Archive for the ‘California’ Category

No Man Is an Island

Monday, March 11th, 2019

On Saturday a superb editorial appeared in the Providence Journal, “When Taxpayers Flee a State.” Here’s an excerpt:

Despite its name, Rhode Island is not an island unto itself. People are free to come and go, including business executives who create jobs and pay high taxes. That is why the state has to be careful that its tax policies do not drive away too many investors or taxpayers…

In high-tax Connecticut next door, billionaires are already escaping. As Chris Edwards of the libertarian Cato Institute notes (“Wealthy Taxpayers are Fleeing These States in Droves,” Daily Caller, Oct. 2), Connecticut in recent years “has lost stock trading entrepreneur Thomas Peterffy (worth $20 billion), executive C. Dean Metropoulos ($2 billion), and hedge fund managers Paul Tudor Jones ($4 billion) and Edward Lampert ($3 billion).”

People can, and will, relocate no matter how nice the climate. I loved living in Irvine, California, but California’s business climate drove me (and I’m not a billionaire) to low-tax, low-regulation Nevada. Rhode Island has lost $1.4 billion of income over the last ten years. The solution for both a small state (Rhode Island) and a large state (California) is identical: low tax rates over a broad swath, rather than very high tax rates in narrow areas. Of course, California now has high taxes over almost everything and a regulatory climate that is the worst in the country.

No, Manny Machado Can’t Avoid Paying California Tax by Being a Florida Resident

Thursday, February 21st, 2019

Earlier this week Manny Machado reportedly signed a baseball free agent contract to play with the San Diego Padres. He’s being paid $300 million over ten years…but that’s before taxes. An article on a website called “12up” says that Mr. Machado will be able to avoid California income tax through “creative posturing” as a Florida resident. The article is wrong.

Mr. Machado is one of many individuals impacted by the “Jock Tax.” This tax impacts entertainers, athletes, and professional poker players and requires income tax be paid based on the source of the income. Let’s assume Mr. Machado is a Florida resident; he would owe Florida income tax on his worldwide income. Since Florida has no state income tax, he owes nothing, right? Well, he owes nothing to Florida but the Padres play games in many states with a state income tax (including California); he will clearly owe California income tax on some of his income.

The Jock Tax is based on ‘duty days’ (not games played). Let’s assume out of the (approximately) 200 days in a baseball season 100 of those days are in California. He will owe tax on 100/200 of his salary (or half). He will avoid owing tax on all of his income to California, but to say he will completely avoid California taxation is dead wrong. While it’s true that California won’t gain $38 million a year, it’s probable that the state will collect over $20 million a year: Not only will Mr. Machado play half his games in San Diego, the Padres will play many games in Los Angeles and San Francisco–and those games will also cause Mr. Machado to owe California income tax.

Gilbert Hyatt Wins Again But…

Thursday, January 17th, 2019

The California Office of Tax Appeals upheld the California Board of Equalization’s ruling that Gilbert Hyatt mostly doesn’t owe California income tax in 1991 or 1992. Yes, you’re reading that correctly: This is a case that is 27 years in the making.

This is the same case that reached the US Supreme Court for the third time this month. The Supreme Court will decide whether or not states have sovereign immunity in other state’s court systems. (Mr. Hyatt sued the Franchise Tax Board in Nevada over various torts committed by the FTB.)

Unlike Bloomberg Tax which noted that the “[case] appears to be over,” I strongly suspect that the Franchise Tax Board (California’s income tax agency) will appeal the ruling into the court system. The FTB’s normal strategy is to exhaust litigation opponents. Thus, I believe that an appeal into the court system is likely.

Gilbert Hyatt and the Franchise Tax Board Head Back to the Supreme Court…Again

Sunday, January 6th, 2019

Back in 1993 (that is not a typographical error), California’s Franchise Tax Board (FTB) initiated a residency audit of Gilbert Hyatt. Mr. Hyatt invented some technology relating to microprocessors in 1990. In 1991 he realized he was going to receive some large royalty payments; he moved from high-tax California to low-tax Nevada. The question was when did he move–was it in April 1992 or October 1991?

The auditors for the FTB committed various torts (for example, they rummaged through Mr. Hyatt’s garbage and did not obey privacy rules). The FTB ruled against Mr. Hyatt; Mr. Hyatt sued the FTB in Nevada state courts. That lawsuit is now heading to the US Supreme Court for the third time. This case will be heard on Wednesday (January 9th). SCOTUSBlog has an excellent preview of the arguments in this case.

Dan Walters is reporting that the FTB has also asked for a rehearing of the decision which went against the FTB at the Board of Equalization. The request for a rehearing is at the new California Office of Tax Appeals. If the rehearing isn’t granted (or if the FTB loses of the Office of Tax Appeals), expect the FTB to appeal the decision into the California court system. It’s likely this case will still be going on when I retire (which is many years away).

There are several points that the average person should realize regarding this case. First, if you’re going to move from a high-tax state to a low-tax state, really move. Make sure you have a clean break from the state.

Second, if you have a high income be aware that your old state may conduct a residency audit. Like almost everything in tax, you’re guilty until proven innocent. In a residency audit, the tax agency will look at your bank and credit card statements to see where you really were. If you said you relocated on July 1, and your credit card statement shows charges from your old state through September 30, you’re going to have a problem.

Finally, California tries to exhaust litigation opponents. The phrase “Pyrrhic Victory” absolutely comes to mind when you deal with the Franchise Tax Board. Additionally, the FTB believes that the whole world owes California tax. Their institutional mentality is definitely not pro-taxpayer.

As for Mr. Hyatt, if he wins this case at the Supreme Court he will eventually be collecting his reduced judgment (in the case in Nevada). If he loses, it’s probable he will be out a ton in legal fees and 15 years of his life and get nothing out of it.

The 2018 Tax Offender of the Year

Monday, December 31st, 2018

Another year has gone by. And that means it’s once again time for that most prestigious of prestigious awards, the Tax Offender of the Year. As usual, there’s a plethora of nominees. As usual, I wish there weren’t any deserving winners.

The Tax Cuts and Jobs Act (TCJA) received a nomination. “This isn’t tax simplification, and few have received benefits,” a correspondent told me. The first part of the statement is absolutely true. The TCJA is anything but simplification. As for few receiving benefits, almost all the provisions of the TCJA impact 2018 taxes (and onward). We’ll have a much better idea of what this law will (or won’t) due to taxpayers in a few months. I’m holding this nomination in abeyance until next year.

The Miccosukee tribe of Indians received another nomination. The tribe has been fighting a losing battle over the taxation of profits from their casino in southern Florida. The tribe itself is exempt from taxation (it’s a sovereign nation); however, members of the tribe are not exempt based on distributions of those profits. This issue has been percolating up and down the Tax Court, District Courts, and the 11th Circuit Court of Appeals for a few years. On June 4th the 11th Circuit ruled in United States v Jim:

When an Indian tribe decides to distribute the revenue from gaming activities, however, the distributions are subject to federal taxation. Id. § 2710(b)(3)(D). The Indian tribe, as a consequence, must report the distributions, notify its members of their tax liability, and withhold the taxes due on them. Id. § 2710(b)(3)(D); 26 U.S.C. §§ 3402(r)(1), 6041(a).

In the case before us, an Indian tribe engaged in gaming activities. Each quarter, the tribe used the revenue of the gaming activities to fund per capita distributions to its members. But the tribe disregarded its tax obligations on these distributions. It neither reported the distributions nor withheld taxes on them…

In this appeal, the member and the tribe contend that the District Court erred in concluding that the exemption for Indian general welfare benefits did not apply to the distributions. The tribe alone asserts that the District Court erroneously upheld tax penalties against the member and incorrectly attributed to the member the distributions of her husband and daughters. Lastly, the tribe argues that the District Court erred by entering judgment against it as an intervenor.

We affirm the ruling of the District Court in each of these matters. The distribution payments cannot qualify as Indian general welfare benefits under [the Tribal General Welfare Exclusion Act] because Congress specifically subjected such distributions to federal taxation in [the Indian Gaming Regulatory Act]. The member has waived any arguments as to penalties or the amount assessed against her, and the tribe lacks a legal interest in those issues. The District Court did not err in entering judgment against the tribe because the tribe intervened as of right and the Government sought to establish its obligation to withhold taxes on the distributions. [footnote omitted]

This taxpayer owes $278,758.83 as of April 9, 2015; the tribe and its members could owe more than $1 billion in personal income taxes. Yet that sum pales in comparison to our ‘winner.’


As most of you know, I grew up just outside of Chicago. I have fond memories of riding the El and of taking the train up to Milwaukee. Subways and other forms of mass transit work well in dense cities such as Chicago, New York, and Boston.

Amtrak, however, has been a money loser. Running passenger trains through the northeast corridor ekes out a profit, but the rest of the service doesn’t make money. Put simply, you need a dense corridor to make trains a winner.

In November 2008, California voters passed Proposition 1A. As noted in the ballot summary, “Provides for a bond issue of $9.95 billion to establish high-speed train service linking Southern California counties, the Sacramento/San Joaquin Valley, and the San Francisco Bay Area.” The argument in favor stated:

Proposition 1A is a $9.95 billion bond measure for an 800-mile High-Speed Train network that will relieve 70 million passenger trips a year that now clog California’s highways and airports—WITHOUT RAISING TAXES…

Proposition 1A will save time and money. Travel from Los Angeles to San Francisco in about 2½ hours for about $50 a person. With gasoline prices today, a driver of a 20-miles-per-gallon car would spend about $87 and six hours on such a trip.

The rebuttal to the argument stated:

Prop. 1A is a boondoggle that will cost taxpayers at least $20 billion in principal and interest. The whole project could cost $90 billion—the most expensive railroad in history. No one really knows how much this will ultimately cost.

Now that we’re ten years after passage, we can determine that both sides were wrong. The last official analysis showed a price tag of $77 billion. The New York Times, in an article this past July, upped the price to $100 billion. So both sides were wrong about the cost, but the opponents had the right idea. And with this project years from completion and the cost having risen every time there’s been a new analysis, I’ll take the over on $100 billion. That’s why California’s high speed rail project (aka “The Train to Nowhere”) is this year’s Tax Offender of the Year.

So where will the money come from to build the train? It’s not coming from this Congress; President Trump and Republicans in Congress vociferously oppose the project. Proposition 1A says that the train must be self-supporting; less than 3% of high-speed train networks in the world are self-supporting. Authority Spokeswoman Lisa Marie Alley told the Sacramento Bee “We haven’t been shy about the fact that this project was never fully funded.” The hope is that once the system begins to operate that it will show private industry its usefulness and that they would be willing to invest in the project.

Consider that the first segment will run from Shafter, just north of Bakersfield, to Madera, a bit south of Merced. It does go through the San Joaquin Valley’s largest city, Fresno, but it does not run through Visalia; instead, it runs near Hanford. I’ll be blunt: There’s no chance that the first segment will be self-supporting. There aren’t enough riders wanting to commute between these cities to make the line profitable. Additionally, state route 99 runs between all these cities. Yes, it will take longer in a car but you have your own transportation when you get to your destination, and you don’t have to wait for the train.

Where high speed rail works is in dense corridors. For example, the Japanese bullet trains run between such cities as Tokyo (population 38 million for the metropolitan area), Osaka (19 million), and Nagoya (9 million). The California bullet trains will initially run between Shafter (population 19,608) and Madera (population 65,508). If we use Bakersfield (840,000 for the metropolitan area) and Fresno (972,000) we get something a little better. Still, how many people really commute between these cities? Having lived in Visalia for years, I can state unequivocally it’s not a lot.

Proponents argue that once the train reaches the Bay Area and Southern California, ridership will pick up; both metropolitan areas have millions of residents. But there’s a huge difference between Tokyo and either California metropolitan area. The Tokyo metropolitan area is 5,240 square miles with a population of 38 million. The Los Angeles metropolitan area is 33,954 square miles with a population of 18.7 million. The Bay Area is 10,191 square miles with a population of 7.77 million. Put simply, Japan is densely populated so train travel works very well.

Additionally, there are several airports serving both the Los Angeles metropolitan area (Los Angeles International, Burbank, Ontario, Long Beach, and Orange County) and the Bay Area (San Francisco, San Jose, and Oakland). There are numerous flights between each of the Southern and Northern California airports. These flights take about one hour and cost about $100. High speed rail is going to have to beat that in some way in order to attract paying customers. Frankly, I doubt either will happen.

If the system is built, I do think that it will attract riders going to and from the Central Valley. There aren’t many flights to Fresno from the Bay Area (or from Los Angeles). There’s also the issue of demand; there really isn’t that much into the Valley. But the service can certainly attract riders there. However, it’s not going to be near enough riders for the project to pay for itself.

The problem for California taxpayers is that they are liable for the project. Those bonds will need to be paid back. There’s a need for at least another $70 billion to finish the line. The best estimate for the annual subsidy is $100 million. Yes, I know that Proposition 1A specified that there can’t be a subsidy. Does anyone really believe that California’s politicians will follow the law on this? (Hint: I don’t.)

But Russ, this is a state project. Its impact is limited to California. If California wants to shoot itself in the foot, we should let it. The problem with that argument is that the next time the California economy suffers a downturn, California will run to Congress for a bail-out. Today, the Trump Administration is likely to tell California, “No.” However, I have my doubts that a future Democratic administration won’t go for a bail-out on this project, leaving non-Californians liable for this boondoggle. There’s a need for $70 billion. The sooner that this project is put out of its misery the better for both California and the country.

Quentin Kopp, a former Supervisor in San Francisco, was the man who introduced the project and was a proponent. He told reason.com

It is foolish, and it is almost a crime to sell bonds and encumber the taxpayers of California at a time when this is no longer high-speed rail. And the litigation, which is pending, will result, I am confident, in the termination of the High-Speed Rail Authority’s deceiving plan…

[The selling of bonds is] deceit. That’s not a milestone, it’s desperation, because High-Speed Rail Authority is out of money.

California High Speed Rail is a worthy winner of the 2018 Tax Offender of the Year award.


That’s a wrap on 2018. I wish you and yours a happy, healthy, and prosperous New Year!

Taxes No Longer the Top Reason for Businesses Leaving California

Monday, December 24th, 2018

California: Good News! Your taxes, tops in the country, are no longer the top reason businesses are leaving the Bronze Golden State. It’s not that taxes have improved; rather, your laws and regulatory climate have exceeded taxes as the reason businesses are departing. That’s not just my view; it’s the view of one of the nation’s leading business relocation experts, Joseph Vranich.

Mr. Vranich has published his annual report on business relocations from California, titled “It’s Time for Companies to Leave California’s Toxic Business Climate.” Mr. Vranich took his own advice: He moved his business from Irvine, California (the same city I resided in) to Cranberry Township, Pennsylvania. In an article in Western Journal Mr. Vranich notes:

I moved for three reasons — taxes, regulations and quality-of-life. First, I’ll have greater freedom in my business now that I’m free of California’s notorious regulatory environment and threats of frivolous lawsuits that hurt small businesses like mine.

Finally, we are enjoying a superior qualify-of-life here. We bought a house larger than what we had in California for about half the cost. We can afford to engage in more activities because the cost-of-living in Cranberry Township is 44 percent lower than in Irvine.

Mr. Vranich cites an example of California’s regulatory climate: California’s Immigrant Worker Protection Act.

The new Immigrant Worker Protection Act states that an employer that follows Federal immigration law is now violating California law, is committing a crime, and is subject to fines. However, it’s also a crime if employer fails to follow Federal immigration law.

“Think about it. California may penalize someone in business who is a legal citizen operating a legal business that is in compliance with every Federal, state and local law, who pays state and local taxes, and who creates employment – and all that counts for nothing in the state’s eyes,” said Vranich. “Signs are that California politicians’ contempt for business will persist.”

For the record, a federal court would likely enjoin California from prosecuting anyone under this new act based on the Federal Supremacy clause. Still, a business might have to pay a lot in legal fees to deal with this. Alternatively, if you’re not in California you don’t have to worry about this.

Consider: You can stay in California, pay the country’s highest state tax rates and deal with a regulatory hellhole, or you can live in Austin, Reno, Las Vegas, Phoenix, Seattle, or Dallas and pay little or no state income taxes and not deal with California’s toxic business climate. I made the move seven years ago, and am as happy as ever I’ve done so. Sure, the weather isn’t as nice as in Irvine but I don’t deal with California’s toxic business climate and the cost of living is lower.

Or as I’ve said before, California: Helping businesses in other states.

Swart Broadens

Thursday, November 29th, 2018

California’s Franchise Tax Board believes that any business with even a remote tie to California should pay California tax. Let’s say you own a 0.21% interest in Acme LLC. Acme invests in something in California. You have no authority to manage (or administer) Acme. In the decision in Swart Enterprises, a 0.2% holding for such an LLC was ruled not to be conducting business in California. The FTB noted that similar businesses could file a refund:

Explain why the taxpayer has the same facts as in the Swart Court of Appeal decision (i.e., sole connection to California is a 0.2 percent membership interest, or less; in a manager-managed LLC; and the original members of the LLC delegated to a sole manager full, exclusive, and complete authority to manage and control the LLC). [emphasis added]

And, yes, the FTB has been continuing to challenge businesses with more than a 0.2% interest. But that may stop soon.

Appeals of FTB decisions now go to the Department of Taxation and Fee Administration. Satview Broadband, Ltd. fell astray in filing California tax returns. Satview is a Nevada LLC that owned a 25% interest in Escape Broadband, LLC. Satview was a limited partner (member) of Escape, and like in Swart, was a passive investor.

Satview paid back taxes and then filed a claim for refund. The FTB denied the claim. One of the issues was the doing business question: Was Satview doing business in California solely by owning a 25% stake in another LLC as a nonmanaging member of that other LLC? After the FTB denied the claim for refund, Satview appealed to the Department of Taxation Fee Administration.

The only conceivable basis in the record before us upon which it could be contended that appellant was actively engaging in transactions for profit in California is the fact that appellant held a non-managing minority member interest in Escape, an LLC that admittedly was doing business in California. However, the doing-business status of a pass-through entity – here an LLC taxable as a partnership – is not automatically attributed to its non-managing minority members where, as here, there is no indication that the non-managing minority member had any power or authority, directly or indirectly, to participate in the LLC’s management or operations.

In Swart, the taxpayer had a 0.2% interest; here, it’s a 25% interest. The FTB is holding that if you exceed 0.2% you need to file in California.

The court in Swart rejected FTB’s position that Swart’s passive holding a minority non-managing interest in Cypress established that Swart was “actively engaging in any transaction for financial or pecuniary gain or profit” during the year at issue. It found that the leading authority, Golden State Theatre & Realty Corp. v. Johnson (1943) 21 Cal.2d 493, could not be interpreted so broadly as to warrant characterizing Swart’s investment activity as “doing business” in the state. (Swart, supra, 7 Cal.App.5th, at pp. 503-505.) We draw the same conclusion under the instant facts. To hold otherwise would ignore the important distinction between actively and passively (or inactively) engaging in business transactions. (Ibid.)…

FTB makes no argument that the operative facts of this appeal are materially different from those at issue in Swart. Although appellant’s percentage interest in the in-state pass- through entity at issue here is significantly greater than the percentage interest in Swart (25 percent as opposed to 0.2 percent), both are minority interests. Without any allegation – much less any showing – that appellant had any ability or authority, directly or indirectly, to influence or participate in the management or operation of Escape’s business, we cannot uphold FTB’s position that Escape’s doing-business status may be attributable to (i.e., flow through to) appellant. Merely pointing to the fact that appellant held a non-managing minority interest in an LLC that was doing business in this state does not, standing alone, satisfy the requirement that FTB show a rational basis for its determination. Consequently, we conclude that appellant is not liable for the 2011 and 2012 NQSF penalties.

It will be interesting to see if the FTB will continue to state that businesses with solely passive interests in other entities that invest in California are doing business in the state. Unfortunately, this opinion is not precedential so my suspicion is that the FTB will continue to force companies to fight it. I also doubt that the FTB will appeal this decision to the court system. Doing so would turn this non-precedential decision into a precedential decision.

Still, this is overall good news. The administrative judges at the Department of Taxation and Fee Administration appear to have a grounding in reality. Sooner or later there will be a precedential decision on this issue, and the FTB will be forced to realize that not everyone is doing business in California.

Regulations Matter, Too

Monday, September 10th, 2018

I used to have my office in Irvine, California. Today, like most days, the weather in Irvine will be absolutely gorgeous: A high of 79 and a low of 66. You can’t ask for better (weather) climate. How about the business climate?

Well, I tell my clients that taxes matter but they’re not the only thing. Regulations matter, too. Let’s say I hire Joe to work remotely as a tax professional assisting me. I give him a return to work on, but I don’t care if he works at 8am or 8pm–just get it done in the next week. Joe works on his computer in his home at his pace. Almost everywhere he would be considered an independent contractor. But not in California.

The California Supreme Court ruled
in Dynamex Operations West, Inc. v. Superior Court of Los Angeles County that in order to have an independent contractor in California three conditions must be met:

1. That the worker is free from control and director of the hirer in regards to the performance of the work;
2. That the worker performs work that is outside the usual course of the hiring entity’s business; and
3. That the worker is customarily engaged in an independent trade, occupation or business in regards to the work performed for the hiring entity.

Note the second condition. This means that it is impossible in California for a software company to hire an independent contractor to write software. Or for a hair salon to hire independent contractor hair stylists (even though that is the norm in this industry and has been so for decades). Or for a tax professional to hire an independent contractor tax preparer.

Back in 2011 I wrote about why I left the Bronze Golden State. I noted:

With the growth of my business, I looked at possibly hiring another tax accountant in 2010. When I ran the numbers, I found that I would lose money by hiring a productive tax accountant. That’s because of all the regulations and costs that I would immediately incur if I had an employee. I’m not stupid: If I lose money by hiring someone, I’m not going to do it.

A question I was asked by friends was, “Why didn’t you hire an independent contractor?” The reason was that California’s Employment Development Department (one of four California statewide tax agencies) was stating that a business that was in activity A (whatever that activity was) couldn’t have independent contractors doing A. I didn’t care to be a test case. I was left with two choices: Hire an employee and lose money or hire an independent contractor and likely lose more money. Neither option appealed to me, so I’m in Las Vegas.

The CBS Sacramento article notes the problem impacts small businesses. It actually impacts all California businesses. It’s yet another factor causing businesses in California to pay more than a comparable business in a neighboring state. Is California free to do this? Absolutely. Are California business owners free to take their businesses elsewhere? You bet, and I suspect that this ruling will just increase the flow.

Another way of stating this: California, doing everything it can to cause full employment in neighboring states.

You Mean My Checking Account Became a Savings Account?

Thursday, May 31st, 2018

In what is definitely an “Oops” moment, two tax software products from Intuit (Lacerte and Intuit ProConnect Online) incorrectly transmitted information for 2018 California estimated payments. Checking accounts became savings accounts in the transmittal and the payments were rejected:

As a result, electronically transmitted estimated tax payments (Form 540-ES) for tax year 2018 transmitted to us between January 23, 2018, and April 25, 2018, could have been rejected by your client’s financial institution. Future scheduled payments transmitted during this timeframe could be impacted as well.

We are collaborating with Intuit to identify impacted taxpayers and assist with resolution. Intuit sent letters directly to affected tax practitioners. We will waive FTB-imposed dishonored check fees on impacted taxpayers’ accounts and will give taxpayers an opportunity to submit first quarter estimated tax payment that will be considered timely.

We are not impacted by this, but if you’re a tax professional using either software package and are impacted by this you should have been contacted directly by Intuit (on or about May 9th). If you’re a taxpayer and your first quarter 2018 California estimated payment was not debited by the Franchise Tax Board and should have been, contact your tax professional immediately.

Kudos to the FTB in working with Intuit and giving impacted taxpayers time to get this resolved.

Back to the Old Drawing Board

Wednesday, May 23rd, 2018

I’ve written before about certain states’ efforts to get around the new $10,000 cap on state and local taxes that can be deducted on federal tax returns. The IRS announced today they will be proposing regulations later this year on this issue. Here’s an excerpt:

In response to this new limitation, some state legislatures are considering or have adopted legislative proposals that would allow taxpayers to make transfers to funds controlled by state or local governments, or other transferees specified by the state, in exchange for credits against the state or local taxes that the taxpayer is required to pay. The aim of these proposals is to allow taxpayers to characterize such transfers as fully deductible charitable contributions for federal income tax purposes, while using the same transfers to satisfy state or local tax liabilities.

Despite these state efforts to circumvent the new statutory limitation on state and local tax deductions, taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes.

This is anything but promising for the efforts of California and New York. Words like “circumvent,” “despite,” and “mindful” pretty much tell us how this is going to turn out. If the IRS were going to allow this, the notice would not have such negative words. Instead, it’s all but a certainty that the doctrine of “Substance Over Form” will dictate that these so-called charitable donations are anything but charitable donations and, instead, will be treated as state tax payments on federal tax returns.

The California and New York legislatures would be far better off looking for things to cut in their states’ budgets. I know of a certain railroad in California that could save the state at least $77 billion….