• Irvine Taxpayers Assoc.

Carrie O’Malley: Is California really the most taxed?

It is a common refrain we hear each year, particularly at tax time, that California has the highest state tax burden in the nation. Many a politician has repeated this line to rile the masses, but the truth of the matter is that after you look at the apple-to-oranges world of comparing tax structures state-by-state, California is undoubtedly a very high tax state…but it could be much worse if not for Prop 13.


The taxes we looked at for comparison nationally are Income taxes, Sales Taxes, and Property Taxes. Not every state has each of these taxes; however, California has all three, which contributes to California’s reputation as a high-tax state.


By the numbers, Californians are roughly the 4th most taxed Americans per capita when it comes to income. However, California boasts by far the highest single income tax rate (13.4%), a fact often used to make the high tax argument - even though most Californians don’t pay at that level.


The analysis of sales taxes is murkier. California has a baseline sales tax; however, local taxes added to the state baseline rate can vary widely. In addition with the wide use of online shopping, local revenues are reduced drastically. All told, California hovers around 9th overall nationally in sales tax rankings at about 8.5%.


If you are a homeowner in California though, it is possible that the largest single tax you have is your annual property tax bill. California has, by far, the most valuable real estate in the nation. However, because of Prop 13 the tax burden on your home cannot increase by more than 1% each year, even though the value of your home might be skyrocketing. The Irvine Taxpayers Association often praises the virtues of Prop13, and this is the central reason: no other tax restriction so effectively protects the middle class.  It is because of this restriction that California sits at around 14th or so in overall property tax rates.


Compared to Income and Sales taxes, property taxes in California are, thankfully, not as egregious. It is a funny world when being the 14th highest property tax ranking feels like a reprieve.


So don’t get us wrong, California DOES tax the heck out of us – gas, car registration, wireless service, travel – there’s a tax for almost everything. It’s these “nickel-and-dime” taxes that often grab headlines and frustrate Californians the most because so often new tax hikes like these come across as greedy revenue grabs.



But in the big picture it is critical for Californians to not lose sight of how deeply important the preservation of Prop 13 is to the health of California’s middle class. If Californians entertain thoughts of weakening the measure it will serve as a direct blow to homeowners and middle-class Californians who already feel a tremendous burden to make ends meet.

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