Guest Post: The Predatory State of California, Part 2

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

The Predatory State of California, Part 2

Due process and rule of law have been replaced with "legalized" looting and harrassment by government in America.

Yesterday's entry Welcome to the Predatory State of California--Even If You Don't Live There generated dozens of emails recounting similar stories of "we don't need no stinkin' due process" looting and "fishing expeditions" by California and other state/local governments.

Let's begin with correspondent (and Arizona resident since 2001) R.T.'s experience of his account being looted without prior notice or due process by the state of California to the tune of $1,343. R.T. finally reached an employee of the State Franchise Tax Board and received an explanation.

The state representative stated that "we don't try to contact the person involved," i.e. the taxpayer whose account is about to be looted. The rep went on to explain that the state had received a 1099 from a financial institution for the year 2006 and had promptly stolen the citizen's money in the event that tax was owed to California.

Everyone who believes the government is "here to help disadvantaged people" needs to wake up and ask what kind of government we have when due process has been replaced with "legal" looting. R.T. reported the income in question on his 2006 Federal and Arizona tax return. Wouldn't common sense, not to mention common law, suggest that the state of California should be required to ask the citizen who now resided in another state if the income in question had been reported in that state?

How about notifying the citizen of the state's claim and his/her rights to present facts relating to the state's claim?

There was no due process. How can this be legal in a nation that is nominally governed by rule of law? First the state steals the $1,343 and authorizes its parasitic predatory bag-"person" Wells Fargo Bank to steal another $100 for handling the state's theft.

A week or two later the citizen is notified of the theft as a fait accompli. Now the onus is on the law-abiding citizen to attempt to reclaim his own money from a distant, all-powerful Kafkaesque state agency. How can this be legal in a nation supposedly operating under rule of law?

Let's be very clear about what happens here in America on a daily basis:

1. The state (or other agency of government) steals citizen's money without due process.

2. Then, in a move akin to the executioner making the condemned buy his own death bullet, the state authorizes the "too big to fail" corporate bank which received billions in taxpayer bailouts to steal $100 from the citizen for the digital theft of his money by the state.

3. If the citizen needed that money to pay rent, buy medication to stay alive, etc., tough luck, Buckwheat, the state of California has your money before they notify you of the purported tax liability or provide due process or recourse and now you enter the Kafkaesque insanity of pleading for a "refund" of your own money from an agency designed to thwart transparency and the reclamation of your own money.

So if you get evicted and are living in a cardboard box and pass away due to inability to buy your meds, hey, the State of California's political class and special interests could care less: they want your money and the rule of law means nothing to them.

If you understand that a purported tax liability is one issue and due process is another far more important issue, then you understand that we now live in an authoritarian nation where "rule of law" is only invoked at the convenience of the political and financial Elites for propaganda purposes.

The state of California has three basic methods of looting law-abiding citizens:

1. The old "you didn't pay a $25 filing fee, the fine is now $499 which we took from your bank account." Never mind you have the cancelled check endorsed by the state, proving they received it and cashed it; the Board of Kafkaesque Authority claims "we didn't get the check" and loots your account for the $499 (true story.)

2. "Fishing expeditions" where companies and citizens are dunned for taxes and fees they might owe, though there is no evidence they do in fact owe fees and taxes. I received many emails describing these fishing expeditions, for example, merely having a license is "evidence" that you must have unreported income.

3. Enforce all sorts of dubious claims, most importantly:

A. That anyone collecting a pension from work performed while residing in California is liable for California taxes on that pension, regardless of where they live;

B. Any income resulting from something invented in California must be reported as income in California, regardless of where the income is derived from or where the inventor now lives.

In other words, residency has no meaning. Any income remotely connected to California--for example, you had the idea while residing in the state--obligates you to pay California income tax on that idea in perpetuity.

Lest you think this far-fetched, please consider this report sent to me by correspondent J.J.: Will California Gamble in Las Vegas? The Stakes are High in the Gilbert Hyatt Case:

To summarize, the California FTB sued Gilbert Hyatt, an inventor of a microprocessor chip, for tax fraud. The FTB claimed that Mr. Hyatt did not file a return for the income derived from his invention. Mr. Hyatt claimed he was already a Nevada resident at the time he invented the chip; California claimed otherwise. Whether that case has merit is still to be decided and could lead to a recovery of around $50M for the FTB, including penalties and interest, which account for over 80% of the total.

The real issue, however, is the FTB’s misconduct in pursuing Mr. Hyatt in Nevada. According to Bill Leonard, a member of the California State Board of Equalization, as published in his newsletter:


Tax agents rummaged through his trash without warrants, visited business partners and doctors, and shared his Social Security Number and other personal information with the media. This is outrageous behavior and I call on the FTB to rein in their agents. What really galled me is the FTB testified in open court that this level of harassment was only a typical audit. If true, then the stormtroopers are alive and well at the FTB.


Mr. Hyatt sued the FTB for torts and other misconduct. The FTB claimed it was immune from being sued under the doctrine of comity- defined by the Nevada Supreme Court as “an accommodation policy, under which the courts of one state voluntarily give effect to the laws and judicial decisions of another state out of deference and respect, to promote harmonious interstate relations.”


The Nevada Supreme Court sided with Hyatt. The FTB appealed to the United States Supreme Court who ruled 9-0 against the agency.


There are two key questions that the taxpayers of California need answered: were any employees of the FTB disciplined? Will California continue to pour money in this case by appealing in what could be called a hostile environment?

Rummaging through trash without warrants and harrassment is precisely the sort of conduct that occurred when Federal agencies ran roughshod over the Constitution in the COINTELPRO campaigns of domestic spying and subversion.

What exactly is the difference between the jackboot behavior of the California Franchise Tax Board, the Federal agencies that conducted COINTELPRO and any other run-of-the-mill fascist agency doing the dirty work of the Elites and special interests by ignoring legal rights and due process?

It's very simple: either we have due process and everyone is equal under the law, or we have an authoritarian regime that is only nominally democratic for PR purposes.

Naive citizens might suggest alerting our fearless elected representatives to these systemic abuses by the state. This overlooks the fact that the agencies are conducting the looting at the behest of the elected toadies and their owners, the special interests and corporate lobbyists. Your complaint about being legally looted will go straight into the round file (or digital equivalent), and your name forwarded to the "hit squad" for harrassment and worse.

You know the dominant emotion that the government at every level generates in law-abiding, taxpaying citizens? Fear. People don't want their names used in reporting these kinds of outrageous abuses because they've heard too many stories of the COINTELPRO-like harrassment that the jackboot agencies unleash on anyone who dares to question their looting and lawlessness.

Our fearless elected representatives, meanwhile, are too busy brown-nosing their donors to care what happens to mere citizens. After all, the citizens don't fund their campaigns, the special interests do, and the special interests care about one thing: raising more revenue to fund their fiefdoms. They don't care how the state raises the revenue, and so neither do the political lackeys they fund.

What sort of government do we have when the typical response of law-abiding citizens is fear of retribution? When state looting and concerted campaigns of harrassment are "legal," then what sort of rule of law do we have?

Answer: none. The only action that will change things is to vote with your feet and leave the oppressive states where due process has been rendered meaningless and find states where rule of law and equality for all before the law still has meaning.

Are "fishing expeditions" and looting unique to California? Unfortunately not, as author/Iraq vet and midwest resident Chris Sullins reported two years ago:

Last week I received tax return forms in my name mailed to my address by a nearby city government. I've never worked in that city and as the letter states my physical address is not within that city's limits. I've lived at the address for over 10 years and this was the first time I've received such a notice.


I sent this letter in response with copies of the forms they had mailed to my address:




To Whom It May Concern:


My spouse and I recently received City of X individual tax return documents which stated a “return must be filed by April 30, 2010.” This letter you are now reading serves your agency notice that we are not required to file a tax return with the City of X. I will make it clear that we do not work in the City of X. Likewise, the mailing address your agency used to contact us is not and never has been within the city limits. Therefore, you will cease and desist from attempting to collect money outside of your legal authority.


Any future attempts by your agency toward collection of taxes on person(s) employed outside the city or at this address which is outside the physical boundary of the City of X will be considered harassment. Therefore, it would be in your agency’s best interests to remove our names and our address from your tax collection rolls posthaste.


Sincerely, Chris Sullins


I'm sure this overreach was done by the city due to their lower revenues, lost income and property taxes. But, to do this under the color of law is nothing short of official fraud. However, proving official misconduct is another matter. There was no official's name on the forms and I can't imagine I'm going to find a signed memo authorizing this new attempt at collection outside of the city's limits.


In the meantime I wonder how many people who reside on the same road also received the same tax forms? How many of them are just going to fill out the forms and send checks to the city without any protest? How many of them will ignore it altogether? But the important question is out of how many households did anyone bother to write a letter of protest? How many actually told them NO? This last question is the most important when considering the extent of the local MacRib Test.


If enough people don't say No early enough, things often tend to go past the camel's nose in the tent. I can imagine the local city continuing to extend its boundaries in the future and/or performing other actions under an air of legality. I can imagine situations in which cities overreach their boundaries and authority, yet still convince judges or a state administrator (aka bureaucrat) to garnish citizens' paychecks for supposedly unpaid taxes and fines which were never owed in the first place.


This outright theft would continue until the citizen trudges through an onerous Kafkaesque process of "proving" they didn't reside within the city and that the tax wasn't ever really owed. The city/judge/administrator could then play the "oops" game and blame a computer error or some other complexity of the system which they had purposely misused. Of course, the costs for the citizen to challenge such an "error" will be designed in advance to exceed the cost of submitting to the "error" in the first place.


Citizens must box in any attempts by government to exceed its authority. They must frame and contain any acts conducted under the color of law. This does not require violence. The simple act of refusing to comply is enough. This was evident in the many peaceful revolutions that took place in 1989 when people said NO to communism across Eastern Europe. Although governments hold the threat of force in reserve to force compliance, the American government will not use it against the citizens over taxation at this time.

You know what would be refreshing? A state government which openly declared itself committed to rule of law, due process, transparency and respect for taxpayers and taxpaying enterprises. If they followed through on their commitment with action, they would quickly attract a flood of the best and brightest fleeing parastic predatory states that have long since abandoned rule of law for looting and servitude to special interests.

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rsnoble's picture

Personally im still waiting for the 'big one' to get rid of that shitpit.

Michael's picture

I just thank God every day for the complete and total economic collapse of the USA so those government thugs and their families gets what's coming to them and get exactly what they deserve. I'll laugh my ass off when all their pension money goes up in smoke too.

Fukushima Sam's picture

The Californians are already in exodus because the place they created for themselves is Heaven turned into Hell.  Now they are bringing it with them, and when they move into your area you'd better watch out because most of them like nothing better than to step all over Libertarians just like they did in the course of their own state history.  No one ruins wonderful places as well as a Californian.

Troll Magnet's picture

kinda ironic that your name is "fukushima sam."  because right now, what happened in fukushima is pretty much ruining california:


imaginalis's picture

Hey Troll Magnet, Try to google Rocketdyne

oldman's picture


We are seeing these jerks from California land here everyday and they are brutal bastards without a word of spanish or iota of respect for another culture----they demand their rights in loud and braying donkey voices when, in fact, they invited only to be here as tourists!

IUn this South American nation a 'resident visa' is not a right, but a privilege granted to those meeting certain conditions of residency. I came from California twenty year ago and it was very differeny---of course, I had been asked by all of the yuppie boomers to 'get out of here if you don't like it!'.

Anyway, it is galling to have escaped these maniacal shit-eaters only to have them flood a beautiful culture and nation the way it has been flooded by them in the past few months.

Can't you keep them home and away from sanity, please?                om

caconhma's picture

Regardless of what State one is living in, we are living in a lawless country. We are not independent country anymore. We are subjects as it was in the Dark Ages.

The USA is a lawless society. The ruling Zionist elite has a total disregard and disdain for the Law of the land and American people. By controlling/owing the White House, the Congress, the Supreme Court, and the mass media, we are treated like brainless POS with no rights whatsoever. The USA is not a 3rd-world country. It is not a fascist state. The USA became a Mafia state similar to the Russia today.

The only question I have: How far and how long will it go before things will blow up a big time?


jpmrwb's picture


You are misinformed. I lived in California and got out just in time. I now live in Idaho and I am a libertarian

Clint Liquor's picture


No one ruins wonderful places as well as a Californian.

Hence the term 'Californication', which was coined in the 70's as the Cali Hippies moved into Oregon and other Western States.

rsnoble's picture

And here I thought the Red Hot Chili Peppers were responsible for that. LOL.

chipshot's picture

what a dick....pinhead sterotype punk with the IQ of a bedroom slipper...

DrewJackson's picture

This has happened with the South from Yankees.   These carpet baggers want to spread thery socialism down here after they ruined their own Cities/States.


It is a disease!!

Troll Magnet's picture

man, i don't wish hardship on anybody but these parasites working for california gov't agencies...they deserve to take a big one up their ass.  here's my story:

i have a home in a decent part of the state.  last year, they sent me a property tax bill claiming that my house is worth $1.3 million.  i went to appeal that shit and told the assessor that if he truly thinks my home is worth that, he could have it for $1.2 million.  hell, i told him, he could have it for $1 million!  the fucker wouldn't budge and told me that similar homes in the area sold for much more recently.  the problem is, those homes never sold because ultimately the buyers couldn't finance.  but still, the assessor argued, that those homes were on the market for so and so and therefore, my home is worth that much.  in the end, they knocked off $500 from my tax bill, so instead of forking over $13,000+ to the city that never does anything efficiently, i ended up forking over $12,500 to "pay for" police, schools and some other bullshit that i nor my neighbors ever benefit from - 4 break-ins in the past year in the neighborhood and zero arrest of course.  

what a bunch of fucking assholes.

Jonas Parker's picture

And you still live there? Get on Mapquest and type in "Texas"!

Dr. Richard Head's picture

Fuck Texas.  That state is currently fishing for taxes on our service company in Ohio. 

Troll Magnet's picture

nothing against texas but i don't want to move there.  i have a decent biz here in taxifornia and am trying to milk it as much as possible before i move the fuck out of this country.

oldman's picture

Hey Troll,

Let's stay friends---please don't come to South America with that attitude; we're full up. The milkers are not wanted here by the locals and they take out on everyone milkers and non-milkers like myself.

You will certainly be welcomed by all if you come here with a lot of money and generosity---yeah, you just give it to those in need. We don't have all the government you have there but we do have government and it is oppressive if you are on it's opposite side.

Come here if you want to do nothing and give your money away. You will be honored and remembered upon your death by all of those who you have shown your natural graciousness.

Take care, my friend                    om

Troll Magnet's picture

hey oldman,

i have no desire to move to south america.  my eyes are on asia - extremely low crime rates which is very important, pretty decent education system for my kids and lots and lots of beautiful women to look at while i'm sipping on martini.  i've narrowed down my list to 2-3 countries and of course my family loves it over there.  

Vlad Tepid's picture

Sensible.  I read too much history to think that South America would be a stable place to raise a family and leave a legacy for posterity.  Asia for me too, Troll.  I left the Golden State in 2010 and will never go back.

Tijuana Donkey Show's picture

Ohio is a bunch of cocksuckers, they send out fake assessments all the time looking for easy revenue. The secret is to have 1 person answer all the calls for the state, and let her have 40 weeks of vacation a year, so they can just hand off the articles to the AG for collection, since you never called... Also, they allow private firms to collet missing tax money, which is a safe and flawless process as well...

ClipperBASIC's picture

Ohio like many states is having financial problems.

One of the newer ideas has been to trick/force people to pay sales taxes on out-of-state internet purchases.

Never mind that the U.S. Supreme Court has ruled that states can not collect sales taxes on all such purchases.

Cite: In Quill Corps. v. North Dakota,  504 U.S. 298 (1992); the court specifically dealt with personal property sold in interstate commerce by a seller that did not have a physical presence in the buyer's state.

The states are hurting for money, so honest and ignorant taxpayers are being tossed under a bus.

The newest trick is to somehow get large internet vendors to force people to declare a transaction as either 'taxable' or 'tax exempt'.  Of course, to qualify for 'tax exempt' you must submit an exemption certificate that will be tossed in the round file, unless it's for one of the politically correct reasons.

And guess what!  Declaring that the seller does not have a physical presence in the state therefore under Federal Law, according the the U.S. Supreme Court, the sale is tax exempt--- Well that reason is NOT politically correct and therefore a corrupt multi-national seller will simply refuse to make the sale, unless YOU the buyer bend over and pay an ILLEGAL SALES TAX.



Case in point: Dell Marketing L.P. refuses to accept a completed and signed Ohio Exemption Certificate despite Ohio Laws which state that they have no liability in conection with any potential sales tax once they have received such a certificate.



Dr. Richard Head's picture

Fuck Texas.  That state is currently fishing for taxes on our service company in Ohio. 

zuuma's picture

NO!  Don't type "TEXAS"! California refugees are lefty locusts. You want Dallas to turn into Marin County? You want Pelosi to be your congrescritter from Lubbock?

Want your taxes quintupled, your borders thrown open, your guns banned, your oil rigs shut down, etc..? That's what they like. That's how they vote.

They should STAY there & fix it.

Either that, or take a nice, hard bankruptcy FAIL. Bust the public unions, & de-fund illegal aliens. RESET.


Don't type Texas. Type "Kevorkian"

Son of Loki's picture

Texas is now filled with Cali wackos my sister said. She moved to Central Texas years ago when it was a nice peaceful place. Now they have a homicide a day and horrible traffic. She's moving further out since she prefers rattlesnakes to Californians.

scam_MERS's picture

Question for TM: How were they able to increase your tax bill like that? Prop 13 prevents this from happening...supposedly. The value is set to a baseline value (the purchase price in nearly all cases) when you buy the house and cannot be raised more than 2% of the assessed value per year, maximum. Since the base tax rate (note: not including special assessments, mello-roos, etc) is 1% of the assessed value statewide, you would pay (for example) $1,000 tax on a $100,000 house. The following year, they can raise the assessment by up a maximum to 2%, so the following year the taxable value goes up to $102,000 and the tax becomes $1,020. Once you buy a home, they can't just come in unilaterally and raise your base tax rate by whatever they want, and the only way the base changes is if you do new construction, improvements, etc.

In 2010 I bought a house here that was valued as high as $1.02M at the peak, for $350,000. It needs a lot of work, but that's the reason why it was so low. Zillow shows the value today at $614,000 (homes in the neighborhood are going for around $500K or so) and I was worried that the county might try to change the base value upon purchase to an amount higher than the purchase price, for tax purposes. This has happened in some instances, even though the law says the county must go by purchase price to set taxable value. There are a couple of "weasel" words in the tax law that allows them to do this in some circumstances, but it's rare. In my case, I breathed a sigh of relief when the tax bill finally came and it was based on my actual purchase price, and not $1.02M!

So I guess my question is, what happened in your case, because I haven't heard of this happening. How long had you owned your house when this happened, and what triggered the assessment increase? Your story, as told, makes no sense to me. I'm not saying it isn't true (anything can happen in this state, for sure) but your details are lacking and the way you describe it, in theory at least, should not and could not happen. More details might make it clearer, though. Not saying you aren't telling the truth, but I'd love to hear more about it.

Dr. Richard Head's picture

There are two co-workers in my company (mid 50's in age) that were both "peace officers" prior to coming here.  He and his wife also worked some part-time jobs so they could contribute then take advantage of Social Security as well.  Their "pension" fund was cut in half prior to their retirement, hence their working here.  Additionally, since they both had a state-sponsored retirement plan, they could not receive social security payments. 

Sucks to be them.  Both are voting for Romney I believe. Stupid fucks.

aerojet's picture

I feel bad for the teachers.  They work hard at making the world better any way they can. I'm sick to death of cops, though.  At least the "law enforcement officer" kind.  Peace officer, if done right, is something altogether different.

Dr. Richard Head's picture

The lesson I have learned in all of this is that the Government hands that feeds will inevitably bite. 

tempo's picture

I live in So. CA. and most of my friends are Govt employees and teachers. They love their retirement at 100% pay with unlimited health care. What is the problem, the Fed will buy all the Ca unfunded liabilities. For those that live in the South, get with the program. Our motto is "milk the system". The old saying is true, "Its much better to owe the banks millions (billions) than thousands"

Son of Loki's picture

The Fed will print another trillion to bail out Cali pensions and many other local gubbermints.

Dave Thomas's picture

Just toss it on the balance sheet my amigo, no problemo!


iDealMeat's picture

That would trigger another bailout for uncle warren's insurance companies..  Thank you for playing..

Abiotic Oil's picture

As Maynard says, "Mom's gonna come and wash it all away."

Dr. Richard Head's picture

Fucking great song and supurb album

I'll be the one to protect you from
Your enemies and all your demons
I'll be the one to protect you from
A will to survive and a voice of reason
I'll be the one to protect you from
Your enemies and your choices son
They're one and the same
I must isolate you
Isolate and save you from yourself

Buck Johnson's picture

This isn't happening to only California, other states are finding hook or by crook ways to get money from you to fund whats left of their economies.  Welcome to a real third world.

AnAnonymous's picture

Made me laugh.

No, US citizenism means a government serving the best interests of the middle class, not the disadvantaged.

Now, when the environment is getting too small, government or not, it is getting too small.

Sophist Economicus's picture

China-bot, you need to go in for reprogramming....'s picture

I used to think that the Chinese were cultured and intelligent people. Then this guy showed up.

Sophist Economicus's picture

Must have been built during the Mao era...

akak's picture

I think he was born during the Great Leap Forward into Stupidity.

LFMayor's picture

it's the opium taking effect.  We conquered and enslaved them once with it, it can be done again. 

Fukushima Sam's picture

China-bot program like fortune cookie!

   Lucky numbers: 3  5 13 46 55

prains's picture



here kitty kitty, melamine milk for yu!!

Thorny Xi's picture

Lesson:  Don't bank with Wells Fargo.  Bank in the state you live within.

DoChenRollingBearing's picture

+ 1

Beat me to it!  If you live outside California, choose a bank with its HQ elsewhere.  

You lose, Wells Fargo!

Gohn Galt's picture

Unless of course you are opening a corporate account and don't want to go through compliance.  Those WF Branch Managers will sign off of on any BS story without documentation to get an account opened.

ConfederateH's picture

Think bank consolidation,  think Dodd Frank.  The regional banks are being devoured by WF, BofA and the other behemoths.  The sheeple are being herded into the financial repression corral for a major fleecing.

TaxSlave's picture

Haha, you don't get it, do you?

The lesson is, don't leave any money in the bank beyond what is needed to pay your bills.  LIMIT how much they can grab.  You can be erased at the touch of a button.

What more does anyone need to know?

Ceteris paribus's picture

Could someone tell me why you need a bank account , mostly because if people did not have one they would have seperation anxiety, there is no other reason.