Sales Tax Oppression

By Richard Colman

The sales tax in Califoria has become oppressive.

If the sales tax keeps increasing, jobs and businesses in California will disappear.  Already, Hewlett Packard is planning to move its headquarters to Texas, where taxes and regulations are not as strict.  Elon Musk, the chief of Tesla, is considering a move to Texas.

The official sales-tax rate in California is 7.5 percent.  But local communities can add to that rate.  California’s overall sales-tax rate (state and local combined) is one of the highest — by some measurements the highest — in the United States.

The California sales tax began in 1933 and was set at 2.5%.  In 1962, the rate went to four percent.  Today, in much of California, the sales tax is at 10 percent or higher.

The highest sales tax in California is in Santa Fe Springs.  The rate there is 10.5 percent.  Curiously, the state has a sales-tax ceiling of 10.25 percent, but Santa Fe Springs has managed to exceed that ceiling.

The time has come to put an upper limit — a limit lower than the current ceiling of 10.25 percent — on sales-tax rates in California, just as Proposition 13 of 1978 put a limit on property-tax increases.

Two cities, both in Contra Costa County, exemplify what is happening with the sales tax.  Contra Costa County is about 15 to 35 miles east of San Francisco.  Two cities in the county, Orinda and Concord, are examples of out-of-control sales taxes.  Orinda is about 15 miles east of San Francisco; Concord is about 30 miles east of San Francisco.

Currently, the sales tax is 8.75 percent in both Concord and Orinda.  On Nov. 3, 2020, (election day) the voters in each city approved, for 2021, a sales-tax increase from 8.75 percent to 9.25 percent.

But that is not the whole story.  The voters in Contra Costa County on the same day (Nov. 3, 2020) approved an increase in the county-wide sales tax, making, in 2021, the sales tax in Concord 9.75 percent.  Orinda, for 2021, went to the same level (9.75 percent).

A sales tax is regressive, meaning that it bears down harder on lower income people and on people (like many senior citizens) who are living on fixed incomes.

Government bodies are constantly telling California’s voters that higher taxation is needed.  One can ask the question, as former California governor Arnold Schwarzenegger did, if California’s government has a revenue (income) problem or a spending problem. 

Schwarzenegger was California’s governor from 2003 to 2011.

California must remain competitive with other states.  If taxation becomes too high, businesses will relocate, close down, raise prices, or cut payrolls.  A consequence of higher taxation can easily be lost jobs.

California is now at a tipping point.  Unemployment is high, there is a coronavirus pandemic, and taxes keep increasing.

The time has come to put a ceiling on California’s sales tax.  Does anyone favor a five percent (or lower) sales-tax ceiling?

Richard Colman is the founder and president of Biomed Inc., a biotechnology, publishing, and informatics company.  He is a biochemist and earned masters and doctoral degrees from the University of California at Berkeley.  He lives in Orinda, California.

The views and opinions expressed in this commentary are those of the author and do not necessarily reflect the official position of Citizens Journal.

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