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As we begin our discussion of Proposition 30 on the Nov. 8 ballot, let’s agree on three things:
Climate change is real. To address it, we must transition more Californians from gasoline-powered to electric vehicles. And progressively taxing those with more money at higher rates is morally right and good for the economy.
But none of that is enough to justify backing Prop. 30, which would raise the top tier of the state income tax to primarily subsidize electric vehicles and the associated charging station infrastructure.
The state and federal government already have two major programs to stimulate production of, and transition to, zero-emission vehicles. California has the highest income-tax rate in the nation. And it’s questionable whether spending yet more tax revenues on electric-car subsidies would be the most cost-effective way to fight climate change.
Voters should reject Prop. 30. It’s a prime example of the pitfalls of budgeting by initiative. Once again, Californians are provided little independent policy analysis on which to base a multi-billion-dollar decision. Yet they’re being asked to lock in spending on a program, this time for 20 years, without the ability to adjust for future needs.
And Prop. 30 is yet another measure that would disproportionately benefit a special interest. In this case, that’s Lyft, the ride-hailing company that has thus far poured $15 million into the initiative campaign in hopes that wealthy taxpayers will subsidize the firm’s transition to electric vehicles.
California’s nation-leading top tax bracket of 12.3% applies to incomes above $625,370 annually for single people and above $1.25 million for married couples filing jointly. On top of that, single or joint incomes above $1 million are taxed another 1% to help fund mental health programs.
Prop. 30 would add an additional 1.75% for single or joint incomes over $2 million a year, for a total of 15.05%. That would dwarf the next state in line, Hawaii, which has a top tax bracket of 11%.
While most wealthy people have not been chased off by California’s high tax rates, the exceptionally large bump of Prop. 30 could push more to consider steps to reduce the amount of income taxes they owe, the independent state Legislative Analyst Office predicts. They might move out of state, change their spending habits to reduce their tax liability or more aggressively claim tax deductions and credits.
But the bigger question is, if the state is going to go to the tax-the-rich well again, will the money be well-spent and produce the desired outcome?
State legislators and Gov. Gavin Newsom last year started a five-year, $10 billion spending plan for zero-emission vehicles. And the Inflation Reduction Act that President Biden just signed includes tax credits of up to $7,500 for 10 years for electric vehicle purchases.
To be sure, the amount of revenue Prop. 30 would generate in California for electric vehicles, about $2.8 billion to $4 billion annually, would be far greater. But it wouldn’t necessarily lead to more electric vehicles on the road.
The bigger determinant, according to the Legislative Analyst’s Office, would be whether the California Air Resources Board, as it is now considering, speeds up its mandates for car manufacturers to shift to zero-emission vehicles.
If it does, according to the LAO, then the main effect of Prop. 30 would not be to put more electric vehicles on the road but rather to shift who pays for them.
The initiative would provide subsidies for low-income buyers. And it would also subsidize businesses that are expected to drive vehicles at 25,000 miles annually. Thus, Lyft drivers and the company itself could be major beneficiaries.
It’s why Lyft is bankrolling the campaign for the measure. It’s why Newsom called Prop. 30 “a cynical scheme devised by a single corporation to funnel state income tax revenue to their company.”
It’s one of many reasons voters should reject Prop. 30.
Source: www.mercurynews.com