Dublin, CA Sales Tax Rate Drops from 9.75% to 8.75%
Consumers in Dublin, CA and the greater Tri-Valley are celebrating a 1% decrease in their sales tax rate. The 1% drop is attributed to the expiration of a temporary 1% hike a few years ago used to help shore up California’s rickety budget. While the Golden State’s piggy bank remains empty, the voter-approved sales tax increase expired at the end of the initially authorized two-year horizon.
The expiration of this self-imposed 1% sales tax increase will save California consumers an estimated $5.5B. The money everyone will save from this regressive tax is expected to boost the volume of consumer retail sales, lead to new jobs over the next few years, and ultimately result in higher sales tax revenue for the State of California.
Starting July 1, 2011, the sales tax rate in Dublin, Livermore, and Pleasanton of Alameda County is now 8.75%. Shoppers in San Ramon and Danville of Contra Costa County will enjoy a slightly lower sales tax rate of 8.25%. The 0.5% difference between the cities in Alameda County and those in Contra Costa County is due to an extra layer of sales tax tacked on by Alameda County.
The 8.75% sales tax rate in Dublin is composed of a 6.25% cut for the State of California, 1.5% for Alameda County, and 1% for the City of Dublin’s general fund. The City of Dublin also receives a fraction of the 1.5% collected by Alameda County.
All tax payers in California benefited from a 0.25% decrease in their state income tax rate at the beginning of 2011. That rate drop was related to another expiration of a temporary tax hike passed a few years ago. California’s car tax rate also dipped today from 1.15% to 0.65%. The combined reduction in car tax rate and sales tax rate should help boost car sales throughout the state and especially in Dublin.
6:58 AM on July 1st, 2011
Yeahh! I forgot about this. This is the best news I’ve heard in awhile.
This will help offset all the B.S. sales taxes we’ll be paying on our Amazon purchases. I hope Amazon sues the state and wins over that. Anyway… another story.
7:50 AM on July 1st, 2011
a 1% economic stimulus…woohoo
4:23 PM on July 11th, 2011
I’d be interested in seeing your statistics to back up this statement: “The money everyone will save from this regressive tax is expected to boost the volume of consumer retail sales, lead to new jobs over the next few years, and ultimately result in higher sales tax revenue for the State of California.”
In particular, you’ve made the assertion that the lower tax rate will result in increased sales tax revenue due to offsetting increases in jobs and spending. Clearly, it is not universally true that a lower tax rate will result in increased revenue — for example, lowing the sales tax rate to 0% will yield $0 of revenue regardless of the jobs/spending it generates.
In fact, if your statement is true (and we accept that the revenue as a function of sales tax rate is a continuous function), then it requires that that there exists at least one “optimal” sales tax rate (i.e. that maximizes revenue) somewhere between 0% and 9.75%.
So, my question boils down to this: what is that optimal rate and how was it derived? If you derive its value, how can you be sure that it’s not between 9.75% and 8.75%? Or, as is my guess, is your statement more of a philosophical, anti-tax comment that “feels” more true than it actually is?
ssuming this is a continuous function (which is quite reasonable), revenue must have at least one local maximum between 9.75% and 0%.
6:53 PM on July 11th, 2011
Hi Anonymous – economic policy has many twists and turns. Sales taxes are regressive taxes meaning that they hit lower earning consumers more than high-income/wealthy consumers. Folks in the lower income bracket are more likely to use their tax savings to buy more things as opposed to paying down their mortgage or socking away funds for a rainy day. This creates a greater multiplier effect, which leads to more spending/production, and eventually greater sales taxes in absolute terms.
A government can encourage economic growth or development of a particular industry by a multitude of means – some of which include either reducing/eliminating certain taxes or offering tax credits. An example where reducing/eliminating taxes has been successful is with online retailers like Amazon.com. A major driver for the tremendous growth of online retailing has been that the companies have been given a competitive advantage by not having to withhold sales tax. Reducing taxes for products or services stimulates demand. Tax credits can also be a helpful way to stimulate demand. A recent example is the HIRE Act where employers were given a $1,000 tax credit for hiring and retaining unemployed workers for at least a year.
If you come from a statistics background, I can see why it would feel more comfortable to couch the world in those terms. However, to understand and implement tax policy, it helps to first understand the basic fundamentals of economics.
Thx, John Z.
8:25 AM on July 13th, 2011
I think you may have misunderstood the mathematical argument being made, which is really completely independent of economic theory. Here are the three pieces of data that go into making my point:
* Sales tax revenue as a function of the tax rate is a continuous function (this is an assumption but I believe we can agree to this).
* Sales tax revenue is $0 when the tax rate is $0, and this is a global minimum of the tax rate-revenue function. This seems like a fairly obvious fact.
* You have argued that a decrease in the sales taxes from 9.75% to 8.75% results in an increase in tax revenue (i.e., revenue is increasing as the tax rate drops).
From a purely mathematical point of view, those three conditions REQUIRE that the function have at least one local maximum within the range between a 0% tax rate and 9.75% rate. In other words, there must be an “optimal” tax rate (or range of rates) at which either raising or lowering the taxes outside of that range will result in a DECREASE in revenue.
I’m not disagreeing with the point that lowering taxes CAN raise revenue — the graph of revenue as a function of tax rate almost certainly is not monotonically increasing. However, the fact that there exists some range in which lowering taxes increases revenue does not mean that lowering taxes ALWAYS increases revenue. More specifically, what proof/data do you have that a change from 9.75% to 8.75% will increase revenue?
12:54 PM on July 13th, 2011
Someone as smart as you should be able generate some simple 3D graphs based on some of the simple assumptions you laid out. Why ask for “proofs” that you are not interested in getting? If you want to say the tax decrease will lead to revenue decrease, let’s see you pull that off for us. Come on, show us how much smarter you really are and not just good just at quibbling over details that only you care about.
6:59 PM on July 13th, 2011
I assume this comment is in response to Anonymous @ 4:23PM, so, if not, I apologize in advance.
I really don’t think it’s absurd to ask the author to explain the basis for an assertion regarding the economic impact of the lowered tax. A condescending response of “it’s complicated” doesn’t really suffice. If, as the original article suggests, it’s “expected” that the tax reduction will increase revenue, who is it expected by? It certainly sounds like the author agrees with that expectation, so, if that’s the case, on what basis?
To make this clear, I never asserted that decreasing the tax would decrease revenue. I have no means of predicting that in any reasonable way. I’m simply presenting a mathematical argument that the author’s implied reasoning that “lower taxes = higher revenue” cannot possibly be uniformly true. There is clearly an inflection point beyond which lowering taxes DECREASES revenue.
If we don’t know where that point lies (or at least have a model/empirical data that suggest where it MAY lie), then there’s no grounds for arguing that 8.75% yields higher revenue than 9.75%.
By the way, no 3D graphing is needed here — a 2D graph will suffice with “tax rate” on one axis and “revenue” on the other.
7:39 PM on July 13th, 2011
“By the way, no 3D graphing is needed here — a 2D graph will suffice with ‘tax rate’ on one axis and ‘revenue’ on the other.”
Sounds like you already have your graph. Let’s see it, or perhaps you can’t perform under pressure. Guys with small ones often have to find other ways to overcompensate…
Getting back to the point, how will you know with a 2D graph if you haven’t hit a local minimum? Please educate us and let your brilliant inferiority complex shine. Don’t worry, anonymous. Size really isn’t everything.
8:19 AM on July 14th, 2011
I haven’t heard the classic “well you must have a small penis” counter-argument employed as effectively since 6th grade. Bravo!
As to the graph, I was simply stating what most folks learn in Algebra I: when you plot the relationship between two variables (taxes and revenue in this case), it yields a two-dimensional graph.
I don’t quite understand your question about hitting a local minimum. I don’t claim to know where the local min (or max) is when considering revenue as a function of tax rate. I actually agree with the author that this is likely a very complex relationship. But, by asserting that the revenue will increase as the tax rate drops from 9.75% to 8.75%, the author implies that, at least within this range, there is common/accepted knowledge of what the graph looks like (specifically, that revenue is decreasing as a function of tax rate). I was simply asking for a reference that provides empirical support for this argument.