Angelenos were excited to see a taco cart in Bad Bunny’s Super Bowl halftime show from Villa’s Tacos in Highland Park.
It’s a taqueria with three store locations across LA. Locals are proud of its success.
But few trolleys make the transition from street vendor to brick-and-mortar stores. And our local government isn’t making it any easier.
LA County just announced that it will be purchasing new equipment to give away to street vendors — “free.”
The “free” carts will be paid for by the taxes of LA County businesses — including brick-and-mortar restaurants, which are often in direct competition with the vendors.
Some argue: hey, that’s just capitalism. Any restaurant worth its salt should have no problem competing with a little hot-dog stand next door.
The problem is, it isn’t the big restaurants vs. the little vendors. It’s the struggling restaurants facing government taxes and fees, on the one hand, versus the nimble vendors who can evade those regulations, on the other.
In California, businesses pay state income tax, sales tax, unemployment insurance, and disability tax. Those taxes are on top of federal income, sales, and unemployment taxes, not to mention Social Security and Medicare taxes.
In some states, restaurants can deduct what servers make in tips from their taxes. Not in California — where if a restaurant puts a required tip on the bill for a larger party, the owner has to pay taxes on the tip that goes to the server.
The City of LA adds its own sales tax, bringing the state and local total to 9.75%. There is also a city business tax, based on a percentage of what the business makes.
Moreover, if a business operates out of a facility owned by the city or county, the business pays a “possessory interest tax,” which is essentially a property tax on a property you don’t own. The restaurant also has to pay liability insurance for the government property.
LA City also charges its businesses an extra occupancy tax. There is even an “unsecured property tax” on any equipment the business owns or operates on government property.
Restaurants in California also have to pay for licenses from the health department and the fire department. They pay extra for a license to serve alcoholic beverages, or soft serve ice cream. They even pay a disposal fee and a fee to be connected to the sewer line.
While restaurants slow-boil in taxes and fees, their street vendor competitors don’t pay rent, or extra taxes on any facilities. They are not required to have hot running water, or provide a bathroom. And now, instead of being charged an unsecured property tax on their equipment, they are getting their carts for free from LA County.
Vendors rarely have employees, or they pay them under the table, so they don’t pay unemployment insurance or worker’s comp, while licensed restaurants in California pay some of the highest minimum wages in the country. Restaurants operating out of government spaces pay an even higher living wage.
Restaurants, like all businesses in California, also deal with some of the worst laws for business owners, leading to frequent and frivolous law suits. One law, for example, says that an employee can sue her employer if she does not feel sufficiently protected from sexual harassment by a customer.
LA restaurants have had it particularly hard in the last few years. They faced some of the most stringent COVID rules and lockdowns, while street vendors were largely left alone. The COVID lockdowns also accelerated the trend towards delivery — and delivery companies often charge the restaurants 20-30%.
The Palisades and Altadena Fires displaced entire communities, and while street vendors can pick up and move to better locations without much cost, brick-and-mortar restaurants are left to struggle with sky-high rents and declining business in new locations.
My father opened his first hamburger stand in LA in 1977, after immigrating to the U.S., and within a few years, he had three more.
Back then, it cost him roughly fifty thousand dollars to start a new business. Today, it costs a new restaurant twenty thousand dollars just to connect to the sewer line.
According to my dad, the entire process of starting a new restaurant costs around half a million.
The truth is that the state and county’s policies aren’t even helping immigrant street vendors. Many of them find themselves trapped in small operations with low profit margins, unable to start a real business and begin building generational wealth.
Nothing in this world is ever free. Well before the socialists “eat the rich”, they will eat the dreams of the little immigrants, and destroy LA’s amazing restaurant culture for all of us.
So while we’re all happy for Villa’s Tacos, the cart is more useful as a halftime prop than as a business policy.
Lisa Cusack is Chairwoman of the California Republican 44th Assembly District and comes from a family of restaurateurs.
