Double-Double California-Style sales tax

An In-N-Out Double-Double with fries and a drink now averages over $10 in California – before tax. The latest price increase is because of the state’s new $20-per-hour minimum wage for fast food workers. Concurrently, an increasing number of cities are considering raising their sales tax. So here’s what this icon of California tells us about the state of California.

A meal at In-N-Out is now $10.45 for a Double-Double, $8.65 for a cheeseburger, and $8.15 for a hamburger outside the headquarters in Irvine.

California’s sales tax is currently 7.25% and has generally increased after every recession. This is split with 6.00% for the state and 1.25% for local governments. Additionally there are special sales tax districts.

In the late 1980s and early 1990s most urban counties passed an additional 0.5% transportation tax for roads and renewed them in the 2000s for a total rate of 7.75%. Many cities in rural counties matched this. Since the 2008 recession, municipal sales taxes have become more common, even when the economy is good.

In Orange County, one third of cities have an additional sales tax. All are in the north, with older communities, less consumption, lower property values, and maturing pension obligations – although even the highest are below Los Angeles.

In March, Westminster voted for another “double-double” 0.5% sales tax, on top of the 1.0% tax it renewed in 2022. Laguna Beach and Orange are currently debating raising their sales tax by 1.0%. Laguna’s appears particularly opportunistic given it has a stronger tax base and would be the first in South Orange County.

Most Inland Empire cities have an additional 1.0% sales tax for a total rate of 8.75% or 9.0%. Half the cities in San Diego County also have a 0.5% to 1.0% sales tax and a total rate up to 8.75%.

Typically revenue isn’t earmarked, with no sunsets, and proposed to whatever cities, consultants, and unions, think the taxpayer and maybe the market will support. “Get it on the ballot” is a common attitude, or whether another city was successful, rather than what is needed.

Then, like In-N-Out there is also a not-so-secret menu. In Los Angeles County, the top rate is 10.25%, every time you order In-N-Out you can have a “4×4” of repeat transportation sales taxes. Plus “Animal-Style fries” for the cities that have their own general sales tax. In Alameda County, the top rate is 10.75%, again with seven duplicative 0.5% sales taxes, before cities take their cut.

The worst offenders are increasing elective taxes just as California faces its own budget deficit, and which historically transfers costs to local governments. Of course alternatively the state could allocate more of its share, given so many cities are struggling.

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Or California could temporarily lower sales tax such as in 2001, since it is relatively a small portion of the budget. Instead, other costs go up for Californians, who then consume less because they didn’t get a raise either.

Which is what we see with hamburgers. Cut soda, fries, meat, cheese, then less, or not at all.  The total difference for a Double-Double and four years ago, with taxes and increases, is essentially an extra hamburger. Businesses do this too, hiring less, or cutting jobs.

In-N-Out has historically paid its workers well. It is also worth billions, owns most of its locations, and has flexibility because it’s a private company. Only one In-N-Out has ever closed and that was because of the obscene crime in Oakland. So, In-N-Out isn’t going anywhere. However, other businesses and many Californians aren’t as fortunate. 

Matt Quan has a Master of Public Policy from the University of Southern California, and is a graduate of the University of California, Irvine.

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