Sales and use taxes in California

Sales and use taxes in California are among the highest in the United States and are imposed by the state and by local governments. Sales taxes are very regressive. Poor families pay almost eight times more of their incomes in sales taxes than the best-off families. Local sales tax increases also create geographical variations in sales tax rates which can place local businesses at a competitive disadvantage.

At 7.25%, California has the highest minimum statewide sales tax rate in the United States, which can total up to 10.25% with local sales taxes included. As of January 1, 2017, the statewide sales tax rate decreased from 7.50% to 7.25% as a result of the expiration of the temporary statewide sales tax increase under Proposition 30 that California voters approved in November 2012.

Some claim the high sales tax rates partially compensate for the reduced property tax revenue resulting from Proposition 13 which California voters approved in June 1978. However, others point out that, in most counties (all but the rural counties), property tax revenues today are higher than the year before Proposition 13 passed, even after adjusting for inflation and population growth. Sales and use taxes in California are collected by the publicly elected Board of Equalization, whereas income and franchise taxes are collected by the Franchise Tax Board.

The statewide base sales tax rate of 7.25% is allocated as follows:

The statewide sales tax in California was first imposed on August 1, 1933, at the rate of 2.50% under the "Retail Sales Act of 1933." No local sales taxes were levied at that time. In an editorial dated September 5, 1933, the Los Angeles Times criticized the 2.50% sales tax rate in stating that the "sales-tax rate should not have exceeded 1 per cent" and that the tax rate was "so high as to discourage business, which will make the tax less productive."

Supplementary local sales taxes may be added by cities, counties, service authorities, and various special districts (such as the Bay Area Rapid Transit district). Local county sales taxes for transportation purposes are especially popular in California. Additional local sales taxes levied by counties and municipalities are formally called "District Taxes." The effect from local sales taxes is that sales tax rates vary in California from 7.25% (in areas where no additional local sales taxes are levied) to 10.25%. For example, the city of Sacramento, the state capitol, has a combined 8.25% sales tax rate, and Los Angeles, the largest city in California, has a combined 9.25% sales tax rate.

...
Wikipedia