Is California’s Minimum Wage Increase a Way to Collect More Taxes?

The California minimum wage increase for fast food workers could boost paychecks — and the state’s budget.

Dollars instead of hamburger toppings on fast food burger
(Image credit: Getty Images)

The 25% increase to California’s minimum wage for fast food workers comes as the state faces a $58 billion budget deficit. Cutting expenses and increasing tax revenue would lower that number. Notably, the new wage increase could accomplish both, as payroll taxes climb and businesses raise prices in response to higher labor costs.

State lawmakers have not yet weighed in on the new wage's potential impact on California’s budget. However, projections for previous minimum wage increases documented by California’s Legislative Analyst's Office (LAO) shed some light on what could happen.

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Katelyn Washington
Tax Writer

Katelyn has more than 6 years’ experience working in tax and finance. While she specializes in tax content, Katelyn has also written for digital publications on topics including insurance, retirement and financial planning and has had financial advice commissioned by national print publications. She believes that knowledge is the key to success and enjoys helping others reach their goals by providing content that educates and informs.