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Tax Day homily

Although this story focuses on California’s abuses, it shows how government gets its revenue in general: arbitrarily and with the power and willingness to ruin people’s lives.

In 1970, a young Southern California electrical engineer and inventor named Gilbert Hyatt filed a patent application for an innovative microprocessor chip…

Twenty years later…the U.S. patent office awarded Hyatt the patent…a multimillion-dollar windfall. He moved to Las Vegas, where he said he was a full-time resident before he received the earnings.

California’s Franchise Tax Board (FTB)…decided to seek $7.4 million in back taxes, claiming that he was still a resident of California when the money came in. That sounds like a simple enough dispute that could quickly be resolved, but what followed has been an ordeal that has consumed a good bit of Hyatt’s adult life.

…[for] a sum that now tops $55 million as interest and penalties have accrued…The tax authorities have been pursuing him through its administrative process. Tired of the endless investigations, Hyatt filed suit in Nevada court in 1998. California officials said they weren’t subject to an out-of-state tort lawsuit. California lost that argument in the Nevada Supreme Court and the U.S. Supreme Court and the high court decision sent the case back to a Nevada district court, which awarded Hyatt nearly $400 million in damages after finding that the California authorities abused their power and invaded his privacy. That case is on appeal.

Hyatt believes that California officials are purposefully delaying. “Specifically, because of the 20 year delay Hyatt can no longer obtain a fair and full adjudication of whether he owes state taxes to California,” according to his lawsuit. “During this time, material witnesses have passed away, memories of witnesses have faded, and documents relevant and important to Hyatt are no longer available.” The board keeps assessing penalties…He suspects the tax board is waiting for him to die so that it can go after his estate.

Under California law, the Franchise Tax Board has the “presumption of correctness,” meaning that the onus always is on Hyatt to disprove what the tax officials say. And, he argues, they keep changing their stories and their allegations, thus resulting in more years of legal expenses and disputes…

To sum up – When dealing with the tax man in America today, you have:

  • No “innocent until proven guilty”.
  • No real “right to a speedy trial”.
  • Kafka-esque complexity and situations rigged for you to lose.

To anyone who wants to claim that our tax system is “voluntary”, or that government somehow isn’t a gun, or that taxation somehow isn’t a use of force on people (many conscientious tax-objectors are given long jail sentences): You’re just lying.



  1. I was going to post this on here, but decided it might be considered inappropriate.

    Comment by V the K — April 15, 2014 @ 1:05 pm - April 15, 2014

  2. If he wins, the penalties should be paid by those people who have names and made choices to pursue this case for so long. Not the taxpayers of California. Hold the guilty responsible and there will be fewer guilty people in the future.

    Comment by Professor Hale — April 15, 2014 @ 2:07 pm - April 15, 2014

  3. In reviewing the methods of taxing within and among the EU countries I encountered the colorful “labyrinth of impossibility” phrase.

    Only the lawyers profit in the court system. The taxing authority has seemingly endless amounts of money to pursue the target of taxation and they can dump all manner of fines and accrued interest on top of their claims. The target has nowhere to turn but his own pockets and stamina.

    At the end of the “labyrinth of impossibility” is the tax minotaur. Good luck.

    Comment by heliotrope — April 15, 2014 @ 6:23 pm - April 15, 2014

  4. It’s embarrassing that a country as backwards as Russia can see the wisdom and convenience of a flat tax and implement it, while we Americans sit around swilling booze to blot out the migraine that is our tax returns.

    Comment by Sean L — April 15, 2014 @ 10:06 pm - April 15, 2014

  5. I’m disappointed that no leftie showed up to say “Why should anyone care what the CA tax board does to some rich guy?”

    Whereupon we could point out that it’s the example that counts: if it can happen to a guy who blessed our society with a major innovation in microprocessors, it can happen to anyone.

    Comment by ILoveCapitalism — April 15, 2014 @ 11:39 pm - April 15, 2014

  6. The issues are too complex for the usual trolls to understand, Jeff.

    Comment by V the K — April 16, 2014 @ 8:23 am - April 16, 2014

  7. California madness …………….. or should I just say the liberal mindset of all liberals.

    Comment by Charles — April 16, 2014 @ 11:24 am - April 16, 2014

  8. Even in conservative South Carolina one really has to worry more about the South Carolina Department of Revenue than the Internal Revenue Service. The SC Department of Revenue displays mercy to no one.

    Comment by Charles — April 16, 2014 @ 11:30 am - April 16, 2014

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