03/28/2024

Inventor’s tax fight with California flares up again

There’s much more at stake than this one man’s tax liability, because of fears among state officials that other high-income Californians might emulate him and change their residences to escape state taxes.

By siding with Hyatt on harassment, the Nevada courts have, in effect, declared that the Silver State will welcome and protect tax refugees from the Golden State. And that’s important because the recent overhaul of the federal tax system severely limits the deductibility of state taxes on federal returns, thus increasing their economic impact and, officials fear, enticing some wealthy people to change residences.

While there’s no evidence of a large-scale flight from California yet, the federal tax changes are too new for their fallout to be evident.

The Hyatt case, in all its ramifications, is a case study in how those fleeing from California’s taxes could be treated, and is being closely watched by those who specialize in minimizing tax exposure of high-income Californians.

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