I agree with what you say completely, but this: > that will be taxed at a lower capital gains rate -- of which the state will see almost nothing ...is not qui

I agree with what you say completely, but this: > that will be taxed at a lower capital gains rate -- of which the state will see almost nothing ...is not quite correct; California does not have a special reduced cap gains tax rate like the Feds. But this does not make the whole setup any less ridiculous.