There are rules in place to determine what's 'fair' and what's not 'fair.' I'm assuming Mike has played by all the rules, so it's most certainly 'fair.'
If the state of California didn't think what Arrington did was right, there'd be a law. We've built up a system of rules, we all have to follow them, Mike did, so he's in the clear.
I encourage you to do the same.
That's a pretty bad attitude to have, that citizens should be trying to exploit as many loopholes as possible. That sets up citizenry vs. govt. as a competitive game, which is a great recipe for making something that's supposed to be cooperative become dysfunctional and complex.
It's an impossibly complex task to make a perfect airtight literal codex of laws in a system, and it's not reasonable to assume that humans can create such without introducing a huge number of contradictions, etc. We need to keep in mind the spirit of the law in order to keep our system from devolving into a morass.
It's not gamesmanship, although there is some competitiveness between state tax laws (such as this WA vs CA capital gains thing).
That's WA's incentive to get people with lots of money to come live (and hopefully spend) it in WA. CA has enough people with lots of money that it can afford to take a different stance.
Clearly it would be unfair to treat Arrington differently than the law requires. I think the charitable interpretation of the above poster is that he thinks the laws themselves are unfair. You may disagree, but arguing that what Arrington did is legal is beside the point.