This is ridiculous.
California: You owe us taxes on those IOUs
Bruce McQuain calls this the theater of the absurd, but that implies humor and entertainment value. Unfortunately, California’s attempt to get hard cash in taxes based on payments to businesses it made with imaginary money is neither humorous or entertaining. It does demonstrate the complete disconnect from reality suffered by the state’s political class in Sacramento:
Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors’ federal class action claims the state is trying to balance its budget on their backs.
Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California “paid” her with an IOU that two banks refused to accept – yet she had to pay California sales tax on the so-called “sale” of the uniforms.