A plan to tax the wealthy to fund electric cars is on the ballot in California

A plan to tax the wealthy to fund electric cars is on the ballot in California


California has long been a leader among states, and even states, in promoting the transition to electric cars, including through its plans to ban the sale of gas-only cars by 2035. But now Californians are voting on a ballot proposal that promises to accelerate that shift even further. taxing the wealthiest Californians to help pay for tax incentives for electric vehicles and EV chargers in the state.

The initiative, Proposition 30, would add an additional tax of 1.75% on income above $2 million. Most of the money would go to incentives to finance the purchase of electric vehicles and the installation of EV chargers, with much of it going to lower-income communities. Another 20% of the funds would be used to pay for fire prevention and additional firefighter training. Recently University of Southern California survey showed that voters were narrowly divided on the idea.

Opponents of the ballot initiative argue that it’s really just an attempt by a tech company to benefit at the expense of other priorities. The initiative is unnecessary at best, they argue, and could even hurt the state’s economy by forcing wealthy residents to leave.

Although the proposal is backed by the Democratic Party, California Gov. Gavin Newsom, a Democrat, has publicly come out against it. In a TV commercial, Newsom called it “a cynical scheme by one company to grab a huge taxpayer-funded subsidy.”

Newsom refers to the ride-sharing company Lyft, which provided 95% of the funding behind the ballot initiative, according to state records. Opponents of the ballot initiative argue that Lyft’s support is self-serving.

State regulations passed in 2021 require that 90% of ride-sharing miles traveled in the state must be zero-emissions by 2030. Companies like Lyft and its main competitor, Uber, don’t buy cars used by their drivers because they consider drivers to be “independent contractors.” who deliver their vehicles. But a rule like Prop 30, which would make it easier for almost anyone in California to buy an electric car, including Lyft drivers. Without the financial incentives for electric vehicles supported by the state Prop 30, Lyft could be forced to subsidize the purchase of electric vehicles for its drivers with its own funds, opponents say.

But being good for a certain industry or company does not mean that the law is not useful for the general welfare, advocates point out. The bill would help all kinds of low-income Californians buy and charge for electric vehicles, not just ride-sharing drivers.

Lyft referred questions about its support for the proposal to Steven Mavigli, a political consultant who campaigned for the proposal. The company spent nearly $50 million campaigning for the proposal, records show.

It’s harder than it should be for electric vehicle drivers to find available chargers in California right now, Maviglio said in an interview with CNN Business. And electric cars are too expensive for lower-income residents to afford, so financial support is needed, especially since sales of gas-powered cars are banned in the future.

“It’s going to fall harder on those who can’t afford cars,” Maviglio said.

But there are real questions about whether such a law is needed in a state that already heavily supports electric vehicles.

“California has prioritized electrification for the last 10, 15 years,” said Bruce Babcock, a professor of public policy at the University of California, Riverside. “And so they’re really trying to get this right and fund things.”

While proponents of Proposition 30 point out that it provides a secure funding stream for electric vehicles, opponents say that’s not necessarily desirable and may, counterintuitively, not give electric car sales what backers are looking for.

“It’s the Legislature’s job to prioritize spending given the competing demands,” Babcock said. “And so what will happen is you suddenly start having a dedicated source of funding. What that will do is take the pressure off the legislature and just fund it less.”

Just as a family given money to buy, specifically, dairy products would probably spend less of their money on milk and butter, this bill may end up not resulting in significantly more money for EVs.

“I don’t know if there would be a net gain,” Babcock said, “but it wouldn’t be as big as the backers say.”

And an additional 1.75% on income over $2 million might not sound like much — after all, these aren’t people scraping by on their meager wages — but it would be taken by a state that already relies heavily on money from its wealthiest residents, Babcock said.

“I think that’s troubling because California gets more than half of its income tax from the top half of a percent of taxpayers,” he said.

Other states, such as Texas and Florida, tax the wealthy at much lower rates or not at all. By continuing to turn to the wealthy to fund the state budget, California risks alienating entrepreneurs and investors, Babcock said, in a state that has more than its fair share of both. But an exodus on such a large scale has apparently never occurred, Maviglio said.

“We have four times as many people making $2 million or more in the state than we did five years ago,” he said. “So that category of people does not leave the country because of taxes. In fact, they do much better.”

Still, the most important objection, said Matthew Rodriguez, a political consultant campaigning against Proposition 30, is simply the precedent it sets. Corporations that want to pass certain laws can go through the legislative process, talking to elected representatives in the legislature, rather than trying to put new laws to a vote. Lyft has been down this road before. It was part of a coalition of companies that, through another voting initiative, escaped classification their gig workers in the state as employees. (That ballot measure is contested in court.)

“If this passes, it will be a big signal to every corporation to say, ‘Well, why did I do this?'” he said.

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