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Where did wealthy inventor live in 1991? California’s taxman wants to know
- tlb 9y agoThe money in question was royalties on a patent (eventually invalidated) covering the idea of a microcontroller (CPU, memory, and communication on one chip). It was a 20 year submarine patent: issued in 1990 but with priority date 1970. It almost certainly could not have been built with 1970s lithography. https://www.google.com/patents/US4942516 https://www.google.com/patents/US4942516
- jacquesm 9y agoInteresting concept, you pay royalties on a patent that is invalidated at a later date but you are still out your royalties.
- deleted 9y ago[deleted]
- winter_blue 9y agoHow is the priority date so old? Did he invent this in 1970? Does the USPTO allow you to put in anything you want as the priority date?
- URSpider94 9y agoPrior to 1995, the term for patents in the USA was 17 years from the issue date - and patents were not published until they issued. It was possible, through legal maneuvering, to prevent the issuance of a patent for a long time - in some cases decades, while the underlying markets grew and matured. Post-1995, patent terms in the USA are 20 years from date of filing, and applications are published after 18 months (unless the applicant waives the right to file overseas), which incentivizes companies to get their patents to issue as soon as possible.
- tlb 9y agoThat was the terrible calculus of submarine patents [0]. Submit a broad patent application today for something conceptually simple that's not currently possible (so nobody has bothered to patent it). File continuations and extensions for years until it is possible and people start doing it. Get patent with early priority date. Profit. Fortunately, the rules were changed in the 1990s to limit extensions. Still, you get 20 years from the initial filing. So if you think something will happen within 20 years but hasn't been explored yet, you too can submit a patent. Enforcing such patents is dirty work, so you basically have to dedicate the rest of your career to rent-seeking. [0] https://en.wikipedia.org/wiki/Submarine_patent https://en.wikipedia.org/wiki/Submarine_patent
- SoMisanthrope 9y agoTextbook example of why we need to have a flat tax or a fair tax / federal sales tax. It's way more difficult to game, if the tax code for individuals could fit into a few short pages...
- Arainach 9y ago>"“The ability to take this to a group of unbiased elected officials is better than taking it to a group of state employees who in the long run benefit from a decision for the state,” Runner said." Unbiased elected officials is an oxymoron.
- 9935c101ab17a66 9y agoI thought that was quite funny. For anyone to even pretend they don't have a bias is mind-boggling.
- nunez 9y agoWhat I've realized throughout the last few years is that there are wealthy investors EVERYWHERE within the US and SV is kind of overhyped.
- leggomylibro 9y agoSV just has the investors who will listen to promises of N-million% growth; investors exist all over the country, but the prevailing risk/rewards seems to have made that uniquely SV attitude the only one where actually investing makes sense. "Hello M. Investor, I would like to start a laser tag place. It will use innovative technologies like drone targets, utilize the cheap real estate and latent suburban customer base of a disused mall, and we think we can conservatively double your investment for the initial capital outlays in ten years." Well gee, that sounds nice, but this new laser-tag-as-a-service company has promised us enormous user growth and the possibility of a buyout by Facebook in ten years. They say they're looking at more like a 100x rate of return. Next!
- Lyle-Cantor 9y agoPatent troll vs the government that enforces patent law, no matter who wins we lose.
- jacquesm 9y agoThat is incorrect. If the tax man wins everybody wins. People downvoting this are cordially encouraged to have a look at countries that have no taxes.
- deleted 9y ago[deleted]
- smudgymcscmudge 9y agoexcept that one guy
- JBReefer 9y agoI never understood that - why do people brag about cheating the tax man? I have to make up the difference, in either (very slightly) reduced services or higher taxes. It always struck me as odd.
- jdavis703 9y agoIt's the same reason people brag about other criminal endeavours, they want to brag about how smart they are and that they beat the system.
- Dirlewanger 9y agoBecause it's a "fuck you" to The Man™. A marginal several thousand or whatever is probably a fraction of the amount that's lost daily across the federal government due to negligence.
- jjawssd 9y agoIs it just negligence or is there more to it than that?
- steffengm 9y agoLet's hope he pays up because California could use the money for infrastructure and environmental remediations.
- vaadu 9y agoHe should have to pay based upon what the law says, not because of California's addiction to spending.
- dawnerd 9y agoThat money is a drop in the bucket. At best it would pay for one traffic intersection.
- yellowapple 9y agoA whole intersection? Yeah right. More like one letter on a stop sign.
- astrodust 9y ago$50,000 doesn't even get you a stop light installed.
- astrodust 9y ago$50,000 doesn't even get you a stop light installed. This isn't the 1940s where hundreds of dollars could buy something meaningful.
- dawnerd 9y agoWhoops, didn't see that the cap was on what the state would owe, not what he would owe.
- whack 9y ago> "If the state wins, Hyatt would be on the hook for at least $13.3 million in taxes and penalties from 1991 and 1992. At past court appearances, the state has argued that Hyatt owes more than $55 million when interest is tacked on to those initial charges." > "The Franchise Tax Board has already spent $25 million trying to collect the money while defending itself from Hyatt’s lawsuits, department spokesman Jacob Roper said." Is it just me or do the above numbers sound ridiculous. Why is the govt spending $25M on a case, that if it wins, would result in a $13-55M payout? Edit: To put the above numbers in context, the IRS recoups about ~$60B in tax enforcement, on a ~$10B budget. That's a 600% return on investment. I would have expected the California state tax enforcers to budget themselves in a similar manner. http://www.huffingtonpost.com/2011/04/28/irs-budget-cuts-deficit_n_850243.html http://www.huffingtonpost.com/2011/04/28/irs-budget-cuts-def...
- slededit 9y agoTo enforce the law? If we only enforced laws when economical to do so we'd leave most unsolved.
- thaumasiotes 9y agoWe do leave most laws unenforced. If laws had to be enforced, almost all of them would quickly be thrown out.
- valuearb 9y agoIf all laws had to be enforced, most of the country would be in jail.
- utternerd 9y agoFor as little as clearing your browsing history[0]. https://www.techdirt.com/articles/20150606/16191831259/according-to-government-clearing-your-browser-history-is-felony.shtml https://www.techdirt.com/articles/20150606/16191831259/accor...
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- rayiner 9y agoCalifornia is in the wrong here: https://www.pillsburylaw.com/en/news-and-insights/hyatt-to-make-second-trip-to-the-united-states-supreme-court.html https://www.pillsburylaw.com/en/news-and-insights/hyatt-to-m.... Basically, California contends that this guy owes taxes for 1991-1992 because was still a California resident at that time, despite extensive evidence he changed his residence to Nevada before the relevant date: > During the audit, Hyatt provided FTB with evidence that he had rented an apartment in Nevada, obtained a Nevada driver’s license, opened a Nevada bank account, registered to vote in Nevada, obtained Nevada automobile and renter’s insurance, joined a Nevada synagogue, and sold his California home prior to the date of his asserted residency change. Nevertheless, FTB concluded that Hyatt staged the alleged move to Nevada all in an effort to avoid state income tax liability on his patent licensing income. In the process, the FTB conducted an abusive investigation: > FTB conducted interviews and collected signed statements from various individuals who were estranged from Hyatt at the time, but ignored witnesses with whom Hyatt had good relations. FTB auditors allegedly rifled through Hyatt’s mail and garbage, and made anti-Semitic remarks in reference to Hyatt. Hyatt sued the FTB in Nevada courts. The FTB then invoked California law, which provides it immunity from suit. The Nevada Supreme Court held that the FTB could not invoke California immunity from suit in a Nevada court. The U.S. Supreme Court agreed, holding that the FTB was entitled to no more protection than a Nevada State agency would receive in a Nevada court. Hyatt then won almost $500 million at trial against the FTB on tort and fraud claims. California appealed, arguing that Hyatt couldn't win a judgment against the FTB in a Nevada court that exceeded what he could win against a Nevada agency ($50,000). In a real "live by the sword, die by the sword" ruling, the U.S. Supreme Court agreed, knocking his judgment down to $50,000.
- berberous 9y agoWhile I don't condone the abusive investigation, I will say that plenty of people do pretend to move in order to avoid income tax liability. I don't think the items you listed, like renting an apartment or obtaining a driver's license, are dispositive. Presumably (but maybe not?), the record also had evidence suggesting he still maintained California residence.
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- sunshinerag 9y agoBoard of equalization? Do they cut people's legs so everyone is equal?
- pcunite 9y agoThe actual evidence against the man has been lost, so claimed by this man. Go to about 14 minutes in. https://youtu.be/FcYbMrS4cVg https://youtu.be/FcYbMrS4cVg
- pcunite 9y agoVB has a perspective on this: https://venturebeat.com/2014/04/01/gil-hyatt-has-waited-40-years-for-the-patent-office-to-rule-on-his-inventions-interview/ https://venturebeat.com/2014/04/01/gil-hyatt-has-waited-40-y...
- ams6110 9y agoNo statute of limitations on tax collections in CA?
- valuearb 9y agoAnother example of tax arbitrage. I have a friend in Portland, Oregon who owns a multimillion dollar business and lives 20 miles away from Vancouver, Washington. Oregon's top income tax bracket is 11%, Washington has no income tax. When it comes time to sell his business, by moving to Vancouver for a year he can increase his net worth by a half million or more and his income for the rest of his live by over 12% a year.
- Simon_says 9y agoWhere is the business located?
- gt2 9y ago1. Why wouldn't he go ahead and move there now to save on his presumedly decently sized income along the way? 2. Anyone know if that kind of 'tax arbitrage' often challenged from states that see people move away just before a major event?
- valuearb 9y agoPortland is much nicer place to life than Vancouver. And the business is located in Portland, so profits are still subject to OR taxes.
- kevin_thibedeau 9y ago> Hyatt would be on the hook for at least $13.3 million in taxes and penalties from 1991 and 1992. At past court appearances, the state has argued that Hyatt owes more than $55 million when interest is tacked on to those initial charges. That's a pretty sweet interest rate they've given themselves. Wish I could get that from my bank.
- mmalone 9y agoAround 6%/yr... more than a savings account, but pretty reasonable. I think the IRS charges 6%/yr too.
- Simon_says 9y agoWell, the interest rate has to be substantially higher than the risk-free rate, otherwise you're incentivizing late payments. 6% is a little on the high side, but not unreasonable IMO.
- ckinnan 9y agoActually that is a low rate for the 1990s
- Simon_says 9y agoGood point.
- deleted 9y ago[deleted]
- jlebrech 9y agowhere someone lives should have no bearing, for example if you work for an employer the state where you turn up to work should receive taxes, and if you're an inventor the state where the patent office resides should get to money. this would solve a lot of cases. and if you live somewhere you also pay property taxes.
- briandear 9y agoAnd I work remotely. I rarely step foot in California, yet I should pay for California’s roads, schools, welfare programs, police, fire? The company for which I work already pays massive corporate taxes to the state so their “impact” and consumption of government is more than paid for. When I do travel to California, I already get to pay high hotel taxes, rental car taxes, gas taxes, sales taxes. That covers my “share.” Really states ought to abolish income taxes; Texas and Washington State and many others seem to be doing just fine. The idea of taxing income is already ridiculous — we should be taxing consumption, but that’s another discussion.
- ckinnan 9y agoProperty taxes are not related to your personal state of residence, you pay them wherever you own property.