03/29/2024

California legislators grant ‘great exceptions’ to laws others must obey

Nearly seven decades ago, historian Carey McWilliams assessed California’s first century of statehood and labeled it “The Great Exception” for its many attributes.

The same phrase could be applied to the California Legislature, which habitually carves out great exceptions for particular interests from laws everyone else must obey.

State tax codes are riddled with loopholes that grant relief from taxes others must pay. One particularly egregious example, enacted three decades ago, exempts custom computer software purchased by big business from sales taxes while levying taxes on off-the-shelf software used by consumers and small businesses.

It’s one of the many reasons why the governor and legislators should completely overhaul the state’s convoluted and counterproductive tax system and eliminate unjustified loopholes.

Another example of the syndrome has to do with the so-called “tied-house law” that supposedly prevents monopolies in the three-tier liquor trade by separating producers, wholesalers and retailers.

The tied-house law is an anachronistic remnant of the misnamed “fair trade” system of state-enforced liquor monopolies that was invalidated by the courts many decades ago and it should be repealed. But rather than erase the law, legislators enjoy a brisk annual trade in bills – five in this session alone – that alter it for particular liquor interests.

View Article