Measure M would cost average family only $25 extra per year
A proposed countywide sales tax increase to pay for billions of dollars in new rail and highway improvements over coming decades would cost the average household in Los Angeles County an extra $25 a year, officials project. Economists say this slight shift in annual expenses is unlikely to have much of an effect on shopping habits.
The Metropolitan Transportation Authority is placing Measure M before L.A. County voters on this year’s general election ballot. If approved by a two-thirds majority, the initiative will do two things: extend the existing Measure R half-cent sales tax approved in 2008 and add a new half-cent sales tax.
According to calculations released by Metro, the average household pays about $25 more in taxes each year for every half-cent increase. Economist Christopher Thornberg of Beacon Economics, an independent research and consulting firm, said that sounds correct. “That’s looking at sales tax receipts and dividing them by the number of households,” Thornberg said.
Revenue from Measure M would generate $860 million a year or $120 billion over 40 years, Metro estimates. The transportation agency plans to undertake a long list of capital projects, including a subway under the Sepulveda Pass, an extension of the Gold Line to Claremont, an acceleration of the Purple Line subway to Westwood, and major highway improvements.
If approved, Measure M would bump the base county sales tax rate up to 9.25 percent.
But Thornberg said there’s little evidence that slight adjustments to sales taxes have much of an effect on whether people choose to shop or where. “Let’s think about what the cost of buying something is,” he said. “There are the direct costs — what you actually pay, including the sales tax, and there are the transaction costs — getting to the store and back, parking, gas all that.” Given a bill that might increase just 50 cents on a $100 purchase, most people would choose not to go out of their way to avoid the tax increase, he said.
Sales taxes are considered regressive because poor people end up paying a higher share of their income compared to wealthier people. But many experts say a sales tax to pay for transit is less problematic. “It’s countered by the fact that transit is progressive,” meaning low-income people use public transit at higher rates, said Lisa Schweitzer, University of Southern California professor of urban planning.
California currently does not charge a sales tax on food or services.