenditures and recommend revisions of the tax code.” New York. The life of the temporary New York State Commission for the Revision of the Tax Laws was continued from year to year, to April 15 1938. A new temporary state commission to make a comprehensive study and analysis of business tax laws was created in 1938." 1 Alabama. Acts, 1935. No. 194, p. 296. Approved July 10, 1935. * Arkansas. Acts, 1937. No. 165, p. 613-16. Approved March 1, 1937. 3 Colorado. Risley, James H., chairman. Report of the Colorado Interim Committee on Public Schools. Denver: the Committe: 1935. 16 p. 4 Georgia. Laws, Extra Session, 1937-38. No. 296, p. 77-102. Approved January 3, 1938. 1583. Special Tax Study Committee. Report . . 5 Indiana. Laws, 1935. S. C. R. No. 16. Chap. 351, p. . to his Excellen the Governor of the State of Indiana and the Members of the Nineteenth General Assembly. Indianapolis, Ind.: the Committ: 1935. 11 p. * Kansas. Corrick, Franklin, compiler. Report and Recommendations to the Kansas Legislature, Submitted December 8, | Topeka, Kans.: Kansas Legislative Council, 1934. 127 p. 7 Massachusetts. Acts and Resolves, 1935. ‘‘Resolutions,’’ Chap. 63, p. 768. Approved August 2, 1935. % Acts and Resol: 1936. Chap. 72, p. 635-37. Approved June 24, 1936. 1 Acts and Resolves, 1938. Chap. 38, p. 723. Approved June 7, 1938 8 New Jersey. Session Laws, 1938. Chap. 402, p. 993-94. Approved June 22, 1938. ® New Mexico. Laws, 1934. Chap. 31, p. 124-25. Effective April 28, 1934. ed 1 New York. Laws, 1934. Chap. 14, p. 38-39. Approved February 14, 1934. { Laws, 1935. Chap. 26, p. 61. Appro February 14, 1935; Chap. 895, p. 1710. Approved May 13, 1935. § Laws, 1936. Chap. 14, p. 36. Approved February 15 1936 Chap. 61, p. 115. Approved February 28, 1936. 1 Laws, 1937. Chap. 10, p. 16-17. Approved February 11, 1937; Chap. 194 670-71. Approved April 14, 1937. { Laws, 1938. Chap. 505, p. 1282-83. Approved May 13, 1938. {152] sout North Carolina. A house resolution declared willingness of the house of representatives to onfer with representatives of Alabama, Georgia, nf , Carolina, and Tennessee with respect to the -oblem of relieving the local tax burden. A tax survey commission was North Dakota. created in 1935 for the purpose of making a com 1 Diges ion of >dus 1 1935 pecia tridy rehensive survey of the state and local tax strus and to draw up plans for its revision. re ris gi Ohio. A house joint resolution of the 1935 le ature authorized the appointment of a special com nission to study of the iblic schools of the state. Study of the tax situation the financing and needs n general, by two commissions created during the cond special session of 1937-38, was directed. Pennsylvania. The 1937 legislature authorized study of the comparative tax burden placed upon Resolution No p. 417-18 onomic Backgr Laws, 1935 Laws, 1935, Chap Legislature on the Tax Laws. Report No. 6, 1936. Mimeo. 85 p Ohio. Laws, 1935. H. J. R. No. 17, p. 612-1! Adopted B. 420, 414. Government Survey Committee. Report, 193 Pennsylvania. Laws, Special Session, 1938. No. 44 Rhode Island. Laws, 19 Resolution No, 66, 431-32. Approved March 12, 1937. Rhode Island Ci Rhode Island, November 27, 1935. Providence, R. I Tennessee. Public Acts, 1935. H. R. No. 21, p Texas. Tax Program Committee Preliminary ruary 21, 1935. Austin, Texas: the Committee, 1935 ‘Utah. Session Laws, 1935. Chap. 135, p. 240 H. R. 309, 281 E North Carolina North Dakota Governor and the Mund o! 3 35 p mmis William 455-57 Report p. 451 Approved 5 p ; Approved February March 1 vania and other indi indust! Penns\ states Rhode ate ans comn ot W and Island. A 1 in 1935 wavs ne was Cc! to consider relief the as Cl \nother commission ot estate tax burden 1937 tor ft taxation in rther study the state Syst Tennessee. The appointment of a committe: members was authorized in 1935 to confer f South Carolina, with nine \s Creo I | representatives 0 labama North Carolina tax burden. and respect to the ot the gia, tion property committee charged with studying t \ and submitting recommendations fo Texas. tax svstem orted to the legislature in 1935 revision Utah. gation committee with enlarged powers was autho 1933 ef \ppointment of a new special tax invest ized in 1935 to replace one created in 1935 Tax No February 18 t of the otd Report epor Sur gS Ohto ( Appro ec Approved on Way R. Browr Adopted Febr nd and Reco! March 26 Sources of Tax Information As stated on page 101, legislation reported in this bulletin is restricted to changes in state tax laws which occurred in the years 1934 to 1938, inclusive, and which more or less directly affected state school revenues. For the conven- ience of the reader who may wish to delve further into the state tax legislation passed during this period or to compare the legislation of this period with that enacted in earlier or later years, a few reliable secondary sources of state tax information found helpful in the past, or in connection with the preparation of the present bulletin, are listed on this page. These are classified under the following heads in the order named: (1) recently pub- lished textbooks and books of readings on pub- lic finance; (2) books, pamphlets, and other publications containing information on state tax legislation or the status of various types of taxes in the various states; (3) summaries and digests of state tax legislation and articles on the status of state taxes appearing in articles in periodicals; (4) publications of the National Education Association dealing with state taxa- tion in its relation to public school finance. Recent Textbooks on Public Finance BUEHLER, ALFRED G. Public Finance. New York: McGraw-Hill Book Co., 1936. 632 p. FacGaN, Etmer D., and Macy, C. Warp. Public Finance: Selected Readings. New York: Long- mans, Green and Co., 1934. 960 p. JENSEN, Jens P. Government Finance. New York: Thomas Y. Crowell Co., 1937. 595 p. Kinc, Ciype L. Public Finance. New York: Mac- millan Co., 1935. 602 p. Lutz, Harvey Lest. Public Finance. Third edition. New York: D. Appleton-Century Co., 1936. 940 p. Books, Pamphlets, and Other Publi- cations Containing Information on State Tax Legislation and the Status of State Taxes in the Various States Income Taxes NATIONAL INDUSTRIAL CONFERENCE Boarp. State Income Taxes. 2 vols. New York: the Board, 1930. 121 p., 214 p. Sales Taxes BUEHLER, ALFRED G. General Sales Taxation. New York: Business Bourse, 1932. 378 p. Haic, Ropert Murray, and SHoup, Cart. The Sales Tax in the American States. New York: Colum- bia University Press, 1934. 833 p. NATIONAL INDUSTRIAL CONFERENCE BOARD. Genpy, Sales..or Turnover Taxation. New York: th, Board, 1929. 204 p. NATIONAL INDUSTRIAL CONFERENCE Boarp. Sy Taxes, General, Selective and Retail. New Yo, the Board, 1932. 79 p. Alcoholic Beverage Taxes FENDERSON, A. P., and HARRisoN, LEONARD VY. Py; lic Revenues from Alcoholic Beverages, 1937 Washington, D. C.: Distilled Spirits May 1938. 57 p. Institute Gasoline Taxes CRAWFORD, FINLA G. The Gasoline Tax in United States, 1934. Publication, No. 44. Chicago. Ill.: Public Administration Service, 1935. 46 ; Property Taxes HILLHouse, A. MILLER, and WELCH, RONALD B Tax Limits Appraised. Publication No. 55. Chi cago: Public Administration Service, 1937. 40 p Leet, GLEN, and Paice, Ropert W. Property Tax Limitation Laws. Publication No. 36. Chicago Public Administratiion Service, 1934. 92 p. LELAND, S1mEON E. The Classified Property Tax the United States. Boston: Houghton Mifflin Co 1928. 492 p. General Proceedings of the Published annually editor.) Columbia, NATIONAL TAX ASSOCIATION. National Tax Association. 1915-1938. (W. G. Query, S. C.: the Association. Tax RESEARCH FOUNDATION. Tax Systems of the World. First-seventh editions. Prepared under the direction of the New York State Tax Com- mission. Published annually, 1930-36, then bi- ennially with supplements in the intervening years. Chicago: Commerce Clearing House. (Seventh edition) Supplement, 1939. 31 p. TWENTIETH CENTURY FUND, COMMITTEE ON TAXA- TION. Facing the Tax Problem. New York: the Fund, 1937. 606 p. TWENTIETH CENTURY FUND, COMMITTEE ON TAXA- TION. Studies in Current Tax Problems. New York: the Fund, 1937. 303 p. Summaries and Digests of State Tax Legislation and Articles on Taxation Appearing in Periodicals Ecker—R, L. Laszio. “Distribution of State and Local Liquor Revenues.” Bulletin of the National Tax Association 19: 271-77; June 1934. Jacosy, Neit H. “Status of State General Sales Taxes as of July 1, 1938.” Tax Magazine 16: 468-74; August 1938. MANNING, Raymonp E. “State Tax Legislation, 1938.” Bulletin of the National Tax Association 23: 266-69; June 1938. [ 154] 7. Pu} S$, 1937 Nstitute f the ually mbDia, t the inder “om- bi- ning use, AXA- the \XA- lew similar summaries of state tax legislation have been contributed annually by the author to this magazine since 1934. MANNING, RAYMOND E. “State Tax Legislation, 1938." Tax Magazine 16: 721-23, 735-38; Decem ber 1938. Similar summaries of state tax legislation for the current years have been contributed annually by the author to the December issue of this magazine since 1935. “November Election Action on State Tax Issues.’ Tax Magazine 14: 748, 761-62: December 1936. “Pending State Tax Legislation.” Tax Magazine. A digest of state tax measures introduced and approved, which appears monthly while state legis latures are in session. “Public Finance Measures in November Elections.” Bulletin of the National Tax Association 20: 89; December 1934. “Table of State Chain Store Taxes.” Tax Maga- zine 16: 49, 53; January 1938. Tax Legislation Bulletin. Published approximately monthly by the Commerce Clearing House, Chi- cago, Ill. Tax Poticy LeEaGueE. “The Decline of the Sales Tax.’ Taxbits 3: 1-6; June 1936. Tax Poticy LEAGUE. “State Tax Yield Statistics.” Tax Policy 6: i-vii, 1-64; December 1938, January 1939. Publications of the National Education Association Lutz, HARLEY L., and Carr, WILLIAM G. Essentials of Taxation. Reprinted from the Journal of the National Education Association. October 1933 June 1934. Washington, D. C.: National Educa tion Association, February 1934. 14 p. ATIONAL EDUCATION ASSOCIATION, RESEARCH Div! SION. “Five Years of State School Revenue Legis lation.” Research Bulletin 12: 4-38; January 1934 ‘ATIONAL EDUCATION ASSOCIATION, RESEARCH Div! SiON. School Revenucs and New Methods of Taxa tion. Studies in State Educational Administration, No. 2. January 1930. 10 p. ,ATIONAL EDUCATION ASSOCIATION, RESEARCH Divi sion. The Personal Income Tax and School Sup port. Studies in State Educational Administration, No. 8. February 1931. 20 p. ATIONAL EDUCATION ASSOCIATION, RESEARCH Div! sion. The Corporation Income Tax and Its Rela tion to School Revenue Systems. Studies in State Educational Administration, No. 11. August 1932. 19 p. JATIONAL EDUCATION ASSOCIATION, RESEARCH DivI SION. School Finance Systems. Revision, No. 2. Washington, D. C.: the Association, January 1938. 12 p. The latest of a series of five pamphlets containing accounts of the systems of raising and distributing revenues for public schools in the several states. NATIONAL EDUCATION ASSOCIATION, RESEARCH DivI sion. State School Legislation, 1938. Washington, D. C.: the Association, 1938. The latest of the annual summaries of school legislation, including school revenue legislation, published annually by the Research Division PUBLICATIONS ON RELATED TOPICS... . School Finance Systems. Summaries describing the plan of state support for schools in 46 states (issued in 1934 and 1935) $2. Revised School Finance Systems, covering 7 states (issued in June 1937) 35¢. Revised School Finance Systems, No. 2, covering 6 states (issued in January 1938) 30¢. Federal Support for Education; the Issues and the Facts. Research Bul- letin, Vol. 15, No. 4; September 1937. 32 p. 25¢. Financing Public Education. Research Bulletin, Vol. 15, No. 1; January 1937. 56 p. 50¢. The Efforts of the States To Support Education. Research Bulletin, Vol. 14, No. 3; May 1936. 64 p. 50¢. Five Years of State School Revenue Legislation, 1929-33. Research Bul- letin, Vol. 12, No. 1; January 1934. 40 p. 25¢. Report of National Conference on the Financing of Education. 78 p. 25¢. Schools and Taxes. June 1935. 16 p. 25¢. Finance and Business Administration. Review of Educational Research, Vol. 8, No. 2; April 1938. 112 p. $1. All orders for publications should be accompanied by funds in payment for same and must be so accompanied when orders for material amount to $1 or less. Orders not accom- panied by funds in payment are subject to transportation charges. Discounts on quantity orders of the same publication: 2-9 copies, 10 percent; 10-99 copies, 25 percent; 109 or more copies, 331% percent. Make checks or money orders payable to the National Educa- tion Association of the United States, 1201 Sixteenth Street, N. W., Washington, D. C. [158] HE ESSENTIALS of a modern school finance program include: Equitable taxation—For the adequate support of all govern- mental activities, including the schools, a stable, varied, and flexible tax system, providing for a just sharing of the cost of government by all members of the community. Equalization of educational opportunity—For every school district, sufficient financial support from the state to permit the maintenance of an acceptable state minimum program of education and to relieve the local property tax when this tax, upon which local initiative depends, is carrying an unfair share of the cost of government. Fiscal planning—In every state a long-time financial plan for public education comprehensive in scope, based on experienced judgment and objective data, cooperatively developed, continually subject to review and revision, and reflecting faithfully the broad educational policy of the people. —From the School Finance Charter.