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In 1990, Gilbert Hyatt was awarded the patent for the first single-chip microprocessor. The computer industry welcomed this invention, earning Hyatt a lot of money. He soon moved to Nevada, which has no state income tax. California’s Franchise Tax Board (FTB) claimed Hyatt lied about his residency, and that he owed $7.4 million in taxes for a six-month period from 1991 to 1992. In Nevada, California’s FTB goons ransacked Hyatt’s trash without warrant, told his business partners and doctors he was under investigation, and shared Hyatt’s personal information with the media. Hyatt sued the agency for harassment and violation of privacy. California tried to get the suit dismissed, but in 2003 the U.S. Supreme Court ruled that Hyatt had a right to go to trial. In 2008, a Las Vegas jury awarded him $388 million, including $250 million in punitive damages. California’s tax hacks duly appealed to the Nevada Supreme Court, calling the award “flagrantly excessive” and claiming they did nothing wrong. In 2014, Nevada’s Supreme Court tossed much of the award, but Hyatt retained the $1.2 million for fraud. Even so, California’s pillage people kept up the chase.
This week California’s Board of Equalization will attempt to decide whether Hyatt lived in California or Nevada when he started cashing in on his invention. If Hyatt wins, the state may be on the hook for tens of millions in legal fees accumulated since 1993. If the state wins, Hyatt, now nearly 80, will have to pony up some $13.3 million in taxes and penalties from 1991 and 1992, and the FTB says that, with interest, the full tab comes to more than $55 million. As it turns out, the FTB has already spent $25 million trying to grab Hyatt’s money, so the pillage people are not very cost effective. George Runner of the Board of Equalization says “it’s all about residency,” but it’s really about government greed, which as this case shows, is truly fathomless. Inventors of useful products such as the single-chip microprocessor will find better conditions in other states.