Bill raising sales tax cap passes CA Assembly

LAO Sales Tax State Comparison ChartAlthough Californians already pay some of the highest sales taxes in the nation, a bill that recently passed the Assembly paves the way for the sales tax to go even higher. Assembly Bill 464 increases to 3 percent (from the current 2 percent cap) the maximum sales tax rate that can be levied by local governments.

That potential 3 percent sales tax levied by cities and counties is in addition to the statewide 7.5 percent sales tax, which could result in a combined 10.5 percent tax in some areas of the state. Tax hikes require majority voter approval for general purpose levies and two-thirds approval for special purposes.

The average state and local combined sales tax in California is 8.5 percent, according to a recent report by the Legislative Analyst’s Office. The lowest rate of 7.5 percent predominates in rural counties, while the highest rates are in urban areas. Residents in eight cities in the Bay Area and Los Angeles County are currently paying a 10 percent sales tax because their counties have received exemptions from the 2 percent cap.

“AB464 is about local control and flexibility,” said the bill’s author Assemblyman Kevin Mullin, D-San Mateo, on the Assembly floor May 14. “It gives local voters the ability to raise revenue to fund important public services, including transportation, public safety and libraries. This bill is crucial, because if just one city in a county reaches the [2 percent] cap, then the entire county is precluded from having voters raise any additional taxes, hindering key transportation projects or attempts to enhance public safety.

LAO Sales Tax Chart“As a result, a flurry of legislation has been signed into law creating individual cap exceptions across the state. AB464 reduces the need for this one-off legislation by lifting the cap statewide. Please join me in granting voters the ability to raise sufficient revenue to fund public services locally in California.”

There was no debate on the bill, which passed along party lines 45-31. It’s supported by California’s counties and their transportation commissions along with government employee unions.

The California Taxpayers Association issued an opposition “floor alert” on the bill that was signed by numerous business and local taxpayer organizations. It states that “California already has the highest sales and use tax rate in the country,” and provides three arguments against raising the cap:

  • Increases the cost of doing business. Businesses face a significant sales and use tax burden in California, and business purchases account for roughly 40 percent of all sales and use tax collected by state and local governments. California is one of the few states that requires businesses to pay sales and use tax on manufacturing and R&D equipment bought and used in the state, making California a very expensive state to operate in, particularly when the sales tax rate is 10 percent in some California cities.
  • The sales and use tax is a regressive tax that impacts California’s most vulnerable residents, making it more difficult for them to budget and purchase everyday necessities. California’s economy is improving, resulting in improved revenue collections this year. Now is the wrong time to ask taxpayers, especially those that can least afford it, to spend more of their income to pay taxes.
  • Raises the sales tax rate to 11 percent in some areas. [T]he Los Angeles Metropolitan Transit Authority imposes a 0.5 percent tax in excess of current limitations for all of Los Angeles County. This bill would authorize this district to increase its rate to 11 percent. This level of taxation is excessive, and exacerbates the problems described above.

The immediate beneficiaries of AB464 are Alameda, Contra Costa, Los Angeles and San Mateo counties, which have all reached the 2 percent limit, as well as Marin, San Diego and Sonoma counties, which are near the 2 percent limit, according to the Assembly’s legislative analysis.

California’s sales tax brought in $48 billion in 2013–14. About half of it goes to the state government’s general fund, making it the second largest general fund source after the income tax, which accounts for two-thirds. One percent of the sales tax goes to cities’ and counties’ general funds; the rest is aimed at specific programs such as public safety and transportation.

LAO Sales Tax Increase Chart

The statewide sales tax rate began at 2.5 percent in 1933. Although the tax rate has tripled since then and its revenue has increased at a 7.3 percent annual rate, the sales tax has actually decreased as a share of total state revenue. “In the 1950s, the sales tax accounted for the majority of General Fund revenue, while the personal income tax contributed less than one-fifth,” the LAO report said. “Since then, personal income tax revenue has grown rapidly due to growth in real incomes, the state’s progressive rate structure and increased capital gains.”

In 1969, cities and counties were granted the authorization to pass their own sales tax increases, mostly benefiting transportation improvements.

Although not nearly as volatile a revenue source as the income tax, revenue from the sales tax can vary significantly depending on the state of the economy. In 1974-75 sales tax revenue increased 22 percent, but in 2008-09 it declined 10 percent. Overall, however, adjusting for increased rate changes, inflation and population, sales tax revenue has remained roughly constant per capita since 1970–71, according to the LAO.

AB464 will next be considered by the Senate Rules Committee.

23 comments

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  1. Bill Gore
    Bill Gore 29 May, 2015, 07:00

    ‘Progressives’ giggle when they let their hair down and get all nasty and regressive. And nothing is more regressive than a sales tax. Very confident the sheeple will approve this: just say its for the kids.

    Reply this comment
  2. Richard Rider
    Richard Rider 29 May, 2015, 08:01

    Tennessee is easily the highest. But then, Tennessee levies a state income tax only on interest and dividends — no tax on “earned income.” Meantime third place CA charges by FAR the highest state income tax rate — including on capital gains. With this new bill, we’ll challenge Tennessee for #1 on sales tax.

    I’ll take that Tennessee trade-off any day! Art Laffer made that swap years ago when he left San Diego for Tennessee — and was vocal about the reason.

    Reply this comment
    • SeeSaw
      SeeSaw 29 May, 2015, 09:39

      So, how soon will you be moving to Tennessee?

      Reply this comment
      • Richard Rider
        Richard Rider 29 May, 2015, 09:44

        My moving to Tennessee (or just out of CA) would make too many of you thieving progressives happy. Can’t do that.

        So I’ll continue to suffer here in the Golden State (at least for now), soldiering on just to piss you off. Indeed, you’re my inspiration!

        Reply this comment
      • bob
        bob 30 May, 2015, 09:57

        Why don’t we raise the sales tax to 15 percent? How about 20?

        What amount will ever be enough, Saw Horse? If you look at the history of sales taxes in Colliefornia (as Ahnode call it) they always go up and if they go down it’s only temporary.

        The truth is no amount will ever be enough for trough feeders such as yourself.

        Pensions were originally intended to be a supplement to an employees savings, not 109% of salary for gooberment employees such as yourself. This is absurd and obscene.

        You work Desmonds gerenation to death to pay for it all, then you’ll dance on his grave.

        With the luck of hapless taxpayers, ex-gooberment employees such as yourself will never die and not even fade away (as Doug McArthur would say), but just feed at the trough for eternity.

        Reply this comment
        • SeeSaw
          SeeSaw 1 June, 2015, 00:35

          Where do you see that I have said anything for or against raising this cap? How many citizens will be asked to raise the cap in their own locales? I don’t know, but if such is presented in mine, I would have to consider the details and make my own decision.

          My pension is not the subject here–you insist on impaling me about the 109%, every comment, which I have countered every time with the information that I never got that amount because I chose an option with a beneficiary. Furthermore, even if I had gotten the full 109%, it is still an amount far less than the levels of the many above mine, even those with a smaller final percentage.. Jealously is not pretty!

          Reply this comment
          • bob
            bob 1 June, 2015, 18:51

            You didn’t answer the question. What amount will ever be enough?

            And pensions are the main reason that voters are being told they should raise sales taxes. These pension obligations are eating up the budgets of cities and counties all over the state.

          • SeeSaw
            SeeSaw 1 June, 2015, 21:16

            I haven’t even taken a position on such subject. There is no proposed sales tax increase on the ballot of my locale and if there is, in the future, I will have to review. There are many reasons to have extra taxes and it is all in your mind that every tax increase is just for the purpose of supporting pensions. The projects, services, and workers all have to exist before there are pensions.. As for me, I have enough, if that answers your question. I am not and never ever have advocated for or asked anybody to pay extra taxes for anything.

          • bob
            bob 1 June, 2015, 21:59

            As for me, I have enough, if that answers your question.

            No it doesn’t answer the question. It shows you don’t even understand the problem or choose to ignore it. What amount of taxation is enough so you can have “enough”? These pensions are unsustainable and no one in the private sector gets pensions like this. If the private sector which is the tax base can’t afford pensions for its workers how can it be expected to pay for gooberment pensions?

            These pensions are devouring government budgets and you refuse to admit this unforgivable truth.

            Pension payments are starving basic city services

    • Rex the Wonder Dog!
      Rex the Wonder Dog! 30 May, 2015, 10:28

      I remember when Art Laffer was in the UTC area of La Jolla, back in the late 1980’s, 4225 Executive Square, been there many times…

      Reply this comment
      • NTHEOC
        NTHEOC 1 June, 2015, 19:54

        Bobo says, And pensions are the main reason that voters are being told they should raise sales taxes. These pension obligations are eating up the budgets of cities and counties all over the state.
        ================================
        Sure bob, prove it! You can’t can you? But I can prove you are a DOOMER! State worker pensions make up just some 3 percent of the state budget, and that percentage is falling as the amount state workers contribute to their retirement continues to rise. Formulas for calculating pensions have been reduced and stringent new rules are being established made through collective bargaining. The changes at the local level are equally dramatic. According to data kept by CalPERS, in more than 185 California cities, counties and local districts, public employees have agreed to increase their pension contributions, reduce formulas and lower public costs.The truth, though, is that the vast bulk of public pensions are modest. The true focus of pension reform should be on the crisis of private-sector pensions that have eroded at an alarming rate. This erosion allows public pension foes LIKE YOU to play off the misery and frustration of private sector workers. Oh and Bobo,
        Total CalPERS Fund
        Market Value
        Reflects market value, as of market close on 5/29/2015.
        $304.1 Billion!!!!! And that has nothing to do with raising taxes buddy!!!!

        Reply this comment
  3. Dude
    Dude 29 May, 2015, 10:08

    Um… No. Vote against these greedy Dims. They consider your money theirs. Bullet train to nowhere, pay-per-mile driving tax, etc. Ask yourself, “Do they still work for me or is it now the other way around?

    Reply this comment
  4. Colonel Bill Kilgore
    Colonel Bill Kilgore 30 May, 2015, 10:04

    Sales tax increases, applying sales taxes to services, increasing carbon taxes and also add another ten cents a gallon on top of the carbon tax to pay for roads (and you belive that’s where the money will go) increase auto registration and tax oil companies and tobacco even more….I’m sure I missed several other DemoNcrat proposals….

    Tax the shiite outta ’em….tax’em good and hard and then tax’em again!

    Tax’em to the stoneage, son!

    I love the smell of tax increases in the morning and remember….you can never have too many taxes and no tax can ever be too high.

    Reply this comment
  5. afrequentreader
    afrequentreader 30 May, 2015, 12:24

    Tax his land,
    Tax his bed,
    Tax the table,
    At which he’s fed.
    Tax his tractor,
    Tax his mule,
    Teach him taxes
    Are the rule.
    Tax his work,
    Tax his pay,
    He works for
    peanuts anyway!
    Tax his cow,
    Tax his goat,
    Tax his pants,
    Tax his coat.
    Tax his ties,
    Tax his shirt,
    Tax his work,
    Tax his dirt.
    Tax his tobacco,
    Tax his drink,
    Tax him if he
    Tries to think.
    Tax his cigars,
    Tax his beers,
    If he cries
    Tax his tears.
    Tax his car,
    Tax his gas,
    Find other ways
    To tax his ass.
    Tax all he has
    Then let him know
    That you won’t be done
    Till he has no dough.
    When he screams and hollers;
    Then tax him some more,
    Tax him till
    He’s good and sore.
    Then tax his coffin,
    Tax his grave,
    Tax the sod in
    Which he’s laid…
    Put these words
    Upon his tomb,
    ‘Taxes drove me
    to my doom…’
    When he’s gone,
    Do not relax,
    Its time to apply
    The inheritance tax.
    Accounts Receivable Tax
    Building Permit Tax
    CDL license Tax
    Cigarette Tax
    Corporate Income Tax
    Dog License Tax
    Excise Taxes
    Federal Income Tax
    Federal Unemployment Tax (FUTA)
    Fishing License Tax
    Food License Tax
    Fuel Permit Tax
    Gasoline Tax (currently 44.75 cents per gallon)
    Gross Receipts Tax
    Hunting License Tax
    Inheritance Tax
    Inventory Tax
    IRS Interest Charges IRS Penalties (tax on top of tax)
    Liquor Tax
    Luxury Taxes
    Marriage License Tax
    Medicare Tax
    Personal Property Tax
    Property Tax
    Real Estate Tax
    Service Charge Tax
    Social Security Tax
    Road Usage Tax
    Recreational Vehicle Tax
    Sales Tax
    School Tax
    State Income Tax
    State Unemployment Tax (SUTA)
    Telephone Federal Excise Tax
    Telephone Federal Universal Service Fee Tax
    Telephone Federal, State and Local Surcharge Taxes
    Telephone Minimum Usage Surcharge Tax
    Telephone Recurring and Nonrecurring Charges Tax
    Telephone State and Local Tax
    Telephone Usage Charge Tax
    Utility Taxes
    Vehicle License Registration Tax
    Vehicle Sales Tax
    Watercraft Registration Tax
    Well Permit Tax
    Workers Compensation Tax
    STILL THINK THIS IS FUNNY?
    Not one of these taxes existed 100 years ago, & our nation was the most prosperous in the world.
    We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids.
    What in the heck happened? Can you spell ‘politicians?’
    I hope this goes around THE USA at least 545 times!!! YOU can help it get there!!! Please play this forward!
    GO AHEAD. . . BE AN AMERICAN!!!

    Reply this comment
  6. Queeg
    Queeg 30 May, 2015, 16:46

    Stop using things and you pay no taxes…..simple…..exist only.

    Reply this comment
    • Richard Rider
      Richard Rider 30 May, 2015, 17:05

      Queeg — Stop keeping anything and simply pay 100% taxes….simple…exist only.

      Makes as much sense as your vapid remark.

      Of course, it’s not pay “all or nothing.” It’s too much or too little.

      Other states and cities providing government services show that we Californians pay too much. You think we always pay too little. I get that.

      Too bad you never have ANYTHING of substance to present. I get that too. After all, your “thinking” clearly is indefensible.

      Reply this comment
      • Queeg
        Queeg 30 May, 2015, 20:46

        Richie,

        The sun comes up nicely in states were citizens vehemently demand government support services….OC is 1/3 poor people. The OC…..who would have known.

        No way out Richie…the poor among us are the movers and takers not chubby doomer blue hairs eating Nutella on rice cakes for dessert at senior centers!

        Reply this comment
    • Donkey
      Donkey 1 June, 2015, 16:00

      Yea using Queegy thought that would seem. Like the progressive that believes it is okay for the NSA to record everything one does. We have all heard libs and conservatives baaa, “if you have nothing to hide why do you care you are being recorded.” Well if you have nothing to say then way is free speech of any use, why are trials needed to fill the jails? The truth is we don’t need trials because the system has degenerated into plea bargaining for jail.
      In short Queegy, you are a RAGWUS sucking fool!! 🙂

      Reply this comment
      • SeeSaw
        SeeSaw 1 June, 2015, 21:31

        I don’t believe for a minute that they are recording everything we do. I do believe that they are documenting phone calls, looking for patterns that signify something might be amiss. I make many calls to a relative in the state of WA. If, in the middle of that list of phone numbers, a number in the middle east pops up and then a return number from the middle east shows up in the calls I have made, the computer program is going to tag it. Then, they might investigate the origin of that call that doesn’t fit the usual pattern and then they might decide to listen. It all makes sense to me–what price do you put on your own privacy to insure our safety and freedom?

        Reply this comment
      • Queeg
        Queeg 2 June, 2015, 00:31

        Donkey,

        Since when is content revered from posters? Deep thinkers generally are tortured….remember….El Collapso….

        Keep it light and entertaining…..otherwise, take prune juice on the rocks for real relief!

        Reply this comment
  7. JPR11
    JPR11 30 May, 2015, 17:09

    The CA Tax Event is now an annual event. Last year it was the teachers retirement that needed a boost. This year it is Pot Holes. Next year it is Free Health Care for illegals. The following year the overall CA socialized health care system will need a major infusions. Meanwhile some Sac buffoon is recommending a $10B sales tax expansion to services. Meanwhile the fraud and waste total billions annually. Meanwhile business expansion and relocations out of state pick up speed. Seems the ONE PARTY state has failed.

    Reply this comment

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