WEEKES v. Richard K. Groulx et al., Intervenors, Class-Representatives and Respondents.

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Court of Appeal, First District, Division 1, California.

Beresford David WEEKES and Felder J. Walker, Plaintiffs and Respondents, v. CITY OF OAKLAND, Defendant and Appellant, Richard K. Groulx et al., Intervenors, Class-Representatives and Respondents.

Civ. 37873.

Decided: December 17, 1976

Berkley, Vaughns, Rhodes & Sherrod by Thomas L.Berkley, Gene Rhodes, Leon H. Rountree, Jr., Oakland, for plaintiffs and respondents. David A. Self, City Atty., Ralph R. Kuchler, Douglas Dang, Asst. City Attys., Oakland, for defendant and appellant. Van Bourg, Allen, Weinberg & Roger, Stewart Weinberg, Michael B. Roger, San Francisco, for intervenors-respondents. Evelle J. Younger, Atty. Gen., Ernest P. Goodman, Asst. Atty. Gen., Gary A. Larson, Deputy Atty. Gen., Thomas M. O'Connor, City Atty., John J. Doherty, Deputy City Atty., San Francisco, William J. Adams, City Atty., City of Merced, Merced, James D. Jackson, City Atty., City of Sacramento, Sacramento, Burt Pines, City Atty., Thomas C. Bonaventura, Senior Asst. City Atty., Pedro B. Echeverria, Thomas J. Theis, Deputy City Attys., Los Angeles, for amicus curiae.

The City of Oakland and its treasurer have appealed from a judgment which, in response to plaintiffs' and intervenors' complaints, declared that the city's employees' license fee taxing ordinance was invalid and of no force and effect and permanently enjoined the enforcement of that ordinance.

The arguments advanced by appellant city and the two groups of amici curiae who have filed briefs for other cities on its behalf, and, as well, those presented by respondent taxpayers and the Attorney General as amicus curiae on behalf of the State Franchise Tax Board and the State Department of Finance, may be segregated into three general issues, as follows: (1) Does respondent city under its charter and the Constitution of this state have the power to levy the tax imposed by the ordinance under review?, if so (2) Has that power been abrogated by other inconsistent provisions of the Constitution or been preempted by general laws enacted by the Legislature?, and if not (3) Is the taxing ordinance invalid, in whole or part, with respect to specific provisions it contains? Underlying the first two questions is an examination of the nature of the tax imposed by the levy.

We find that the ordinance imposes a tax on the privilege of engaging in or following any business, trade, occupation or profession as an employee (with the exception of persons employed as domestic servants in private homes, and those receiving compensation of $1,625, or less, in any calendar quarter), whether a resident or nonresident, within the City of Oakland, and that it is measured by a percentage of the gross compensation of such person, with a credit for the proportion of any other business license fee for which the taxpayer may be responsible. The tax has qualities of both an income tax and a license or privilege tax for revenue. On balance we conclude that it is a valid tax measure authorized by the city charter and the enabling provisions of the state Constitution (art. XI, § 5) which impliedly empower chartered cities to levy taxes for general revenue purposes; that neither the constitutional provisions governing the levy of an income tax, nor state legislation, passed pursuant to the power thereby conferred, preempt the right of a chartered city to levy a tax of the nature involved here; and that the provisions of the ordinance do not violate constitutional provisions guaranteeing equal protection because of any alleged discrimination between residents and nonresidents, or because of the exemption of domestic servants; nor does it unlawfully restrict the right of any nonresident to travel and work outside the city in which he resides; nor does the ordinance unlawfully tax governmental employees. The judgment must be reversed.1


Each side seeks, by categorizing the levy with a label, to place it on one side of a line dividing a permitted from a prohibited enactment. We first approach that subject. It is necessary to understand the nature of the enactment, in order to determine where it lies within the principles authorizing or prohibiting specific action by municipal authorities. Nevertheless, it is the latter which must be interpreted. The provisions of the ordinance are clear. Mere reference to the tax as an ‘employee license fee,’ ‘compensation tax’ or ‘income tax’ is not the determinative factor.

The ordinance (Ord.No. 9021 O.M.S.) adds section 5–1.65 and sections 5–1.65(a) through 5–1.65(s) to chapter 5, article 1 of the Oakland Municipal Code. It is entitled, ‘An Ordinance Providing For The Raising Of Additional Public Revenues By Levying A License Fee Upon Persons Who Engage In The City Of Oakland In Any Trade, Occupation Or Profession, Of One Percent (1%) Of The Compensation Hereof; Providing For The Administration, Collection And Investment Of Said License Fee; Providing Penalties For Violation Of The Provisions Thereof; And Providing An Effective Date Hereof.’

Section 5–1.65 reads: ‘EMPLOYEE LICENSE FEE. Commencing July 1, 1976, for the privilege of engaging in or following any business, trade, occupation or profession as an employee as defined in this section, within the City, a license fee measured by one percent (1%) of the gross receipts in excess of $1,625.00 for each quarterly report period specified herein of each such employee from such business, trade, occupation or profession is hereby imposed and required.’

Section 5–1.65(b) provides: ‘. . . ‘Employee’ shall mean all persons engaged in the operation or conduct of any business, whether as owner, any member of the owner's family, partner, agent, manager, solicitor, and any and all other persons employed or working in said business, trade, occupation or profession.'

Section 5–1.65(c) specifies: ‘. . . ‘Engaging in or following any business, trade, occupation or profession as an employee’ shall mean and include the doing of any work, rendering any kind of personal services, or holding any kind of position, office or job within the City, as clerk, laborer, tradesman, mechanic, manager, official or other employee but shall not mean or include any domestic servants employed in private homes.'

Section 5–1.65(d) prescribes: ‘. . . The words ‘business, trade, occupation and profession’ shall mean and include all and every kind of calling, whether or not carried on for profit, and shall also mean and include the holding of any kind of office or position, either by election or appointment, by any officer or employee of any employer as defined in this Section.'

Section 5–1.65(g) provides: ‘. . . ‘Gross receipts' and ‘compensation’ shall have the same meaning and both words shall mean and include the total gross amount of all salaries, wages, commissions, bonuses, or other money payments of any kind or any other considerations having monetary value, which a person receives from or is entitled to receive from or be given credit for by his employer for any work done or personal service rendered in any trade, occupation or profession, including any kind of deductions before ‘take home’ pay is received; but the words ‘gross receipts' and ‘compensation’ shall not mean nor include amounts paid to traveling salesmen or other workers as allowance or reimbursement for traveling or other expenses incurred in the business of the employer, except to the extent of the excess of such amounts over such expenses actually incurred and accounted for by the employee to the employer.' Section 5–1.65(h) provides for the apportionment of gross receipts attributable to work performed or services rendered partly within and partly without the city.

Section 5–1.65(k) provides that any employee's liability for the tax imposed by section 5–1.65 shall be reduced by the extent of his proportional liability (as an individual proprietor, or a partner, and, in the case of certain corporations, as a stockholder) to pay any other business license fees imposed by article 1 of chapter 5 of the Oakland Municipal Code.

Section 5–1.65(a) prescribes, ‘LICENSE REQUIRED. Commencing July 1, 1976 it shall be unlawful for any employee to engage in or follow any business, trade, occupation or profession within the City without filing a required return, as defined herein, and paying the license fee when due for the privilege of engaging in or following such business, trade, occupation or profession as an employee as defined in this section.’ There is no provision for application for or issuance of any licenses. Section 5–1.65(f) provides, however, ‘. . . ‘Licensee’ shall mean and include any person required to file a return or to pay a license fee under this section.'

Collection of the tax is to be accomplished through employers who are required to deduct and withhold and return and pay the taxes due for each employee quarterly (§ 5–1.65(i)). Section 5–1.65(e) states, ‘. . . ‘Employer’ shall mean and include any person, business, firm, corporation, either public or private, partnership, association, public utility, district, government body or political subdivision, or branch of any municipal, county, state or federal government, or any local public body or agency, or any other kind of organization who or that employs any person in any business, trade, occupation or profession in the City within the meaning of this section, whether or not for profit of the employer.'

When the employer fails to return and pay the tax, the employee is required to do so (§ 5–1.65(j)).

The city treasurer is charged with the duty of collecting, administering and enforcing the tax (§§ 5–1.65(l) and 5–1.65(m)). The ordinance provides for interest and penalties for failure to pay the tax (§ 5–1.65(n)), and for the collection of unpaid taxes, interest and penalties by civil suit (§ 5–1.65(p)). It prescribes that it is a misdemeanor to fail to perform any duty or obligation imposed by the ordinance, or to knowingly make an incomplete, false or fraudulent return (§ 5–1.65(s)). Other sections provide for a board of review to hear appeals by any persons dissatisfied with an adverse decision of the city treasurer (§ 5–1.65(g)), and for refunds of sums erroneously or illegally collected (§ 5–1.65(o)).

There is also a savings clause which reads in part, ‘The provisions of this Section shall not apply to any person, association, corporation or to any property, as to whom or which it is beyond the power of the City Council to impose the license fee herein provided.’ The remaining part is the customary severability clause.2 (§ 5–1.65(r).)

Each side recognizes that the nature and character of the tax must be determined by principles that were enunciated in Ingels v. Riley (1936) 5 Cal.2d 154, 53 P.2d 936, as follows: ‘It is impossible to lay down any positive rule by means of which the character of any given tax may be ascertained. In each case the character of the given tax must be ascertained by its incidents, and from the natural and legal effect of the language employed in the statute. [Citations.]’ (5 Cal.2d at p. 159, 53 P.2d at p. 942. See also Ainsworth v. Bryant (1949) 34 Cal.2d 465, 473, 211 P.2d 564; Pesola v. City of Los Angeles (1975) 54 Cal.App.3d 479, 484, 126 Cal.Rptr. 580; John Tennant Memorial Homes, Inc. v. City of Pacific Grove (1972) 27 Cal.App.3d 372, 384, 103 Cal.Rptr. 215; and Arnke v. City of Berkeley (1960) 185 Cal.App.2d 842, 847, 8 Cal.Rptr. 645.)

The respondent plaintiffs and intervenors and the Attorney General contend that the tax imposed by the ordinance must be labeled an ‘income tax’ and be subject to all provisions and omissions of law relating to such a tax. In support of their position they point to the following factors: (1) Under the state income tax law ‘Gross income’ includes ‘Compensation for services, including fees, commissions, and similar items.’ (Rev. & Tax.Code, § 17071, subd. (a)(1).) The city tax is measured by the same factors and burdens the employee's compensation. (2) It is not related to the type of work done by the taxpayer and is to be distinguished from a license tax measured by ‘gross income derive from business.’ (Id., § 17071, subd. (a)(2).) (3) The fact that the exemption of $1,625 each quarter is measured by gross receipts (Ord. No.9021 O.M.S., § 5–1.65) indicates that the character of the tax is an income tax. (4) The ordinance has no provision requiring the application for, or issuance of, a license. (5) The federal tax on self-employment income (26 U.S.C., § 1401 et seq.) in taxing ‘net earnings from self-employment,’ defined as ‘the gross income derived by an individual from any trade or business carried on by such individual’ (id., § 1402, subd. (a)), expressly excludes income or net earnings from ‘the performance of service by an individual as an employee’ (id., § 1402, subd. (c)(2) and (3)). The city ordinance should also so provide if it is to be a license, as distinguished from an income tax. (6) There is no California precedent for a license tax ‘for the privilege of engaging in or following any business, trade, occupation or profession as an employee.’ (Ord., § 5–1.65, emphasis added, and see §§ 5–1.65(b), 5–1.65(c) and 5–1.65(d).) (7) Precedents from other jurisdictions indicate that a tax such as that imposed by the city ordinance is an income tax. (8) The trial judge in his statement of intended decision properly observed, ‘Its [the tax's] description by defendant on an employee license fee is not determinative. Form must give way to substance. ‘A rose by any other name . . .’' (9) Law dictionaries define an income tax as a tax on either gross or net income,3 and it has been noted, ‘Income tax laws do not profess to embody perfect economic theory. They ignore some things that either a theorist or a businessman would take into account in determining the pecuniary condition of the taxpayer.’ (Weiss v. Wiener (1929) 279 U.S. 333, 335, 49 S.Ct. 337, 73 L.Ed. 720.)

On the other hand it is urged that the tax imposed is an excise tax on the privilege of engaging in employment within the city. (1) The tax purports to be ‘for the privilege of engaging in or following any business, trade, occupation or profession as an employee.’ (Ord., § 5–1.65.) In Ingels v. Riley, supra, the court held that a privilege tax measured by the value of a motor vehicle was not a property tax which would entitle a veteran to a property tax exemption. The court stated, ‘Although the designation made by the legislature is not conclusive on the courts, some weight must be given such designation in determining the nature of the tax. In San Francisco v. Liverpool etc. Ins. Co., 74 Cal. 113, 15 P. 380 . . . this court, in discussing the character of a tax, had recourse to this factor. In the Opinion of the Justices, supra, [250 Mass. 591, 148 N.E. 889], the Massachusetts court, in advising the legislature of that state as to the nature of a proposed taxing statute on motor vehicles, based on value, identical in many respects with the one here involved, stated (148 N.E. 889 p. 891): [¶] ‘Avowedly an excise tax is established. The declaration to that effect is explicit. Such statutory statement is to be accepted as true unless incompatible with the meaning and effect of the act as a whole.’' (5 Cal.2d at pp. 160–161, 53 P.2d at p. 942. See also Ainsworth v. Bryant, supra, 34 Cal.2d 465, 469, 211 P.2d 564; and Pesola v. City of Los Angeles, supra, 54 Cal.App.3d 479, 484, 126 Cal.Rptr. 580.)

(2) The fact that the tax is measured by a portion of the gross income of the taxpayer does not conclusively establish that it is an income tax. In Ingels v. Riley, supra, the court answered the assertion that the tax was a property tax because it was measured by the value of the property involved (here the value placed on the employee's compensation), as follows: ‘However, we are of the opinion that the better rule is that the mode of ascertaining the amount of the tax is not conclusive. We are of the opinion that if a tax in its nature is a privilege tax, it does not become a property tax simply because it is proportioned in amount to the value of the property used in connection with the privilege which is taxed. [Citations.]’ (5 Cal.2d at p. 160, 53 P.2d at p. 942.) Analysis shows that although the tax is measured by a percentage of a form of gross income referred to in the State Personal Income Tax Law it fails to include 14 other types of gross income encompassed in the statute. There is no attempt to tax either the resident or the nonresident on any other type of income other than compensation. Moreover, the resident who earns his livelihood elsewhere is apparently free of any tax on his gross income. The failure to include gross income derived from business does not tend to invalidate the tax but strengthens the conclusion that the tax is an excise tax on the privilege of employment. Section 5–1.65(k), which gives an owner, or partner, and in some cases a shareholder, a credit for business license tax fees, tends to indicate that the levy is part of a general system to tax the privilege of earning a livelihood within the city. The distinction drawn is consistent with that found between self-employed and an employee of another in the Social Security Act. All are treated equally. We further note that, as distinguished from the usual income tax, there is no reduction in the measure of the tax for the expenses attendant to the acquisition of the compensation by which the tax is measured. The grant of an exemption measured by a gross income ceiling is of no more significance than the measure of the tax itself.

(3) Although the statute does not provide for the application for or issuance of a license, the right to continued employment within the city is conditioned upon payment of the tax. (Ord., § 5–1.65(a).) Since the tax is for revenue and not for regulation there is no need for a formal license. (Note City of Louisville v. Sebree (1948) 308 Ky. 420, 429, 214 S.W.2d 248, 253.) Residents and nonresidents alike by accepting the privilege of employment within the city and the protection and services offered by the city government subject themselves to the tax. ‘It should be observed that a right may be subject to an excise tax . . . although it is a right which cannot be prohibited under the Constitution.’ (City of Glendale v. Trondsen (1957) 48 Cal.2d 93, 104, 308 P.2d 1, 7.) In the case last cited the court, in upholding a tax on occupants of any place where rubbish accumulates, referred to Steward Machine Co. v. Davis (1937) 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279. There the court upheld the social security tax on employees for unemployment insurance and stated, ‘We are told that the relation of employment is one so essential to the pursuit of happiness that it may not be burdened with a tax. Appeal is made to history. From the precedents of colonial days we are supplied with illustrations of excises common in the colonies. They are said to have been bound up with the enjoyment of particular commodities. Appeal is also made to principle or the analysis of concepts. An excise, we are told, imports a tax upon a privilege; employment, it is said, is a right, not a privilege, from which it follows that employment is not subject to an excise. Neither the one appeal nor the other leads to the desired goal.’ (301 U.S. at pp. 578–579, 57 S.Ct. at 887.) After rejecting the historical argument, the court continued. ‘The historical prop failing, the prop or fancied prop of principle remains. We learn that employment for lawful gain is a ‘natural’ or ‘inherent’ or ‘inalienable’ and not a ‘privilege’ at all. But natural rights, so called, are as much subject to taxation as rights of less importance. An excise is not limited to vocations or activities that may be prohibited altogether. It is not limited to those that are the outcome of a franchise. It extends to vocations or activities pursued as of common right. What the individual does in the operation of a business is amenable to taxation just as much as what he owns, at all events if the classification is not tyrannical or arbitrary . . . Employment is a business relation, if not itself a business. It is a relation without which business could seldom be carried on effectively. The power to tax the activities and relations that constitute a calling considered as a unit is the power to tax any of them. The whole includes the parts. [Citation.]' (Id., pp. 580–581, 57c S.Ct. at 887. See also Gillum v. Johnson (1936) 7 Cal.2d 744, 762, 764, 62 P.2d 1037. Cf. Siler, J., dissenting City of Louisville v. Sebree, supra, 308 Ky. 420, 436, 214 S.W.2d 248, 257.) In the California case the court after upholding the tax on the employer added: ‘The tax on the employee is either an income tax and as such is authorized by the sixteenth amendment, or is a tax on earnings for personal services and as such is an excise tax authorized even without the sixteenth amendment. [Citation.]’ (7 Cal.2d at p. 763, 62 P.2d at p. 1046.)

In Long v. City of Anaheim (1967) 255 Cal.App.2d 191, 63 Cal.Rptr. 56, the court, while excluding the publication and sale of a nonprofit making newspaper from a city business license tax, imposed for revenue purposes, recognized the breadth of the scope of such a levy. It stated: ‘The term, ‘business' as used in a law imposing a license tax on businesses, trades, professions and callings, ordinarily means a business in the trade or commercial sense, one carried on with a view to profit or livelihood. [Citation.] In statutes relating to license taxes, the word ‘business' means that which occupies the time, attention and labor of men for purposes of livelihood or for profit. [Citations.] Business in its broad sense embraces everything about which one can be employed; the word is often synonymous with calling, occupation, or trade engaged in for the purpose of obtaining a livelihood or profit or gain. [Citation.] “Business' is defined to be that which occupies the time, attention and labor of men for the purpose of livelihood or profit . . . [citations]. An occupation or employment will not be excluded from the classification of business merely because it actually results in loss instead of profit; but it is essential that livelihood or profit be at least one of the purposes for which the employment is pursued, in order to bring it within the accepted definition of the word . . ..’ (Deering v. Blair, 57 U.S.App.D.C. 367, 23 F.2d 975, 976 . . .)' (255 Cal.App.2d at p. 197, 63 Cal.Rptr. at p. 59.) The reported decisions of this state reflect the variety of occupations and callings which have been subjected to such taxes measured by gross receipts.4

(4) In Franklin v. Peterson (1948) 87 Cal.App.2d 727, 197 P.2d 788, the court upheld a business license tax measured by the gross receipts of an attorney. It stated, ‘Appellant's next contention, that the ordinance in question is invalid because it is an income tax, must be rejected. A long line of decisions rendered in this state has sustained the validity of gross receipts taxes, and furthermore a gross receipts occupation tax is not an income tax. [Citation.]’ (87 Cal.App.2d at p. 733, 197 P.2d at p. 792.) Paradoxically the authority cited is not a compendium of ‘[a] long line of decisions rendered in this state,’ but a decision of the Supreme Court of the United States invalidating a state tax on the gross receipts of a steamship company engaged in interstate and foreign commerce because it was an unconstitutional burden on that commerce. The court did say, ‘Can the tax in this case be regarded as an income tax? and, if it can, does that make any difference as to its constitutionality? We do not think that it can properly be regarded as an income tax. It is not a general tax on the incomes of all the inhabitants of the state; but a special tax on transportation companies. Conceding, however, that an income tax may be imposed on certain classes of the community, distinguished by the character of their occupations; this is not an income tax on the class to which it refers, but a tax on their receipts for transportation only. Many of the companies included in it may, and undoubtedly do, have incomes from other sources, such as rents of houses, wharves, stores and waterpower, and interest on moneyed investments.’ (Phila. Steamship Co. v. Pennsylvania (1887) 122 U.S. 326, 344–345, 7 S.Ct. 1118, 1124, 30 L.Ed. 1200.) So here there is no general intent to reach all types of income realized by residents or nonresidents within the city, nor is there any deduction for the expenses attendant to securing the compensation which is taxed on the gross amount. Respondents all acknowledge that the license tax on the business of practicing law measured by gross receipts, which was upheld in Franklin, is a proper occupation tax. They claim that once the city attempts to tax all occupations in which one may be involved in making a livelihood, the tax then becomes an income tax. No inherent reason is suggested why the individual lawyer who receives his compensation in salary and bonuses from an incorporated or unincorporated law firm should be treated differently than a sole practitioner, or a partner, or a stockholder in a law firm. Presumably each receives the benefit of the governmental services rendered by the municipality in which he earns his living. Nor is it self-evident that a distinction, although permissible, between independent contractors and those employed by others is mandatory before a tax can be levied on the privilege of engaging in an occupation be it as a laborer or a professional man.

(5) Each side points to precedents from other jurisdictions in support of its position. Similar taxes have been upheld in Alabama, Kentucky, Ohio and Pennsylvania. (See McPheeter v. City of Auburn (1972) 288 Ala. 286, 292, 259 So.2d 833, 837, and Estes v. City of Gadsden (1957) 266 Ala. 166, 170–173, 94 So.2d 744, 747–750; City of Louisville v. Sebree, supra, 308 Ky. 420, 425–431, 214 S.W.2d 248, 251–254; McConnell v. City of Columbus (1961) 172 Ohio St. 95, 97–98, 173 N.E.2d 760, 762–763, and State ex rel. Zielonka v. Carrel (1919) 99 Ohio St. 220, 229, 124 N.E. 134, 136; and Kiker v. City of Philadelphia (1943) 346 Pa. 624, 631, 31 A.2d 289, 294; Dole v. City of Philadelphia (1940) 337 Pa. 375, 378, 11 A.2d 163, 165, and Butcher v. Philadelphia (1938) 333 Pa. 497, 498–499, 6 A.2d 298, 299.) On the other hand, the attempts of a municipality to levy an income tax have been invalidated in Colorado and Missouri. (See City and County of Denver v. Sweet (1958) 138 Colo. 41, 46–53, 329 P.2d 441, 444–447; and Carter Carburetor Corporation v. City of St. Louis (1947) 356 Mo. 646, 653–660, 203 S.W.2d 438, 440–445.) In the later Colorado case, the court did uphold a ‘Business Occupational Privilege Tax’ measured by the number of persons engaged in the business including employees, and an ‘Employee Occupational Privilege Tax’ of $2 each levied on and against the employee. (City and County of Denver v. Duffy Storage and Moving Co., 168 Colo. 91 at pp. 99–102, 450 P.2d 339 at pp. 343–344.) It must be recognized that in each instance the weight of the precedent must depend on the particular constitutional, legislative or charter provisions involved. Therefore, the principles in the cited decisions may be analyzed more properly in our consideration of the powers of appellant as a chartered city (part II below), and the preemption of such powers by state action (part III below). For purposes of this section of the opinion we point out that in Alabama and Kentucky the courts clearly held that the tax was a privilege tax or license tax and not an income tax.5 On the other hand, it has been acknowledged that the Philadelphia tax, which taxed residents on salaries and wages regardless of where employed, and nonresidents for salaries and wages resulting from employment within the city, and imposed a similar tax on income from net profits of residents and nonresidents, was an income tax. (See Dole v. City of Philadelphia, supra, 337 Pa. at pp. 379–381, 11 A.2d at pp. 165–166; and City of Louisville v. Sebree, supra, 308 Ky. at p. 428, 214 S.W.2d at p. 253.) The Missouri case also involved a tax on earnings and net profits of residents wherever earned, and those of nonresidents which resulted from endeavors within the city. The Missouri court stated, ‘In our opinion it is a species of income or excise tax.’ (356 Mo. at p. 653, 203 S.W.2d at p. 440.) It concluded, ‘We hold the charter provision relied on by appellants is too indefinite to support the tax, which is novel in this State.’ (Id., p. 658, id., p. 444. See part II, infra.)

We reject respondents' contention that the Sebree case is not persuasive because in Howard v. Commissioners (1953) 344 U.S. 624, 73 S.Ct. 465, 97 L.Ed. 617, the court found that the Louisville tax could be levied against employees of a naval ordinance plant within the city limits, under the jurisdiction to tax conferred by the Buck Act (4 U.S.C., §§ 105–110).6 Since the act confers such power for ‘any tax levied on, with respect to, or measured by, net income, gross income, or gross receipts' (emphasis added), the court's conclusion that the tax authorized by the Louisville ordinance was an income tax within the meaning of the Buck Act (344 U.S. at pp. 628–629, 73 S.Ct. 465) in no way detracts from the Kentucky court's finding that under state law it was not an income tax. (See also State of Alaska v. Baker (1964) 64 Wash.2d 207, 212–213 and 217–218, 390 P.2d 1009, 1013–1014 and 1016.)

(6) As we have noted (fn. 3 above) the dictionary definitions, like that in the Buck Act (fn. 6 above), throws little light on whether the tax is a privilege or license tax on all occupations in which a taxpayer may be employed or an income tax. Reference to olfactory botanical nomenclature is equally unpersuasive. It may be conceded that the inroads of federal, state and city levies on his compensation presents a thorny problem to the wage earner.

It is apparent from the foregoing that the tax is imposed on the privilege of engaging in employment in the City of Oakland and is measured by the taxpayer's gross compensation. It has some of the characteristics of both an occupational license tax and of an income tax. As we pointed out, its validity cannot be determined by merely categorizing it as an ‘employee license fee,’ ‘compensation tax,’ or ‘income tax.’ We must examine the power of the city to enact a tax with the specific incidents contained in the ordinance under review (part II), and also determine whether the state has acted to curb that power if it otherwise exists (part III).


In determining the power of a chartered city to levy a tax such as that described above we turn first to section 5 of article XI of the state Constitution, which provides in part: ‘(a) It shall be competent in any city charter to provide that the city governed thereunder may make and enforce all ordinances and regulations in respect to municipal affairs, subject only to restrictions and limitations provided in their several charters and in respect to other matters they shall be subject to general laws. City charters adopted pursuant to this Constitution shall supersede any existing charter, and with respect to municipal affairs shall supersede all laws inconsistent therewith. . . .’ This paragraph embodies provisions formerly (prior to June 2, 1970) found in sections 6 and 8, subdivision (j), of article XI. Principles developed under those provisions were collated in Ainsworth v. Bryant, supra, as follows: ‘It is well settled that the power of a municipal corporation operating under a freeholders' charter . . . to impose taxes ‘for revenue purposes, including license taxes, is strictly a municipal affair’ pursuant to the direct constitutional grant of the people of the state (Const., art. XI, § 6; West Coast Adver. Co. v. San Francisco, 14 Cal.2d 516, 524, 95 P.2d 138, 143) and that ‘the restrictions on the exercise of that power are only the limitations and restrictions appearing in the Constitution and in the charter itself.’ (Ibid., p. 526, 95 P.2d [138], at p. 144) So it was said in the earlier case of Ex parte Braun, 141 Cal. 204, at pages 209–210, 74 P. 780, at page 782, quoting from Mr. Justice Field in United States v. New Orleans, 98 U.S. 381, 25 L.Ed. 225: ‘A municipality without the power of taxation would be a body without life, incapable of acting, and serving no useful purpose. . . . When such a corporation is created, the power of taxation is vested in it, as an essential attribute, for all the purposes of its existence, unless its exercise be in express terms prohibited. For the accomplishment of these purposes, its authorities, however limited the corporation, must have power to raise money and control its expenditure.’' (34 Cal.2d at p. 469, 211 P.2d at p. 566. See, in addition to the cases cited in the quotation, A.B.C. Distributing Co. v. City & County of San Francisco (1975) 15 Cal.3d 566, 571, 125 Cal.Rptr. 465, 542 P.2d 625; Rivera v. City of Fresno (1971) 6 Cal.3d 132, 135, 98 Cal.Rptr. 281, 490 P.2d 793; City of Glendale v. Trondsen (1957) 48 Cal.2d 93, 98–99, 308 P.2d 1; City of Grass Valley v. Walkinshaw (1949) 34 Cal.2d 595, 598, 212 P.2d 894; In re Nowak (1921) 184 Cal. 701, 704–706, 195 P. 402; Ex parte Jackson (1904) 143 Cal. 564, 572, 77 P. 457; Marsh & McLennan of Cal. v. City of Los Angeles (1976) 62 Cal.App.3d 108, 122, 132 Cal.Rptr. 796; Pesola v. City of Los Angeles, supra, 54 Cal.App.3d 479, 487, 126 Cal.Rptr. 580; Century Plaza Hotel Co. v. City of Los Angeles (1970) 7 Cal.App.3d 616, 620, 87 Cal.Rptr. 166; Franklin v. Peterson, supra, 87 Cal.App.2d 727, 732–733, 197 P.2d 788; Sato, ‘Municipal Affairs' in California (1972) 60 Cal.L.Rev. 1055, 1055–1058; Comment, The Municipal Income Tax and State Preemption in California (1971) 11 Santa Clara Lawyer 343, 344–345; Note, San Francisco's Commuter Tax (1969) 20 Hastings L.J. 813, 813–821; Januta, Municipal Revenue (1968) 56 Cal.L.Rev. 1525, 1544–1546; Sato, Municipal Taxes (1965) 53 Cal.L.Rev. 801, 805–810; and Comment, Legislative Control of Municipal Corporations in California (1960) 7 U.C.L.A.L.Rev. 102, 103–107 and 111–112.)

In the light of the precedents which have been reviewed above (part I, particularly fn. 4, and accompanying text), we have no hesitancy in ruling that in the absence of any limitation or restriction appearing in the state Constitution or the city charter itself, a chartered city has the power and authority to impose a tax on all occupations engaged in for compensation within the city measured by the compensation received by the taxpayer. Since the ordinance under consideration does not purport to tax all income with the city, we refrain from determining whether or not the power extends to the imposition of such a general tax. (Cf. part III below.)

Respondents suggest that the tax in question is not a municipal affair, but a matter of statewide concern because it creates a cumulative burden on the nonresidents employed within the city and causes them to bear a disproportionate burden to those residing within the city, who receive city services 24 hours a day. This argument overlooks the fact that those residing within the city undoubtedly pay directly or indirectly other taxes on their food and shelter to which nonresidents are not exposed. They also cite warnings against retaliatory and multiple taxes by numerous local government. (See City of Los Angeles v. Shell Oil Co. (1971) 4 Cal.3d 108, 119, 93 Cal.Rptr. 1, 480 P.2d 953, quoting Sato, op.cit., 53 Cal.L.Rev. 801, 818; and County of Alameda v. City and County of San Francisco (1971) 19 Cal.App.3d 750, 757, 97 Cal.Rptr. 175.) Those warnings, however, are aimed at intercity discrimination, and the statewide concern against discrimination is found in section 50026 of the Government Code. (See part III–B, below.) The effect of the Oakland ordinance on the movement of people between cities, or upon a person's ability to pay his state income taxes is no greater than that imposed by any local nondiscriminatory taxing measure of unquestioned validity. We reject the contention that the ordinance on its face is beyond the scope of municipal affairs.

The Charter of the City of Oakland, as effective January 28, 1969, expressly provides: ‘The City shall have the right and power to make and enforce all laws and regulations in respect to municipal affairs, subject only to the restrictions and limitations provided in this Charter; . . .’; and ‘It is the intention of the people in adopting this section to take advantage of the provisions of Section 6 [now § 5] of Article XI of the Constitution of the State of California giving cities Home Rule as to municipal affairs.’ We have not been referred to any portion of the charter which restricts the city's power to impose taxes for revenue as a municipal affair.


In Rivera v. City of Fresno, supra, the court referred to Bishop v. City of San Jose (1969) 1 Cal.3d 56, 81 Cal.Rptr. 465, 460 P.2d 137, a case involving an alleged conflict between the regulatory, not the taxing, power of a municipality and of the state, for the principles governing the preemption of a chartered municipality by an act of the Legislature (see 6 Cal.3d at p. 135, 98 Cal.Rptr. 281, 490 P.2d 793). In Bishop those principles are reviewed and expounded as follows: ‘At all times since adoption of the Constitution in 1879, section 11 of article XI has specified that ‘Any county, city, town, or township may make and enforce within its limits all such local, police, sanitary, and other regulations as are not in conflict with general laws.’ (Italice added.) In 1896 section 6 of article XI was amended to provide a limited amount of autonomy for freeholders' charter cities, and in 1914 sections 6 and 8 of article XI were amended to permit such cities, by appropriate charter amendments, to acquire autonomy with respect to all municipal affairs [provisions now found in § 5]. A city which adopted such ‘home rule’ amendments thereby gained exemption, with respect to its municipal affairs, from the ‘conflict with general laws' restrictions of section 11 of article XI.

‘As to matters which are of statewide concern, however, home rule charter cities remain subject to and controlled by applicable general state laws regardless of the provisions of their charters, if it is the intent and purpose of such general laws to occupy the field to the exclusion of municipal regulation (the preemption doctrine). (Pacific Tel. & Tel. Co. v. City & County of San Francisco (1959) 51 Cal.2d 766, 768–769, 336 P.2d 514; Pipoly v. Benson (1942) 20 Cal.2d 366, 369–370, 125 P.2d 482 . . .)

‘As is made clear in the leading case of Pipoly v. Benson, supra, local governments (whether chartered or not) do not lack the power, nor are they forbidden by the Constitution, to legislate upon matters which are not of a local nature, nor is the Legislature forbidden to legislate with respect to the local municipal affairs of a home rule municipality. Instead, in the event of conflict between the regulations of state and of local governments, or if the state legislation discloses an intent to preempt the field to the exclusion of local regulation, the question becomes one of predominance or superiority as between general state laws on the one hand and the local regulations on the other. [Citations.]

‘If resolution of that question requires a determination as to whether the matter regulated is a state or a municipal affair, then, as declared in Professional Fire Fighters, Inc. v. City of Los Angeles (1963) 60 Cal.2d 276, 294, 32 Cal.Rptr. 830, 841, 384 P.2d 158, 169, ‘Because the various sections of article XI fail to define municipal affairs, it becomes necessary for the courts to decide, under the facts of each case, whether the subject matter under discussion is of municipal or statewide concern.’ In other words, ‘No exact defintion of the term ‘municipal affairs' can be formulated, and the courts have made no attempt to do so, but instead have indicated that judicial interpretation is necessary to give it meaning in each controverted case. The comprehensive nature of the power is, however, conceded in all the decisions . . ..’ (Butterworth v. Boyd (1938) 12 Cal.2d 140, 147, 82 P.2d 434, 438 . . .; see also City of Pasadena v. Charleville (1932) 215 Cal. 384, 392, 10 P.2d 745). Further, the ‘constitutional concept of municipal affairs . . . changes with the changing conditions upon which it is to operate. What may at one time have been a matter of local concern may at a later time become a matter of state concern controlled by the general laws of the state. [Citation.]’ (Pacific Tel. & Tel. Co. v. City & County of San Francisco, supra, 51 Cal.2d 766, 771, 775–776, 336 P.2d 514, 517; Butterworth v. Boyd, supra.)

‘In exercising the judicial function of deciding whether a matter is a municipal affair or of statewide concern, the courts will of course give great weight to the purpose of the Legislature in enacting general laws which disclose an intent to preempt the field to the exclusion of local regulation [citation], and it may well occur that in some cases the factors which influenced the Legislature to adopt the general laws may likewise lead the courts to the conclusion that the matter is of statewide rather than merely local concern. However, the fact, standing alone, that the Legislature has attempted to deal with a particular subject on a statewide basis is not determinative of the issue as between state and municipal affairs, nor does it impair the constitutional authority of a home rule city or county to enact and enforce its own regulations to the exclusion of general laws if the subject is held by the courts to be a municipal affair rather than of statewide concern; stated otherwise, the Legislature is empowered neither to determine what constitutes a municipal affair nor to change such an affair into a matter of statewide concern.’ (1 Cal.3d at pp. 61–63, 81 Cal.Rptr. at p. 468, 460 P.2d at p. 140, fn. omitted. See also, A.B.C. Distributing Co. v. City & County of San Francisco, supra, 15 Cal.3d 566, 570–576, 125 Cal.Rptr. 465, 542 P.2d 625; Rivera v. City of Fresno, supra, 6 Cal.3d 132, 135–140, 98 Cal.Rptr. 281, 490 P.2d 793; Galvan v. Superior Court (1969) 70 Cal.2d 851, 859–860, 76 Cal.Rptr. 642, 452 P.2d 930; In re Hubbard (1964) 62 Cal.2d 119, 127–128, 41 Cal.Rptr. 393, 396 P.2d 809 [overruled in part, Bishop v. City of San Jose, supra, 1 Cal.3d 56, 63, fn. 6, 81 Cal.Rptr. 465, 460 P.2d 137]; Ex parte Helm (1904) 143 Cal. 553, 556–557, 77 P. 453; Ex parte Lemon (1904) 143 Cal. 558, 559–560, 77 P. 455; Ex parte Braun (1903) 141 Cal. 204, 74 P. 780; Marsh & McLennan of Cal. v. City of Los Angeles, supra, 62 Cal.App.3d 108, 122–124, 132 Cal.Rptr. 796; Pesola v. City of Los Angeles, supra, 54 Cal.App.3d 479, 482–486, 126 Cal.Rptr. 580; and Franklin v. Peterson, supra, 87 Cal.App.2d 727, 731–732, 197 P.2d 788. Cf. John Tennant Memorial Homes, Inc. v. City of Pacific Grove, supra, 27 Cal.App.3d 372, 381–385, 103 Cal.Rptr. 215; Century Plaza Hotel Co. v. City of Los Angeles, supra, 7 Cal.App.3d 616, 620–626, 87 Cal.Rptr. 166; and City & County of San Francisco v. Boss (1948) 83 Cal.App.2d 445, 451–453, 189 P.2d 32. Note, Sato, op.cit., 60 Cal.L.Rev. 1055, 1098–1105; Comment, op.cit., 11 Santa Clara Lawyer 343, 345–361; Note, op.cit., 20 Hastings L.J. 813, 821–824; Januta, op.cit., 56 Cal.L.Rev. 1525, 1541–1543 and 1546–1548; and Comment, op.cit., 7 U.C.L.A.L.Rev. 102, 108–111 and 112–114.)


Respondents and the Attorney General as amicus curiae suggest that provisions found in article XIII of the California Constitution confer the power to tax incomes exclusively in the state Legislature and thereby preclude the chartered cities from imposing an income tax. At the time of the adoption of the Oakland ordinance and at the time of the adoption of section 17041.5 of the Revenue and Taxation Code (see part-B-below), section 11 of article XIII, as adopted in 1879, read as follows: ‘Income taxes may be assessed to and collected from persons, corporations, joint-stock associations, or companies resident or doing business in this State, or any one or more of them, in such cases and amounts, and in such manner, as shall be prescribed by law.’ By amendment to the Constitution, effective November 5, 1974, the provisions found in section 11 were recast and are now found in the first paragraph of section 26 of article XIII, which reads: ‘(a) Taxes on or measured by income may be imposed on persons, corporations, or other entities as prescribed by law. . . .’7 New section 33 repeats the language formerly found in section 13.

The Attorney General points out that the power to enact an income tax is and always has been an inherent power of the state. This was recognized in Tetreault v. Franchise Tax Bd. (1967) 255 Cal.App.2d 277, 63 Cal.Rptr. 326. There the court, in response to the contention that former section 11 of article XIII did not authorize a tax on gross receipts less expenses, stated: ‘This contention overlooks the fundamental distinction between the federal Constitution as a grant of legislative power and the state Constitution as a reservation of legislative power. Thus, any unappropriated tax imposed by Congress cannot exceed the grant of power to Congress contained in the Sixteenth Amendment. In contrast, the power of the state Legislature to levy taxes is inherent and requires no special constitutional grant [citation]. Article XIII, section 11, merely buttresses the inherent power of the Legislature to levy income taxes. . . . [T]axes enacted by the state are valid unless contrary to an express constitutional provision. There is nothing in article XIII, section 11 that purports to require a deduction or tax credit for taxes paid to foreign countries.’ (255 Cal.App.2d at pp. 280–281, 63 Cal.Rptr. at p. 329.) The foregoing does not sustain the amicus' contention that the constitutional provision gives the Legislature the exclusive right to impose state income taxes. It would be amazing to discover almost 100 years after the adoption of the 1879 Constitution that chartered cities had no power to levy taxes measured by gross income, because the measure of the tax was the sole concern of the state Legislature.

In Ainswort v. Bryant, supra, the court was concerned with the effect on municipalities taxing power of the “exclusive right and power to control, license and regulate” the intoxicating liquor business as delineated in section 22 of article XX of the state Constitution. In upholding the application of local sales tax to the retail purchase of intoxicating liquor, the court observed: ‘Where the power of taxation has been lodged in the state to the exclusion of municipalities and other entities of that character, it has customarily been done by specific language expressive of such purpose. Thus in 1933—the year intervening between the 1932 adoption of section 22 of article XX of the Constitution and the 1934 amendment thereto—there were two amendments to article XIII, sections 14 [cf. present § 28] and 16 [cf. present § 27], vesting an exclusive power of taxation in the state over ‘insurance companies' and ‘banks,’ respectively, by expressly providing it to be ‘in lieu of all other taxes and licenses, State, county, and municipal, . . . except taxes upon [their] real estate.’ Yet in 1934 when the constitutional provision as to 'intoxicating liquors' was amended so as to include an express reservation of an exclusive power of taxation, the reference was made explicitly to the authority of the ‘State Board of Equalization’ to ‘collect license fees or occupation taxes' on account of ‘the manufacture, importation and sale of intoxicating liquors,’ and only amounts so collected were mentioned for apportionment between the state and municipalities. In thus delineating and limiting the specific, exclusive taxing power of the state over such property, it would appear—under the settled rule of construction ‘expressio unius est exclusio alterius' (Sutherland, Statutory Construction (3d ed.), Horack, vol. 2, § 4915, p. 412)—that no further exclusive power of taxation was intended.’ (34 Cal.2d at pp. 472–473, 211 P.2d at p. 568. See also A.B.C. Distributing Co. v. City & County of San Francisco, supra, 15 Cal.3d 566, 571, 125 Cal.Rptr. 465, 542 P.2d 625. Cf. Century Plaza Hotel Co. v. City of Los Angeles, supra, 7 Cal.App.3d 616, 619–620, 87 Cal.Rptr. 166.)

The provision ‘The Legislature shall pass all laws necessary to carry out the provisions of this article’ should not be deemed a limitation on powers otherwise conferred upon a chartered city by the Constitution. It is clear that such a provision cannot of itself confer power on the Legislature to abrogate other provisions of law. In People v. Central Pac. R.R. Co. (1890) 83 Cal. 393, 23 P. 303, in response to the contention that the former section 13 gave the Legislature the power to pass any legislation it chose in the field the court acknowledged ‘that the legislature is not only authorized but required to pass all laws necessary to carry that article into effect’; it continued ‘it is not authorized, required, or empowered to pass laws that are not necessary to carry it into effect, nor to destroy the uniform operation of laws which are required by the constitution itself to have a uniform operation.’ (83 Cal. at pp. 405–406, 23 P. at p. 307.) In short, the authority conferred by present section 33 can rise no higher than the duties imposed by the earlier section. Where they are neutral, as here, we should not imply an exclusiveness which would invade the recognized taxing power of a chartered municipality.

We do not reach the question, posed by amici curiae and suggested by appellants, of whether or not the constitutional provisions contained in article XI and article XIII provide coextensive powers for a comprehensive personal income tax law such as is found in part 10 (§ 17001 et seq.) of division 2 of the Revenue and Taxation Code. (See Comment, op.cit., 11 Santa Clara Lawyer 343, 350–353; and Januta, op.cit., 56 Cal.L.Rev. 1525, 1541–1543.) It suffices to state that the provisions found in article XIII do not prohibit a chartered municipality from imposing a tax of the nature, character and incidents found in the Oakland ordinance. If the ordinance is invalid it must be because the state has preempted the right to measure a privilege tax by gross personal income.


In 1963 the Legislature added the following section to the Personal Income Tax Law: ‘Section 17041.5, is added to the Revenue and Taxation Code, to read: [¶] 17041.5. Notwithstanding any statute, ordinance, regulation, rule or decision to the contrary, no city, county, city and county, governmental subdivision, district, public and quasi-public corporation, municipal corporation, whether incorporated or not or whether chartered or not, shall levy or collect or cause to be levied or collected any tax upon the income, or any part thereof, of any person, resident or nonresident. [¶] This section shall not be construed, so as to prohibit the levy or collection of any otherwise authorized license tax upon a business measured by or according to gross receipts. . . .'8 (Stats.1963, ch. 812, § 1, pp. 1841–1842.)

In support of the judgment of the trial court the respondents urge that, regardless of how it is designated, the tax in question is an attempt by a chartered city to levy and to collect a tax upon a part of the income of persons, both resident and nonresident, receiving compensation within the city, that, as such, it is prohibited by the provisions of section 17041.5; that section 17041.5 represents legislation on a matter of statewide concern which takes precedent over any local legislation predicted on control of municipal affairs; and that in any event by the adoption of the Personal Income Tax Law the Legislature has preempted any right the city might otherwise have to impose an income tax.

The city contends that precedents such as Bishop v. City of San Jose, supra, which deal with a conflict in state and local regulations adopted pursuant to the police power are not controlling in the field of taxation because the raising of revenue by a chartered city is strictly a municipal affair; that there can be no preemption of that taxing power by the state Legislature; that all intendments are in favor of the validity of the licensing ordinance; and that in any event the tax in question is not a tax upon the income of any person such as is prohibited by the provisions of section 17041.5. The cities of Cypress, Los Angeles, Sacramento, Santa Ana and Torrance, appearing as amici curiae, paint with a broader brush. They assert that the power to impose a conventional income tax is inherent in the power of a chartered city and coextensive with any power in the state Legislature. They seek a ruling that the prohibition against municipal income taxes contained in section 17041.5 is invalid as it applies to charter cities. San Francisco, Merced and Sacramento take a narrower position and seek to uphold a chartered city's right to impose occupation taxes by strictly construing the provisions of section 17041.5.

We do not probe the extent to which the state Legislature may impinge upon the revenue raising power of a chartered city, nor do we attempt to determine whether a chartered city may impose an income tax such as is found in the Personal Income Tax Law, or, if so, whether that power may be preempted by the mere existence of the state law or by the provisions of section 17041.5. We conclude, for the reasons set forth below, that the tax imposed by the Oakland ordinance, is not the type of tax on income embraced in the Personal Income Tax Law, or the provisions of section 17041.5, and that the power of the chartered city to impose such a tax (part II above) insofar as it may be preempted by action of the state Legislature has not been so limited.

In the first place there is some question concerning the extent to which the state may interfere with the taxing power of a chartered city. There have been few inroads on the power of municipal taxation by state action. A series of cases struck down city license taxes on persons who were licensed under state law. In re Groves, supra, made it clear that those decisions were compelled only because the city licensing system attempted to impose further regulations on the licenses and was not merely for revenue.9

We have seen that in Ainsworth v. Bryant, supra, the city's right to levy a purchase and use tax was not inhibited by the constitutional and statutory provisions governing the licensing and regulation of the manufacture, sale, purchase, possession and transportation of intoxicating liquor. The respondents and the Attorney General rely upon Century Plaza Hotel Co. v. City of Los Angeles, supra, 7 Cal.App.3d 616, 87 Cal.Rptr. 166. There the court dealt with a subsequently enacted ‘Alcoholic Beverage Tax Law’ which expressly provided, ‘The taxes imposed by this part are in lieu of all county, municipal, or district taxes on the sale of beer, wine or distilled spirits . . .’ (Rev. & Tax.Code, § 32010.) It concluded that a ‘tipplers' tax,’ which imposed an excise tax of 5 percent upon the purchase price of alcoholic beverages sold by a retailer for consumption on his premises, irreconcilably conflicted with the Legislature's intent to preempt the field of taxation on transactions in alcoholic beverages as embodied in section 32010. (7 Cal.App.3d at pp. 622–623, 87 Cal.Rptr. 166.)10 The strength of Century Plaza is diluted by subsequent decisions which limit it as dependent ‘upon the interrelationship of certain constitutional and statutory provisions' relating to the taxation and regulation of alcoholic beverages (Rivera v. City of fresno, supra, 6 Cal.3d at p. 140, 98 Cal.Rptr. at p. 285, 490 P.2d at p. 797), and as relating to a tax which ‘clearly singled out the liquor industry in imposing a tax upon the purchase (and, necessarily, the sale) of alcoholic beverages.’ (A.B.C. Distributing Co. v. City & County of San Francisco, supra, 15 Cal.3d 566, 575, 125 Cal.Rptr. 465, 470, 542 P.2d 625, 630.)

The last two cases cited support the city's position in this case. In Rivera the court found that the Fresno utility user's tax fell ‘within the concept of a ‘substantially different tax’ excepted by the Legislature from the scope of Bradley-Burns and from the declaration of preemption found in Statutes 1968, chapter 1265, section 2.' (6 Cal.3d at p. 138, 98 Cal.Rptr. at p. 284, 490 P.2d at p. 796.) In A.B.C. Distributing Co. the San Francisco payroll expense tax was held to be a valid license or occupation tax which could be applied to retailers of intoxicating beverages because it was not a tax “on account of' the manufacture, importation or sale of alcoholic beverages within the meaning of article XX, section 22, of the California Constitution' (15 Cal.3d at p. 573, 125 Cal.Rptr. at p. 469, 542 P.2d at p. 629), and because it did not violate section 32010 of the Revenue and Taxation Code since it ‘is neither imposed upon the sale of alcoholic beverages nor measured by the gross receipts from such sales.’ (Id., p. 575, 125 Cal.Rptr. p. 470, 542 P.2d p. 630.) The court noted, ‘It is true that, as applied to plaintiffs, the payroll expense tax probably will be paid from revenues derived at least in part from the sale of alcoholic beverages. To a degree every tax and expense of this type necessarily results in a reduction of available revenues, yet this indirect burden has never been held sufficient to nullify such taxation. [Citations.]’ (Id.)

Applying a similar analysis here we find first that the prohibitory section is found in the Personal Income Tax Act itself. It is reasonable to infer that the legislative concern was with an income tax that would be of a general nature similar to that found within the act itself. Here, as we have seen (part I), there is no general attempt to tax income, or even part of the income of everyone within the city. Secondly we notice—that the tax on the privilege of engaging in employment in Oakland is, as was the payroll expense tax in A. B. C. Distributing Co., complementary to a business license tax. (See 15 Cal.3d at p. 572, 125 Cal.Rptr. 465, 542 P.2d 625; and Ord. § 5–1.65(k).) It has the attributes of a license tax upon a business measured by or according to gross receipts. The Legislature has expressly stated in section 17041.5, ‘This section shall not be construed so as to prohibit the levy or collection of any otherwise authorized license tax upon a business measured by or according to gross receipts.’ The discussion above indicates that the city is authorized to levy a license tax upon the business of being employed, and the fact that the tax is measured by the gross receipts from that employment will not bring it within the prohibition of section 17041.5.

This conclusion is strengthened by reference to section 50026 of the Government Code which provides: ‘The legislative body of any local agency, chartered or general law, which is otherwise authorized by law or charter to impose any tax on the privilege of earning a livelihood by an employee or any other tax, fee or charge on or measured by the earmings, or any part thereof, of any employee, shall not impose any such tax, fee or charge on the earnings of any employee, when such employee is not a resident of the taxing jurisdiction, unless exactly the same tax, fee or charge at the same rate, with the same credits and deductions, is imposed on the earnings of all residents of the taxing jurisdiction who are employed therein. [¶] This section shall not be construed as authorizing any tax prohibited by Section 17041.5 of the Revenue and Taxation Code or any other provision of law, nor shall it be construed so as to prohibit the levy or collection of any otherwise authorized tax upon a business measured by or according to gross receipts.’ It is clear from the first paragraph that the Legislature was aware of the possibility, approved in this case, that a chartered city was authorized to impose a tax on the privilege of earning a livelihood by an employee measured by the gross earnings of the employee. Its concern was that the tax be nondiscriminatory between residents and nonresidents. (See Stats.1968, ch. 559, § 3, pp. 1226–1227.) It is now established that the provisions of the state and federal Constitution which guaranty equal protection of the laws proscribe taxes which arbitrarily discriminate against nonresidents. (County of Alameda v. City and County of San Francisco (1971) 19 Cal.App.3d 750, 753–756, 97 Cal.Rptr. 175. See also Austin v. New Hampshire (1975) 420 U.S. 656, 665, 95 S.Ct. 1191, 43 L.Ed.2d 530.)11 Respondents urge that the last paragraph of section 50026 indicates that it is not intended to limit the prohibition of section 17041.5. That may be true, but it does not preclude reading the two sections together to determine what the section in the Personal Income Tax Law actually intented to prohibit.

We have examined the opinion of the Attorney General which concludes: ‘. . . [W]e cannot predict with certainty how a court would rule on the proposed Los Angeles occupation tax. Unless a court were to hold that section 17041.5 is unconstitutional as applied to charter cities, the section would have the effect of prohibiting a municipal income tax such as the proposed ordinance in question.’ (53 Ops. Cal.Atty.Gen. 270 (1970) Op. No. 70–83, 274, see fn. 11 above.) We disagree with its predicate that an occupation tax measured by the compensation received, such as that found in the Oakland ordinance, is more like an income tax than a traditional business license tax. The opinion is also impeached by the fact that Century Plaza on which it relies has been strictly limited, and the San Francisco Commuters tax case, which it mentions, has been disposed of solely on the grounds of discrimination. We therefore reject his conclusion.

As amicus curiae the Attorney General urges that we find state action has preempted the city's right to impose a tax of the nature found in the ordinance because of numerous policy reasons—a chamber of horrors—which lack weight because they are predicated on the assumption that the ordinance imposes a general income tax. There may be important policy reasons which indicate that the state alone should impose a general income tax. If the chartered cities by the exercise of their legitimate power to license for revenue create a situation which parallels that which lead to the enactment of the Bradley-Burns Uniform Local Sales and Use Tax Law, the remedy may be by providing similar treatment for local income tax laws, not in curbing the city's power to license for revenue. (Cf. fn. 10 above.) The proposed license ordinance no more affects the progressive state income system than do other taxes levied on individuals and businesses. An examination of the hypothetical situation posed by the Attorney General indicates that all of the problems he envisions could similarly be attributed to an income taxpayer's sales, property and flat fee or gross income license taxes payable to several jurisdictions. Nor does the fact that the Legislature gives subventions to local government create a limitation on the latter's taxing power.

We conclude that there is no preemption of the city's power to impose the tax created by the ordinance in question. ‘It is urged, in effect, that the particular provision in question is unreasonable and oppressive, and that it is unequal and unlawfully discriminating. But we are unable to regard it as open to either or any of these objections. A municipal ordinance must be very clearly obnoxious to such objections as those made, or some one of them, before it will be declared invalid by the courts. Every intendment is to be indulged in favor of its validity, and all doubts resolved in a way to uphold the lawmaking power; and a contrary conclusion will never be reached upon light consideration. It is the province and right of the municipality to regulate its local affairs—within the law, of course—and it is the duty of the courts to uphold such regulations, except it manifestly appear that the ordinance or by-law transcends the power of the municipality and contravenes rights secured to the citizen by the constitution, or laws made in pursuance thereof. That the ordinance in question violates any such right we are unable to perceive.’ (Ex parte Haskell (1896) 112 Cal. 412, 416, 44 P. 725.)


We turn now to the alleged invalidity of certain provisions of the ordinance itself.


Respondent-plaintiffs contend that the tax is invalid because the burden of the compensation tax is not borne equally by residents and nonresidents. We have already alluded to that argument insofar as it was relied upon to show that the tax involved was not a municipal affair (see part II above). It is clear that a tax which patently taxes nonresidents and subjects them to a disproportionately heavier tax while excluding residents will be invalid because of discrimination which denies nonresidents equal protection of the laws. (County of Alameda v. City and County of San Francisco, supra, 19 Cal.App.3d 750, 753–757, 97 Cal.Rptr. at 175; and see Gov.Code, § 50026.) Here there is no such defect.

The prospective taxpayers complain that a tax on nonresidents must be proportioned to the benefits they receive. In the case last cited, the court stated: ‘We are satisfied the formula adopted is arbitrary, since if the purpose of the ordinance is in fact to require commuters to pay for the services they enjoy, the only sound basis for apportionment would be occupancy in San Francisco. The time spent by commuters in San Francisco, rather than the percentage of commuters to the total population, has a direct bearing upon the services which commuters use. The San Francisco ordinance totally ignores the fact that individuals who work in San Francisco and reside elsewhere are normally absent from San Francisco during any given week for a greater number of hours than they are present in San Francisco and able to avail themselves of the services it provides.’ (19 Cal.App.3d at p. 756, 97 Cal.Rptr. at p. 179, fn. omitted.) The foregoing comments must be viewed in the light of the context in which they are found—a discriminatory tax.

The omitted footnote in the last case refers to Associated Home Builders etc., Inc. v. City of Newark (1971) 18 Cal.App.3d 107, 95 Cal.Rptr. 648, wherein the court upheld a city's determination that residential construction should be taxed at a substantially higher rate than commercial and industrial structures because the full-time requirements of residents, as opposed to the part-day requirements of those who merely work in the city, result in greater use of the streets and of fire and police protection. In the latter case the court observed, ‘[I]t is not for the courts to say that the full-time requirements of residents do not impose a greater burden than the part-day pressures imposed by those who but work in a city. That fact issue is for the legislative body, and its determination affords an adequate basis for the classification.’ (18 Cal.App.3d at p. 110, 95 Cal.Rptr. at p. 649.)

Here the respondents are asking the court, rather than the legislative body, to determine that there is a disproportionate burden when all employees, resident and nonresident, are taxed equally in proportion to such city services as they may receive while engaged in making a livelihood. The fact that residents may receive other governmental services while not working does not create a discrimination in the absence of a showing that they are not otherwise taxed for those services. (See American Commuters Association v. Levitt (2d Cir. 1969) 405 F.2d 1148, 1152–1153.)

‘A discriminatory intent or purpose is not presumed. [Citations.] To the contrary, the good faith of those enforcing the law and the validity of their action in the premises are presumed. [Citation.] The burden of proving discrimination is upon the complaining party. [Citation.]’ (City of Banning v. Desert Outdoor Advertising, Inc. (1962) 209 Cal.App.2d 152, 155, 25 Cal.Rptr. 621, 622. Accord: A.B.C. Distributing Co. v. City & County of San Francisco, supra, 15 Cal.3d 566, 573, 125 Cal.Rptr. 465, 542 P.2d 625.) No discrimination has been demonstrated in this case.


The United States Supreme Court has recognized that persons have a constitutional right to move from state to state. ‘[A]ny classification which services to penalize the exercise of that right, unless shown to be necessary to promote a compelling governmental interest, is unconstitutional. [Citations.]’ (Shapiro v. Thompson (1969) 394 U.S. 618, 634, 89 S.Ct. 1322, 1331, 22 L.Ed.2d 600. See also Memorial Hospital v. Maricopa County (1974) 415 U.S. 250, 254–256, 94 S.Ct. 1076, 39 L.Ed.2d 306.) The extent to which this privilege exists with respect to intrastate travel is not clear, but, in any event, respondents have failed to show how the nondiscriminatory tax in this case interferes with the privilege of a nonresident to engage in employment in the City of Oakland. To hold that the city could not tax nonresidents on the fruit of their activities within the city would create a discrimination against residents. It is true that the nonresidents have no voice in fixing the tax, but it may be assumed that if the tax destroys the labor market within the city, and creates an exodus of employees and employers from the city, responsible government will act to curb that result.

The exemption of domestic servants from the tax is not an improper classification. In other jurisdictions the exemption has been recognized as a valid exception to similar taxes. (See McPheeter v. City of Auburn, supra, 288 Ala. 286, 292, 259 So.2d 833, 837; Estes v. City of Gadsden, supra, 266 Ala. 166, 174, 94 So.2d 744, 752; and City of Lousiville v. Sebree, supra, 308 Ky. 420, 433–435, 214 S.W.2d 248, 256.) Until recent legislation, operative January 1, 1977 (Stats.1975, ch. 1263, § 5.5, p. ——), section 3352 of the Labor Code excluded persons engaged in household domestic service from compulsory coverage under Worker's Compensation Insurance. Also domestic service in a private home is excluded from unemployment insurance coverage. (Unemp.Ins.Code, § 629.)

Under the federal Constitution the following principles apply, ‘It is inherent in the exercise of the power to tax that a state be free to select the subjects of taxation and to grant exemptions. Neither due process nor equal protection imposes upon a state any rigid rule of equality of taxation. [Citations.] This Court has repeatedly held that inequalities which result from a singling out of one particular class for taxation or exemption, infringe no constitutional limitation. [Citations.] [¶] Like considerations govern exemptions from the operation of a tax imposed on the members of a class. A legislature is not bound to tax every member of a class or none. It may make distinctions of a degree having a rational basis, and when subjected to judicial scrutiny they must be presumed to rest on that basis if there is any conceivable state of facts which would support it. [Citations.]’ (Carmichael v. Southern Coal Co. (1937) 301 U.S. 495, 509, 57 S.Ct. 868, 872, 81 L.Ed. 1245.)

Similar principles have been recognized in this state. ‘It is well settled that occupations and businesses may be classified and subdivided for purposes of taxation, and it is within the discretion of the Legislature to exact different license taxes from different classes or subclasses of businesses, subject only to the limitations of the state and federal Constitutions in regard to equal protection of the laws.’ (Fox etc. Corp. v. City of Vakersfield (1950) 36 Cal.2d 136, 142, 222 P.2d 879, 884.)

No reason has been shown why we should ‘substitute our judgment for that of the city's legislative power and conclude that there was no conceivable basis' for the exemption of domestic servants employed in private homes. (See id., at p. 144, 222 P.2d 879, 885.)


It is claimed that the law violates the provisions of section 222 of the Labor Code. That section provides: ‘It shall be unlawful, in case of any wage agreement arrived at through collective bargaining, either wilfully or unlawfully or with intent to defraud an employee, a competitor, or any other person, to withhold from said employee any part of the wage agreed upon.’ Section 224, however, in pertinent part qualifies section 222, as follows: ‘The provisions of Sections 221, 222 and 223 shall in no way make it unlawful for an employer to withhold or divert any portion of an employee's wages when the employer is required or empowered so to do by state or federal law . . .. [¶] Nothing in this section or any other provision of law shall be construed as authorizing an employer to withhold or divert any portion of an employee's wages to pay any tax, fee or charge prohibited by Section 50026 of the Government Code whether or not the employee authorizes such withholding or diversion.’

The tax does not fall within the prohibition of section 50026 of the Government Code (see part III–B—above). State law includes authorized ordinances of a municipality. (In re Johnson (1920) 47 Cal.App. 465, 467, 190 P. 852.)

The right to compel withholding or collection of a tax has been generally recognized as a burden properly placed upon the seller or employer. (See Rivera v. City of Fresno, supra, 6 Cal.3d 132, 139, 98 Cal.Rptr. 281, 490 P.2d 793; Ainsworth v. Bryant, supra, 34 Cal.2d 465, 476–477, 211 P.2d 564; Estes v. City of Gadsden, supra, 266 Ala. 166, 171, 94 So.2d 744, 752.) If a governmental agency, or any employer, not a party to this suit, can establish that withholding is a prohibited burden, the provisions of the ordinance governing return and payment by the employee would govern. (See McPheeter v. City of Auburn, supra, 288 Ala. 286, 291, 259 So.2d 833, 836.) The ordinance cannot be invalidated because of the withholding provision.


Finally, it is urged that the tax improperly requires employees of the State of California to pay a license tax. This contention is predicated upon the state's power to create a comprehensive scheme for the employment of public servants. (See Gov.Code, § 18000 et seq.)

Where the question has been considered it is generally held that governmental employees are subject to nondiscriminatory local taxes. (Graves v. N.Y. ex rel. O'Keefe (1939) 306 U.S. 466, 486–487, 59 S.Ct. 595, 83 L.Ed. 927; McPheeter v. City of Auburn, supra, 288 Ala. 286, 290, 259 So.2d 833, 836; Hamilton v. City and County of Denver (1971) 176 Colo. 6, 15–17, 490 P.2d 1289, 1293; McConnell v. City of Columbus (1961) 172 Ohio St. 95, 97, 173 N.E.2d 760, 763, 764; Kiker v. City of Philadelphia, supra, 346 Pa. 624, 632–634, 31 A.2d 289, 294–295.)

The judgment is reversed.


1.  The plaintiffs claimed $5,000 and the intervenors $2,500 for attorneys' fees in the court below. The court in taxing costs ordered the claims stricken. There is no appeal in the record from that order. We, therefore, refrain from reviewing intervenors' contention that attorneys' fees should have been allowed.

2.  It reads, ‘If any sentence, clause, section or part of this Section, or any license fee against any individual or any of the several groups specified herein is found to be unconstitutional, illegal or invalid, such unconstitutionality, illegality or invalidity shall affect only such clause, sentence, section or part of this ordinance and shall not affect or impair any of the remaining provisions, sentences, clauses, sections or other parts of this ordinance. It is hereby declared to be the intention of the City Council of the City of Oakland that this Section of the OAKLAND MUNICIPAL CODE would have been adopted had such unconstitutional, illegal or invalid sentence, clause, section or part thereof not been included herein.’

3.  ‘A tax on a person's income, emoluments, profits, and the like, or the excess thereof over a certain amount.’ (Black's Law Dict. (4th ed. 1968) p. 906.)‘A tax based on income, gross or net.’ (Ballentine's Law Dict. (3d ed. 1969) p. 601.)Since both definitions encompass either a net income tax or a gross income tax, it is necessary to consider which is covered by any statutory or constitutional reference to an income tax, before applying such provision to the ordinance, which clearly imposes a tax measured by gross compensation.

4.  See: City of Los Angeles v. Belridge Oil Co. (1954) 42 Cal.2d 823, 831, 271 P.2d 5 [privilege of engaging in the activity of ‘selling’]: In re Nowak (1921) 184 Cal. 701, 703, 195 P. 402 [conducting, managing and carrying on the business of retail grocer]; In re Galusha (1921) 184 Cal. 697, 699, 195 P. 406, and Franklin v. Peterson (1948) 87 Cal.App.2d 727, 730, 197 P.2d 788 [business of practicing law]; Ex parte Braun (1903) 141 Cal. 204, 205, 74 P. 780 [license-tax upon a great majority of callings and occupations]; and Marsh & McLennan of Cal. v. City of Los Angeles (1976) 62 Cal.App.3d 108, 111, 112, 132 Cal.Rptr. 796 [any person engaged in any trade, calling, occupation, vocation, profession or other means of livelihood as an independent contractor].Note also, taxes otherwise measured: A. B. C. Distributing Co. v. City & County of San Francisco (1975) 15 Cal.3d 566, 125 Cal.Rptr. 465, 542 P.2d 625 [persons engaging one or more employees to perform services with the city]; Rivera v. City of Fresno (1971) 6 Cal.3d 132, 135, 98 Cal.Rptr. 281, 490 P.2d 793 [utility users tax]; In re Groves (1960) 54 Cal.2d 154, 156, 4 Cal.Rptr. 844, 351 P.2d 1028 [carrying on any business, vocation, profession, calling, show, exhibition or game]; City of Glendale v. Trondsen (1957) 48 Cal.2d 93, 106, 308 P.2d 1 [charge on occupants of real property for the privilege of accumulating rubbish and having available collection service therefor]; Ainsworth v. Bryant (1949) 34 Cal.2d 465, 469, 211 P.2d 564 [sales and use tax on purchaser-consumer]; West Coast Adver. Co. v. San Francisco (1939) 14 Cal.2d 516, 95 P.2d 138 [license fee for revenue only on business of outdoor advertising]; Ex parte Jackson (1904) 143 Cal. 564, 565, 77 P. 457 [carrying on a livery or feed stable]; Ex parte Lemon (1904) 143 Cal. 558, 559, 77 P. 455 [business of keeping a restaurant]; Ex parte Helm (1904) 143 Cal. 553, 554, 77 P. 453 [engaging in or carrying on business of selling goods]; Arnke v. City of Berkeley (1960) 185 Cal.App.2d 842, 847, 8 Cal.Rptr. 645 [nonresident independent ornamental metals contractor engaged in business in city, on basis of employees working there]; McAdams Oil Co. v. Los Angeles (1939) 32 Cal.App.2d 359, 362, 89 P.2d 729 [pumping of oil wells]; City of Redding v. Dozier (1922) 56 Cal.App. 590, 591, 206 P. 465 [physician and surgeon]; and In re Diehl (1908) 8 Cal.App. 51, 54, 96 P. 98 [occupation of shoeing horses].

5.  ‘The ordinance which is now before the court lays the tax upon the privilege of working and rendering services within the city and measures the value of the privilege by the amount of gross receipts of each person. It is true that the character of any tax should be determined by its incidences and not by the name given it or necessarily the language used. . . . [¶] It will be observed that the amount of the instant tax is measured entirely by gross receipts and, therefore, it is argued that this shows that this is an income tax. But this provision is merely a manner of measuring the tax. [¶] To summarize the situation, we think that the tax in question is not a property or income tax but is a privilege tax or license tax within the power of the city to enact.’ (Estes v. City of Gadsden, supra, 266 Ala. at pp. 171 and 172, 94 So.2d at pp. 749 and 750.)‘The principal storm center of the controversy, as we have said, is whether or not this ordinance imposes an income tax, the taxpayers' argument being that the city has no authority to levy such a tax. We need not pass upon the question of the existence or absence of that power. [¶] Confusion in the case may arise from placing so much emphasis on the measure of the tax as to subordinate or lose sight of its true character. The ordinance calls for ‘license fees for the privilege of engaging in Louisville in occupations, trades, professions, business and other activities.’ The privilege is to be ‘measured by the amount of salaries, wages, commissions, net profits and other compensation earned.’ . . . [¶] This Louisville ordinance lays the tax upon the privilege of working and conducting a business within the city, and only measures the value of the privilege by the amount of earnings or net profits. It is contended that this is but a subterfuge to avoid the absence of power and that, looking beyond the matter of form to the matter of substance, it is but an income tax. The definition or classification may be a matter of approach or point of view. Sometimes one may not see the woods for the nearby trees. The psychological impact loses force when emphasis is placed on what is made subject to taxation rather than on the measure of the tax and the basis of computation. Or if the word ‘receipts', which, in truth, is the more appropriate term, be used instead of ‘income.’ If graduated stated sums had been provided instead of a per centum of receipts or net profits, the source of such sums would in all probability have been the same. And that way of fixing the tax could scarcely be regarded as illegal. [Citation.] The sting of feeling that an unlawful tax has been imposed would then be eased by the recognition of certain legitimacy. [¶] It is laid down in 27 Am.Jur., Income Taxes, Sec. 7: [¶] ‘General income tax laws usually apply to net income rather than to gross income, and various exemptions and deductions are allowed from gross receipts in computing the amount of income upon which the tax must be paid. Although various types of taxes may be measured by gross receipts or gross income, such taxes are usually not income taxes . . . Thus, franchise or privilege taxes on corporations are not income taxes, although measured by gross receipts or gross income. Likewise, occupation taxes or privilege taxes on those engaged in specified businesses, although measured by gross receipts, are not income taxes.’ (City of Louisville v. Sebree, supra, 308 Ky. at pp. 428–429 and 430, 214 S.W.2d at pp. 252–253 and 254.)

6.  Section 106 of this act reads as follows: ‘(a) No person shall be relieved from liability for any income tax levied by any State, or by any duly constituted taxing authority therein, having jurisdiction to levy such a tax, by reason of his residing within a Federal area or receiving income from transactions occurring or services performed in such area; and such State or taxing authority shall have full jurisdiction and power to levy and collect such tax in any Federal area within such State to the same extent and with the same effect as though such area was not a Federal area. [¶] (b) The provisions of subsection (a) shall be applicable only with respect to income or receipts received after December 31, 1940.’ (4 U.S.C. (Supp. V) § 106.)Section 110, subdivision (c) defines ‘income tax’ as follows: ‘(c) The term ‘income tax’ means any tax levied on, with respect to, or measured by, net income, gross income, or gross receipts.' (4 U.S.C. (Supp. V) § 110, subd. (c).)

7.  The comment of the Constitutional Revision Task Force on article XIII with respect to section 26 (7 Journal of the Assembly 1973 1974 Reg.Sess. 13272) reads, ‘Sections 26(a) and 26(b) are intended to consolidate existing Section 11 (which authorizes the Legislature to impose income taxes) with the pertinent portion of existing Section 1 3/4 which exempts interest from State and local bonds from income taxes.’ (Id., p. 13272.) That report was officially adopted as a statement of legislative intent in adopting the revised article XIII. (Stats. 1974, ch. 311, § 78, p. 624.)It may be noted that at the same election the voters approved an amendment to subdivision (a) of section 3 of article XI which abolished the necessity for legislative approval of a county or city charter adopted by a majority vote of its electors, and which expressly provided. ‘The provisions of a charter are the law of the State and have the force and effect of legislative enactments.’

8.  A further provision reading ‘This section shall remain in effect until the 91st day after the final adjournment of the 1965 Regular Session of the Legislature’ was deleted in 1965. (Stats.1965, ch. 1319, § 1, p. 3206.)

9.  The opinion states: ‘Petitioner contends, however, citing Agnew v. City of Los Angeles, 51 Cal.2d 1, 330 P.2d 385, Agnew v. City of Culver City, 51 Cal.2d 474, 334 P.2d 571, and Agnew v. City of Culver City, 147 Cal.App.2d 144, 304 P.2d 788 that city business taxes may not be enforced against persons licensed under state law by requiring them to secure business licenses or suffer criminal penalties. In the Agnew cases the license fees were not imposed solely for revenue purposes but as an inseparable part of a regulatory scheme excluded by state law. (See also Agnew v. City of Los Angeles, 110 Cal.App.2d 612, 619–623, 243 P.2d 73; Lynch v. City of Los Angeles, 114 Cal.App.2d 115, 118–120, 249 P.2d 856; City & County of San Francisco v. Boss, 83 Cal.App.2d 445, 452, 189 P.2d 32.) [¶] In the present case, however, the city seeks to enforce its licensing ordinance against petitioner for revenue only, and as the Agnew cases expressly recognized, such taxation is not excluded because the state has occupied the field of regulation. (51 Cal.2d 1, 7, 330 P.2d 385; 51 Cal.2d 474, 477, 334 P.2d 571; 147 Cal.App.2d 144, 149, 304 P.2d 788)’ (54 Cal.2d at pp. 157–158, 4 Cal.Rptr. at p. 847, 351 P.2d at p. 1031.)

10.  The court also commented on the Bradley-Burns Uniform Local Sales and Use Tax Law (Rev. & Tax.Code, div. 2, pt. 1.5, § 7200 et seq., as added by Stats.1955, ch. 1311, § 1, p. 2381, operative April 1, 1956), and particularly section 7203.5, as added in 1968 (Stats.1968, ch. 1265, § 1, p. 2387). It indicated that the declaration in section 2 of the 1968 amendment reading, ‘Therefore, the Legislature declares that the state, by enactment of the Sales and Use Tax Law and the Bradley-Burns Uniform Local Sales and Use Tax Law, has preempted this area of taxation,’ is supportive of a conclusion that the tipplers' tax was improper as it imposed a tax at a rate greater than that permitted by the Uniform Law. We note, however, that the last paragraph of section 7203.5 reads, ‘Nothing in this section shall be construed as prohibiting the levy or collection by a city, county or city and county of any other subsantially different tax authorized by the Constitution of California or by a statute or by the charter of any charter city.’ We do not attempt to decide whether the Uniform Act is a carrot to lead local government on the road to uniformity, or a bludgeon which will strike if the local government attempts to stray from the narrow path outlined. (See Rivera v. City of Fresno, supra, 6 Cal.3d 132, 136–137, 98 Cal.Rptr. 281, 490 P.2d 793.)

11.  The court in County of Alameda, having found the ordinance discriminatory, did not reach the question of whether the tax, imposing ‘license fees for the privilege of engaging in occupations, trades and professions, in the City and County of San Francisco by all non-resident persons employed by others . . .’ (19 Cal.3d at p. 752, 97 Cal.Rptr. at p. 176) measured by adjusted gross receipts from the employment, violated the provisions of section 17041.5 of the Revenue and Taxation Code, although the trial court had so held. (See 53 Ops.Cal.Atty.Gen. 270 (1970) Op. No. 7–83, at p. 274.)

SIMS, Associate Justice.

MOLINARI, P. J., and ELKINGTON, J., concur.