California Tax Collection: Time for Reform

Abstract:     
California's tax collection system has been characterized in at least one legislative study as duplicative, a financial waste, a diffusion of activities and responsibilities, and as a hodgepodge of boards, and elective and appointed officials not truly responsive to the Governor. The current structure evolved from mechanisms created in the State Constitution of 1879 in order to equalize property taxes among competing mining and grazing counties in the state. While both the California economy and the sophistication of its revenue laws has grown, the state remains saddled with an antiquated tax collection system supervised in large part by an elected board with no particular experience with tax matters. The problem of fair taxation is exacerbated by the tax adjudication system through the elected Board of Equalization which seldom publishes its opinions, which can be influenced by ex-parte communication with potential political supporters appearing before it in tax disputes, and which is susceptible to changing its holdings as a result of periodic changes in membership. The absence of reliable interpretative guidance to the application of California's tax law is disruptive to business investment in the State.

This article explores the historic evolution of the California tax collection system. The article examines numerous legislative studies and governmental commission reports recommending restructuring the California tax administration. The article also explores in depth the California tax adjudication process to recommend creation of a California Tax Court under the model of the United States Tax Court.

Accepted Paper Series