Editorial - Room with a View

Room with a view: California caps state sales tax

Humble brag: I like to think myself well-informed on civic and political matters while maintaining a suitable humility that allows for filling gaps in my knowledge.

An article by Samantha Mehlinger at Long Beach City Journal earlier this month provided me with an example of why greater humility might be called for:

With the mayor’s support, city staff are presenting a proposal to the Long Beach City Council tonight, July 2, to extend the Measure A sales tax in perpetuity. Doing so, they argue, will ensure that critical infrastructure and public safety needs continue to be met going forward. Additionally, staff are proposing to use the sales tax revenues to pay down the city’s obligation for seismic work at Community Hospital.

Measure A was approved by voters in 2016 as a temporary sales tax that would address public safety and infrastructure needs, including reopening the police department’s South Division, restoring Fire Engine 8, paving miles of streets and alleys, rehabilitating park facilities, and more. It imposes a sales tax rate of 1% – on top of existing sales taxes – for six years. In 2023, the rate then drops down to a half percent for four years, expiring in 2027. With Measure A, Long Beach currently meets the state’s cap on sales taxes at a combined rate of 10.25%.

(Emphasis added.)

For the life of me, I did not know that the State of California caps sales tax at 10¼%. I thought entities from community service districts through cities and counties to the State itself could just keep piling on the sales tax as long as they could get the votes to approve the new tax.

This is important in Long Beach because the City is now looking at a sunset clause that will lower the rate collected by Measure A, leaving a teensy weensy gap.

Staff warns that some other entity — for instance, the South Coast Air Quality Management District — would squeeze into the gap to siphon funds away from the City. To prevent that, staff is recommending that the City keep the sales tax high enough to block such a sneaky maneuver.

In other words: they want to tax residents to prevent somebody else from taxing residents.

Fallow fields

If you are progressive in your politics, do you see a sales tax rate lower than the state-mandated cap as an opportunity for reaping more revenue?

If you are conservative in your politics, do you see localities with a maxed-out sales tax rate as oppressed by too much government?

As a payer of sales tax, would you just like to keep more of your own money by selecting where you spend it?

Methinks that localities along the Los Angeles – Orange County border are missing a marketing opportunity by failing to trumpet the difference in sales tax rate between, say, Long Beach and Cypress. Buy a new outfit for $150.00 in Long Beach, and you’ll pay an additional $15.38. Buy the same $150.00 outfit in Cypress, and pay only an additional $11.63.

Here are the current sales tax rates for cities in our coverage area (last updated July 1):

  • Anaheim, 7.75%
  • Buena Park, 7.75%
  • Cerritos, 9.5%
  • Cypress, 7.75%
  • Hawaiian Gardens, 9.5%
  • Huntington Beach, 7.75%
  • Lakewood, 9.5%
  • La Palma, 8.75%
  • Long Beach, 10.25% maxed out
  • Los Alamitos, 7.75%
  • Seal Beach, 8.75%
  • Stanton, 8.75%
  • Westminster, 8.75%

My head hurts from pounding it against my desk top.

Then I clutched my (metaphorical, virtual, unreal) pearls as I thought: The (progressive) solution is for the California State Legislature to raise the cap on sales tax!

(I snooped around trying to confirm that the sales tax cap is statutory and therefore subject to change at the whim of the State Legislature. All I could find for sure was an article at CalWatchdog from 2015 reporting on the bill that raised the cap to 10¼%. From that, I infer that the State Legislature could indeed again raise the cap. In my new humility, I will throw this out to readers: can anyone confirm that the sales tax cap is statutory?)

Standard political philosophy today, which is undergoing a most curious flowering in the name of Aristotle’s “distributive justice,” hardly has a thing to say any longer about why or how something exists to be redistributed in the first place.
— James V. Schall, Another Sort of Learning