A plan to tax the rich to fund electric cars is on the ballot in California – CNN | CarTailz


California has long been a leader among states and even countries in encouraging the switch to electric vehicles, including with its plans to ban the sale of pure gas-powered cars by 2035. But now Californians are voting on a election proposal that promises to accelerate that shift even further by taxing the wealthiest Californians to help fund tax incentives for electric vehicles and EV chargers in the state.

The initiative, Proposition 30, would impose an additional tax of 1.75% on income over $2 million. Most of the money would go towards funding incentives for EV purchases and the installation of EV chargers, with a large portion of that going to lower-income communities. A further 20% of the funds would be used for forest fire prevention and additional fire brigade training. A recent University of Southern California poll showed that voters were very divided on the idea.

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

While the proposal has the support of the state’s Democratic Party, California Governor Gavin Newsom, a Democrat, has publicly opposed it. In a TV ad, Newsom called it “a company’s cynical scheme to secure a huge taxpayer-funded subsidy.”

Newsom is referring 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 claim Lyft’s support is self-serving.

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

But be good for something Proponents emphasize that industry or company does not mean that a law is not also beneficial to the common good. The law would help all types of low-income Californians buy and charge electric vehicles, not just rideshares.

Lyft referred questions about his support for the proposal to Steven Maviglio, a political adviser championing the proposal. The company has spent nearly $50 million to promote the proposal, records show.

Finding available chargers in California is currently more difficult than it should be for EV drivers, Maviglio said in an interview with CNN Business. And electric cars are too expensive for lower-income residents, so financial support is needed, especially as sales of petrol cars are banned in the future.

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

However, the question is whether such a law is needed in a state that already strongly supports electric vehicles.

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

While Proposition 30 supporters point out that it provides a safe stream of funding for electric vehicles, opponents say it’s not necessarily desirable and, counterintuitively, may not boost the electric car sales that supporters are seeking.

“The job of lawmakers is to prioritize spending in the face of competing demands,” Babcock said. “And what’s going to happen is suddenly you have a dedicated funding source. That will relieve the legislature and only finance it less.”

Just as a family that receives money to buy dairy products would likely spend less of their own money on milk and butter, this law might not end up resulting in significantly more money for electric vehicles.

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

And an extra 1.75% on income over $2 million might not sound like much – after all, these aren’t people who make ends meet on their meager salaries – but it would be claimed by a state that already relies heavily on the dependent on money from its richest residents. said Babcock.

“I think it’s worrying because California gets more than half of its income taxes from the top half percent of taxpayers,” he said.

Other states, such as Texas and Florida, tax the rich at much lower rates or not at all. By continuing to look to the rich to fund the state budget, California risks alienating entrepreneurs and investors, Babcock said, in a state with more than its fair share of both. But such a large-scale emigration has apparently never happened before, 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 this category of people does not leave the state for taxes. They are actually doing much better.”

The most important objection, however, said Matthew Rodriguez, a political adviser leading a campaign against Proposition 30, is simply the precedent it sets. Businesses that want specific legislation passed can go through the legislative process and speak to elected officials in the legislature rather than trying to put new legislation to a vote. Lyft has walked this path before. She was part of a coalition of companies that, through another ballot initiative, avoided classifying their gig workers as employees in the state. (This voting measure was challenged in court.)

“When that happens, it’s going to be a huge signal for any company to say, ‘Well, why did I do that?'” he said.

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