American Alliance Ins. Co. v. State Board of Equalization

This case requires that we construe, apparently for the first time, certain language contained in the Californiá Constitution, article XIII, section 28, subdivision (f), paragraph (3), as well as virtually the same language contained in California Insurance Code section 685.1.

The constitutional and Insurance Code sections referred to are part of the so-called “retaliatory insurance tax” levied by California and most of the other states of the union. California’s law was held to be constitutional in Western & Southern L. I. Co. v. Bd. of Equalization (1981) 451 U.S. 648 [ 68 L.Ed.2d 514 , 101 S.Ct. 2070 ]. The court determined, inter alia, that, “. .. the principal purpose of retaliatory tax laws is to promote the interstate business of domestic insurers by deterring other States from enacting discriminatory or excessive taxes.” (Id., at p. 668 [ 68 L.Ed.2d at p. 531 ].) Likewise, the California Assembly Interim Committee on Revenue and Taxation in volume 4, number 15 of the Insurance Tax, part 8 (Dec. 1964) page 66, stated, “The actual rationale for the provision is that the application of the retaliatory laws acts as a deterrent to state taxation on the insurance…