Why Is Split-Pea Soup Taxable and Gazpacho Isn't?

By Jonathan Kauffman Wed., Apr. 4 2012 at 8:11 AM

Categories: Talking Points

Illustration: Jesse Lefkowitz

In this week's cover story, Joe Eskenazi tackles the crazy logic behind California's laws regulating whether foods are subject to sales tax or not. Most people know the basics: Foods sold for preparation at home are not taxed and foods eaten outside the home are taxed. But the practical implications of that statement are similar to those of the statement "Good people go to heaven and bad people go to hell." The State Board of Equalization must engage in Talmudic feats of logic to determine which foods are taxable and which are not -- and even whether a substance counts as food:

A hot sandwich to go would be taxable, while a prepackaged, cold one would not -- but a cold sandwich becomes taxable if it has hot gravy poured onto it. Cold foods to go are generally not taxable -- but hot foods that have cooled are taxable (meaning a cold sandwich slathered in "hot" gravy that has cooled to room temperature is taxable). Cold, non-carbonated, non-alcoholic beverages to go aren't taxable. Hot beverages to go are, but coffee and tea are specifically exempted from taxation. Soup, however, is taxable. Hot soup that has cooled? Still taxable. But, the BOE specifically informs SF Weekly, cold soups such as gazpacho are exempt.

Worse yet, these tax laws, which are meant to benefit the poor, actually may penalize them. Eskenazi's proposed solution -- taxing all food and giving lower-income Californians a food-tax credit -- isn't just a pipe dream, either: It seems to work for Hawaii.

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