Taxes versus Fees: Lead Paint and LLCs Available to Purchase

This paper discusses the rather blurred distinction between fees and taxes, particularly for states like California where enactment of a tax requires a two‐thirds vote while fees can be enacted with a simple majority. We discuss the California Supreme Court decision in Sinclair Paint wherein the Court adopted a broad definition of a fee. Many taxpayers feared that this would open the flood gates for enactment of fee legislation both in California and nationwide. We examine recent legislative and judicial trends in enactment of fee legislation and court interpretations following Sinclair Paint. The data shows that the Legislature is actively pursuing all types of fee legislation as budget dollars do not stretch far enough to cover program expenditures. Courts are continuing the Sinclair Paint trend of broadly defining fees. The result seems to be an ever increasing fee burden on businesses and taxpayers.