California utilizes a modified origin-based sales tax system instead of a pure origin or destination-based system primarily for administrative efficiency and revenue allocation. This hybrid approach simplifies the tax collection process by using the seller’s location for the state base rate while allowing local jurisdictions to add taxes based on the buyer’s location. Benefits include:

• Administrative Simplicity: Reduces the complexity of managing multiple tax rates for sales across various destinations, streamlining compliance for businesses operating in single locations.

• Local Revenue Allocation: Ensures that tax revenue benefits the locality where the business is located, supporting local infrastructure and services.

• Balanced Compliance: Provides a straightforward method for businesses to apply state and local taxes without needing to manage entirely separate origin or destination-based rates.

Overall, the modified origin-based system balances simplicity and accuracy, making it easier for businesses to comply with tax obligations while ensuring fair distribution of tax revenues to both the state and localities.