Robert H. Jackson

“ A rate of interest on tax delinquencies which is low in comparison to the taxpayer's borrowing rate-if he can borrow at all-is a temptation to use the state as a convenient, if involuntary, banker by the simple practice of deferring the payment of taxes. ”

“ The legislature may include compensation to the state for the increased costs of administration in the exaction for delay in paying taxes without thereby changing it from interest to penalty.
These factors-risk, and the expenses of handling-are reflected in the interest rates permitted by California to certain types of financial institutions: for example, credit unions may charge interest at the rate of one per cent per month; [3] pawnbrokers, at two per cent per month on the first one hundred dollars of indebtedness ”

“ Petitioner seeks to establish that the twelve per cent exaction here in question is not 'interest' by pointing to Article XX, Section 22 of the California Constitution, which provides that, except for specified institutions, the rate of interest on loans, and on accounts after demand or judgment, shall be seven per cent, and leaves the parties free to contract in writing for a rate not exceeding ten per cent. ”