California’s ‘Pillage’ People Lose Equity Theft Battle

But government greed still prevails across the nation.

Last week, California Governor Gavin Newsom signed Assembly Bill 418, a measure dealing with “tax-defaulted property.” The governor provided no official signing message for the bill, also missing from his October 8 legislative update, despite its huge significance for Californians.
AB-418 closes “a loophole that allowed California localities to seize and transfer homes to the government or nonprofits without compensating former owners for their hard-earned equity,” explains the Pacific Legal Foundation (PLF).
“For too long, California allowed local governments to strip homeowners of their life savings,” said PLF state policy director Jim Manley in a statement. “With the signing of AB 418, that injustice ends.” The measure was “a victory for California property owners,” but should not be taken as the end of government greed in the Golden State. On that theme, Californians might recall the case of Gilbert Hyatt, inventor of the first single-chip microprocessor.
Hyatt moved to Nevada, which has no state income tax, but California’s Franchise Tax Board (FTB) claimed the inventor lied about his residency and owed $7.4 million in taxes. That ballooned to nearly $60 million, and California harassed the Nevadan until 2008, when a Las Vegas jury awarded him $388 million, including $250 million in punitive damages. The Nevada Supreme Court tossed much of the award, but Hyatt retained $1.2 million for fraud.
The case failed to prompt reflection that California’s state income tax, the highest in the nation, acts as a disincentive to inventors and entrepreneurs. State sales taxes remain among the highest in the nation, and the overall tax burden has motivated many Californians to move to other states. State Attorney General Rob Bonta, when he was a member of the California Assembly, claimed that California could continue to tax them for 10 years. At this writing, there is no sign of tax reform that would motivate people to stay, and others to show up.
In 1978, Californians limit...