Since everything from soup to nuts is taxed in Hawaii — albeit at a rate less than half of many California counties — there's no worry about whether that soup is gazpacho or cream of tomato, or if the nuts are hot or cold. When asked if a consumer could initiate a class-action lawsuit because she was charged 71 cents in sales tax on supposedly tax-exempt to-go coffee at Target, Hawaiian tax officials broke out laughing. Their California equivalents did not — and also declined to discuss pending litigation. Just such a case has worked its way to the state Supreme Court. Its outcome may set a precedent on whether class-action lawsuits are permissible in pending cases against Ralph's (regarding sales tax on hot coffee to go); Sav-On (accused of collecting sales tax on tax-exempt glucose test strips and skin puncture lancets); and even Cingular Wireless (a litigant claims he was charged sales tax "based on the full value of the cellular phone purchased rather than the bundled price.").

If California were to adopt a system more like Hawaii's, the state would be saddled with the task of deciding just how "low-income" a household must be to qualify for a food credit — or could simply disburse a flat amount that would likely represent all or most of a poor family's expenditures but only a fraction of a well-off family's. But, under such a scenario, even those not qualifying for the food credit could prosper. If the state began taxing food — but also lowered its tax rate by even 1 percent — a wealthier family would, naturally, pay hundreds more in food taxes. But it could also save hundreds on big-ticket purchases now taxed at a lower rate.

Such a system is still a non-starter with many poverty advocates, who argue that the needy require point-of-sale relief. Well, fair enough. "With technology the way that it is today, we ought to be able to deliver tax relief in ways other than just sending people a chunk of money when they file their returns," notes Kirk Stark, a UCLA law professor and tax expert. That could include a system akin to federal food stamps, or a state-issued card. "This could all be done electronically. This ought to be possible."

With no kitchen in his room, Jim Ayers is in a Tenderloin restaurant most days — getting taxed.
Joe Eskenazi
With no kitchen in his room, Jim Ayers is in a Tenderloin restaurant most days — getting taxed.

Politics is, after all, the art of the possible. But Stark issues a huge caveat — he dwells in academia, not politics. In California, such drastic alterations to the tax system would necessitate a constitutional amendment. A ballot measure, meanwhile, would require citizens to voluntarily subject themselves to taxation on food items long exempt — and now considered sacrosanct — while withstanding howls that this would equate to a middle-class tax hike.

Admittedly, a setup like Hawaii's is not perfect. "But the perfect is the opposite of the good," argues Pomp. "If you try to get it exactly perfect you do nothing. You're paralyzed." Actually, not quite — things can always get worse.

No politician unwilling to be immolated by powerful anti-taxation forces would propose widening California's tax base, even if that means lowering its tax rate. Yet the opposite route has long been the state's go-to quick revenue-generator. Too bad: Former California Franchise Tax Board head Jerry Goldberg notes that keeping the tax base narrow and hiking up the rate — as we've done — is far more regressive than doing the opposite.

Maybe we don't care so much about being regressive after all.


In 2007, Jim Ayers learned that his elderly neighbor at the Lawrence Hotel was storing a World War II-era Japanese mortar shell in his room. Ayers promptly phoned police and led them to the live explosive. Had it gone off — and it may well have as it continued to deteriorate — it would have blown the building apart.

Ayers is a no-frills kind of guy, so it's a good bet he celebrated his good fortune in not being vaporized at one of his two favorite restaurants — The Lafayette or The Manor House — with "the usual," a ground beef steak.

"I like a big ol' hunk like that," he says, holding his hands a rather large steak-sized length apart. "A baked potato or mashed potatoes, Jell-O or pudding for dessert — and what I can't finish I can wrap it up, bring it back home, and slap together some sandwiches."

That he's being taxed at a relatively high clip pains him. So does the demise of some of his favorite Tenderloin restaurants, which have been replaced by faux working-class joints serving $10 burgers — and that's before tax. "The taxes — it doesn't make sense," he says. "At least not to me. But I don't like to get involved with politics." Like food from the wrong restaurant in Ayers' neighborhood, "it hurts my insides."

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7 comments
withkaden
withkaden

Looks like it swallowed my previous comment.  Well, anyway, it's all taxable in Kansas - at 8.3% - NOT cheap.  And they rescinded the food sales tax rebate for low-income earners this year.  THAT'S hurting the poor.  I so miss California.

obbop
obbop

"There's class warfare, all right, Mr. (Warren) Buffett said, but it's my class, the rich class, that's making war, and we're winning"

"My friends and I have been coddled long enough by a billionaire-friendly Congress." - Billionaire Warren Buffett, in a New York Times op-ed on Aug. 15.

There has been class warfare going on," Buffett, 81, said in a Sept. 30 interview with Charlie Rose on PBS. It's just that my class is winning. And my class isn't just winning, I mean we're killing them."

Obey your ruling-class commoners and corporate USA, etc. you vile scum commoners.

OBEY!!!!!!!!!!!!!!

CarlsbadVillageOrthodontist
CarlsbadVillageOrthodontist

One really has to read the fine print, especially when it concerns the law and taxes. I never knew that food taxes are this complicated. Though, I guess in a way the less fortunate can have a little respite with food stamps?

anadromic
anadromic

For the TLDR crowd:

Hot, prepared food is taxed. Food you take home or cold food prepared in advance is not. As anyone would expect, life is not simple and there are gray areas between these categories. Many cases need to be considered and decided on their own, often in a less-than-perfect way.

anadromic
anadromic

Actually, I don't mean to hate so much. It's an interesting piece. But the "penalizes the poor and benefits the rich" subhed? Meh. That's a stretch, dude.

Dave Lieberman
Dave Lieberman

Look up the phrase "food desert" and you'll see why this system penalizes the poor. When all you have nearby is convenience stores and restaurants, nearly everything you buy is taxed.

I fail to see why we can't tax food, even at a lower rate, and specifically require that EFTPOS (food stamp) purchases be exempt.

Joe Eskenazi
Joe Eskenazi

Dave --

Thanks for reading and an erudite comment.

Food stamp purchases are already tax-free, even in states that tax food.

Best,

JE

 
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