Publication 216, The First 100 Years
World War II and Economic Boom
Tax legislation diminished in importance during the 1940s. Preoccupation with the war shifted the state’s attention to national affairs. The war created an economic boom which literally flooded the state treasury with revenue.87 In its 1941-42 Biennial Report, the Board of Equalization remarked:
“War with its economic dislocations and extraordinary demands upon manpower, has had a marked effect upon the California revenue system. Huge, unexpected revenues have poured into the state treasury.” 88
The Legislature responded to this excess revenue in 1943 by lowering the rates for the retail sales and use tax, the personal income tax, the bank and corporation franchise tax, and the corporation income tax effective July 1, 1943. The program provided that the tax rates would return to the 1943 levels on July 1, 1945. Surpluses continued, and the tax reductions were extended until July 1, 1949.
A few notable changes did occur in the late 1940s. The Board, after having reported to the Governor biennially since 1902, was directed to submit its report to the Governor annually.89 This presumably resulted from the passage of Proposition 6 at the general election November 5, 1946, which called for annual, rather than biennial, sessions of the Legislature.
In 1951, the Board was assigned the administration of the Itinerant Merchants Act. The Act required all persons engaged in selling agricultural products across county lines as an itinerant merchant to obtain a license. The Itinerant Merchants Act was repealed in 1961 “. . . because the regulatory requirements related to marketing farm products had become incorporated in the Agricultural Code.” 90
87 One exception was the gasoline tax revenue which had actually decreased because of gas rationing.
88 Report of the State Board of Equalization 1941-1942, p. 9
89 Report of the State Board of Equalization 1946-1947, p. 1
90 Report of the State Board of Equalization 1960-1961, p. 26