Do you remember the snack tax?

As our Legislature discusses a sales tax on services, and whether baby diapers and feminine hygiene products should be exempt from sales tax, we recall the infamous snack tax of 1991. Effective July 15, 1991, the state began taxing snacks, defined as:1

  • Candy, confectionery, and nonmedicated chewing gum; and
  • Snack food: defined as cookies, crackers (excluding soda, graham, and arrowroot crackers), potato chips, snack cakes or pies, corn or tortilla chips, pretzels, granola snacks, popped popcorn, fabricated chips, and fabricated snacks.

Among the exclusions were: ice cream, baby food, doughnuts and other bakery products not mentioned above, nuts, cereals, and beef jerky.

The definition was so devoid of logic that the State Board of Equalization worked out a preliminary 87-page report identifying as taxable or nontaxable some 4,000 items that they believed could be considered snack foods.

Fortunately, in the November 1992 election, the voters repealed the snack tax,2 which was good because even then Board Member Brad Sherman called the law "incomprehensible and ludicrous."

Here's a cartoon, created by Sam Carter, age (at the time) 14. The cartoon ran in Spidell's California Tax Seminar materials in 1991/1992.

1 BOE Ann. 245.1430; R&TC §6359, later amended by Prop. 163
2 Proposition 163

Are you smarter than Einstein?

One of the most famous quotes about taxes is attributed to Albert Einstein, who is said to have remarked to his CPA, Leo Mattersdorf:

"The hardest thing in the world to understand is the income tax."

The quote appeared as part of an anecdote written by Mattersdorf after Einstein's death in 1955. The story goes that Mattersdorf, who was also an astronomy buff, was invited for lunch with Einstein and his wife. During lunch, Einstein made the above remark, and Mattersdorf responded "There is one thing more difficult, and that is your theory of relativity." Einstein demurred, saying "Oh, no, that is easy" … to which his wife replied "Yes, for you."1

So cheers to you for making a career out of preparing taxes — something that confounded Einstein so much he delegated the task to an accountant. And starting April 19, you can tackle the theory of relativity. It should be easy, after all.

Here are some other tax-related quotes:2

"Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund."

— F. J. Raymond

"Taxation with representation ain't so hot either."

— Gerald Barzan

"Income tax has made more liars out of the American people than golf."

— Will Rogers

"People who complain about taxes can be divided into two classes: men and women."

— Unknown


Let's get quizziCAL

Here's a stumper for you … click below to reveal the answer.

You never seem to have enough time to enjoy your 10-acre ranch in the San Joaquin Valley, so you're going to part with it. The last time you were there, you noticed some scurrying rats in one of the outbuildings on the property. You called an exterminator, who informed you that your land had become a haven for a species of endangered kangaroo rats. You're moved by the thought that these delightful creatures have chosen your property to call home, so you've decided to donate your land for their repopulation because California could certainly use more rodents. The FMV of the property is $500,000 with a basis of $50,000. How should you handle this donation on your California tax return?


You can take a $500,000 charitable deduction on your California return or claim a $275,000 ($500,000 x 55%) Natural Heritage Preservation Credit if you receive approval from the Wildlife Conservation Board. (See Spidell's Analysis and Explanation of California Taxes® ¶25-120)

A few fun facts about this week's writers:

Lynn Freer, EALynn Freer, EA, loves to travel and loves Starbucks. Here she is at Starbucks on the Champs-Élysées.

Kathryn Zdan, EAKathryn Zdan, EA, is not only director of the editorial department, she also "rocks the house" as a regular in curling bonspiels around the country.

Diane FullerDiane Fuller is a gourmet cook with a refined taste in all things sweet. From traditional Japanese desserts to the best bacon donut that's ever appeared in our break room, Diane knows how to satisfy her sweet tooth. She also writes children's poetry!

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