The Foreign Miners' Tax Act of 1850 was passed by the California Legislature in an attempt to discourage miners who weren't American citizens from coming to the state. Gold had recently been discovered in California, attracting fortune-seekers from all across the globe. Such competition led to resentment among white American miners, who believed that California's extensive gold reserves rightfully belonged to them.

It was in response to their concerns that the Foreign Miners' Tax Act was passed. It imposed a monthly tax of twenty dollars—a large sum of money in those days—on foreign miners working in California. However, the Act turned out to be a disaster. For one thing, it didn't raise as much revenue as intended. Many foreign miners, especially those from Mexico and China, simply quit the state instead of paying the tax. Also, a number of foreign miners expressed their anger at the tax by staging full-scale riots that had to be broken up by the state militia.

Unsurprisingly, the Act was soon repealed. But just a year later, in 1852, a variation of the original legislation, the Foreign Miners' License Tax, was introduced. The new tax was set at a much lower rate than the previous one—three dollars a month—but the overriding objective was the same: to reduce the number of foreign miners coming into California, especially from China, as anti-Chinese feeling remained high among the state's white population.