When an opinion starts out with a slap in the face, you don't have to read much further to understand its outcome: "The Jibilians, who describe themselves as “citizens” of the state of California, filed state income tax returns ..." That is if you want to call the document they filed state tax returns. Putting "citizens" in quotes was my first clue that the Jibilians were going to have a hard time of it. The second was the amount of taxes they wanted to pay on their rather substantial income. Read on.
Although the Court notes that they filed state tax returns "for the years 1999, 2000, and 2001 and paid taxes for those years of $61,542, $56,730, and $90,470, respectively" and taxes of $75,000 for 2002, they apparently started to get creative with their tax returns once they secured a full tax refund of $315,000 from the federal government. Yes, you read that number right: $315,000, or so the state court opinion reports. The actual facts may be a bit different.
That alleged victory of sizable federal tax refund might embolden some people to get creative with all of their tax returns, and the Jibilians apparently thought they likewise deserved an equivalent tax refund from California, so they amended their tax returns for these four years to $0.00 for the "taxes due" line item. That's right. Zero.
Admittedly, I don't like paying taxes anymore than anyone else. But zero? How did they reach that riveting number? The Court sets out their six defenses (now known as "don't try these excuses here"):
"(1) Whether or not they earned any income, they are not 'within the class of people' required to pay income tax under federal or state law.
(2) They are not 'taxpayers' within the meaning of the Internal Revenue Code, title 26 of the United States Code, or the California Revenue and Taxation Code and have no obligation to file returns or pay a tax based on income.
(3) They had no taxable income for federal or state purposes because their earnings were not 'gain from capital, labor or both.'
(4) Their earnings were not includable as gross income under section 861 of the Internal Revenue Code (section 861) and regulations thereunder.
(5) No tax is owed because [the Franchise Tax Board] has not made any assessment against them.
(6) Because they have no taxable income for federal purposes, they also have no taxable income under the California statutory scheme."
It may not have been the smartest idea to argue these positions in front of government employees whose salaries are paid by the taxes we all pay. But then again, what other alternative do you have? If you're going to live in California, drive on our freeways, use and rely on our government services and otherwise enjoy the benefits that paying taxes create, it's hard to believe anyone that earns that much money would believe that you don't have to pay anything for all of those benefits.
Maybe they should buy an island somewhere far away and try out a new form of government. As long as I have a government there that provides everything I have here, I'd be happy to go live on that island and not pay any taxes.