¶1Harold B. Green, Los Angeles, Cal., Joseph H. Inglese, San Francisco, Cal., for plaintiff-appellant.
¶2*907Robert Barton, Barton & Barton, Oakland, Cal., for defendant-appellee.
¶3Before WRIGHT, KENNEDY, and HUG, Circuit Judges.
¶5National appeals from a judgment declaring Trahan’s debt to National dischargeable in bankruptcy. We affirm.
¶6FACTS
¶7Trahan was required by the State of California to give security ensuring his payment of sales tax. A surety contracted with Trahan to meet the requirement by posting a $2,000 bond with the State. After Trahan failed to pay the tax, National, the surety’s assignee, brought a state court action against Trahan to recover the $2,000 the surety had paid to the State.
¶8Trahan petitioned for voluntary bankruptcy and subsequently sought a declaration from the bankruptcy court that the debt to National was discharged in the bankruptcy proceeding. The district court affirmed the bankruptcy judge’s finding that the debt was discharged.
¶9DISCUSSION
¶10There is an exception to dischargeability for tax debts owed by a bankrupt to government entities.1 The question is whether this exception applies to a debt owed to a surety which has paid the tax debt of a bankrupt.
¶11National contends that it has a right under California surety law to enforce every remedy that the state would have had against Trahan. National concludes that, because Trahan’s debt to the state was non-dischargeable, the debt owed to National could not be discharged.
¶12A state law that is contrary to federal bankruptcy law must yield. See Elliot v. Bumb, 356 F.2d 749, 755 (9th Cir.), cert. denied, 385 U.S. 829, 87 S.Ct. 67, 17 L.Ed.2d 66 (1966); In re Professional Bar Co., 537 F.2d 339, 340 (9th Cir. 1976) (per curiam). Assuming National’s interpretation of California law is correct, that law does not control if it conflicts with Bankruptcy Act policy.
¶13The statutory exception for tax debts runs counter to the general policy of the Bankruptcy Act favoring discharge of debts and the resulting fresh start it provides to debtors. See generally Perez v. Campbell, 402 U.S. 637, 648, 91 S.Ct. 1704, 1710, 29 L.Ed.2d 233 (1971). It furthers, however, the overriding need to assure tax collection by government entities.
¶14Interpreting 11 U.S.C. § 35 broadly to include debts owed to a surety would not promote the collection of taxes because the state is paid by the surety whether or not the bankrupt’s subsequent debt to the surety is nondischargeable.2 We conclude that any state statutory right that National might have to recover against Trahan would conflict with the federal bankruptcy policy favoring the discharge of debts.
¶15National also contends that under the doctrine of equitable subrogation it stands in place of the state and is subrogated to the nondischargeable quality of the state’s claim. Such an approach was adopted under similar facts in Gilbert v. United States Fidelity & Guaranty Co., 180 F.Supp. 794 (M.D.Ga.1959), aff’d, 274 F.2d 823 (5th Cir. *9081960).3St. Paul-Mercury Indemnity Co. v. Donaldson, 225 S.C. 476, 83 S.E.2d 159 (1954). In light of the overriding policy favoring dischargeability, we reject the approach taken in Gilbert and Donaldson, decline to apply the doctrine of equitable subrogation, and hold that the debt owed to National was discharged.4
¶16AFFIRMED.