CNN
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California has long been a leader among states, and even countries, in promoting a shift to electric cars, including with its plans to ban the sale of purely gas-powered cars by 2035. But now Californians are voting on a ballot proposal that promises to accelerate that shift even more by taxing the wealthiest Californians to help pay for electric vehicle tax incentives and EV chargers in the state.
The initiative, Proposition 30, would add an additional 1.75% tax on incomes above $2 million. Most of the money would go toward funding incentives for electric vehicle purchases and installing EV chargers, with a large part of it going to lower-income communities. Another 20% of the funds would be used to pay for wildfire prevention and additional firefighter training. A recent University of Southern California poll showed voters closely divided on the idea.
Opponents of the ballot initiative claim it’s really just an attempt by one tech company to benefit itself at the expense of other priorities. The initiative is unnecessary at best, they claim, and could even harm the state’s economy by pushing wealthy residents to leave.
While the proposal is backed by the state’s Democratic party, California Governor Gavin Newsom, a Democrat, has come out publicly against it. In a TV ad, Newsom called it “one company’s cynical scheme to grab a huge tax-payer-funded subsidy.”
Newsom is referring to the ride-sharing company Lyft, which has provided 95% of the financing 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 that 90% of ride-sharing miles traveled in the state must be emissions-free by 2030. Companies like Lyft and its main competitor, Uber, don’t buy the cars their drivers use, as they consider the drivers to be “independent contractors” who supply their own vehicles. But a rule like Prop 30, which would make it easier for just about anyone in California to buy an electric car, including Lyft drivers. Without Prop 30’s state-supported financial incentives for electric vehicles, Lyft might be forced to subsidize its drivers’ EV purchases from its own funds, opponents say.
But being good for a specific industry or company doesn’t mean a law isn’t also beneficial to the general welfare, proponents point out. The law would help all kinds of low income Californians to purchase and charge electric vehicles, not just ride-share drivers.
Lyft referred questions about its backing for the proposition to Steven Maviglio, a political consultant campaigning for the proposal. The company has spent nearly $50 million to campaign for the proposal, records show.
It’s harder than it should be for EV 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 the financial support is needed, especially with sales of gas cars being banned in the future.
“It’s going to fall harder on those who can’t afford the 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 been prioritizing electrification for, really, the last 10, 15 years,” said Bruce Babcock, professor of public policy and University of California Riverside. “And, so, they are really trying to get this right and they have been funding 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, counter intuitively, not give electric car sales the boost backers are looking for.
“The job of the legislature is to prioritize spending given the competing demands,” said Babcock. “And so what will happen is, suddenly, you start having a dedicated funding source. What that will do is take the pressure off the legislature and they’ll just fund it less.”
Just as a family given money to buy, specifically, dairy products would probably just spend less of its own money on milk and butter, this law could end up not resulting in substantially more money for EVs.
“I don’t know if there’d be a net gain,” Babcock said, “but it wouldn’t be as big as 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 salaries – but it would be taken by a state that already relies heavily on money from its wealthiest residents, Babcock said.
“I think it’s a concern because California gets more than half of its income tax from the top half a percent of taxpayers,” he said.
Other states, like Texas and Florida, tax the wealthy at much lower rates or not at all. By continuing to turn to the wealthy to finance the state’s budget, California risks alienating entrepreneurs and investors, Babcock said, in a state with more than its fair share of both. But no such large-scale exodus has apparently ever happened, said Maviglio.
“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 is not leaving the state because of taxes. They’re doing, actually, much better.”
The most crucial objection, though, said Matthew Rodriguez, a political consultant leading a campaign against Proposition 30, is simply the precedent that it sets. Corporations that want certain laws passed can go through the legislative process, speaking with elected representatives in the legislature, rather than trying to put new laws on the ballot. Lyft has been down this road before. It was part of a coalition of companies that, through another ballot initiative, avoided having to classify their gig workers in the state as employees. (That ballot measure has been challenged in court.)
“If this passes, this is going to be a huge signal to every corporation to be like, ‘Well, why did I do this?’” he said.