Californians are just weeks away from voting on Proposition 30 in November. The plan to raise the income tax on Californians who make more than $2 million by 1.75% each year to pay for electric-vehicle incentives and wildfire prevention has split Democrats from Gov. Gavin Newsom, their standard-bearer in Sacramento.
State analysts estimate that the new tax on the state’s wealthiest would raise between $3.5 billion and $5 billion annually, growing over time until it expires in 2043.
The proposition requires that the state spend 80% of that revenue on EV rebates, to help people, businesses and government pay for electric trucks, cars and buses, and to pay for the installation of charging stations in public and in homes and apartment buildings. The remainder would be spent on hiring and training firefighters, and other wildfire mitigation measures.
Why is the EV-loving Newsom opposing this measure?
Newsom has vocally and publicly opposed the proposition, “warning” Californians not to be “fooled” by the campaign in support. He called it a “Trojan horse” and a “cynical scheme.”
His opposition surprised a lot of his fellow Democrats. Investing in electric vehicles is a top priority of his administration. He ordered the state to phase out the sale of new gasoline-powered cars by 2035 and said he wants to “accelerate investment, accelerate innovation, research, development, accelerate manufacturing” in that industry.
So why is he opposing? He has said that the plan is unnecessary, pointing to the fact that the state invested billions of dollars this year on clean car rebates, electric vehicle chargers and other transportation projects.
In opposing Proposition 30, Newsom villainized Lyft, saying the ride-hailing company “devised” the measure to “funnel state income tax to benefit their company.”
Lyft certainly has skin in this game — and has dumped, at this writing, more than$45 million into the Yes on 30 campaign. Last year, California required that nearly all trips on ride-hailing platforms be in electric vehicles by the end of this decade.
Proposition 30 doesn’t mention the company’s name, nor would it funnel money directly to it. But it would make electric vehicles cheaper for its drivers (and all Californians) and pay to install public charging stations that these cars would use.
Did Lyft devise the measure to direct state tax money its way?
Newsom has claimed that Proposition 30 was “devised by a single corporation” (read: Lyft).
But the measure was actually designed by a coalition of environmental and other advocacy groups, including the Natural Resources Defense Council, SPUR and other groups. (Environmental attorneys told The Sacramento Bee that Lyft was involved in drafting the measure.)
There are receipts here. Back in 2020, Denny Zane, former mayor of Santa Monica and head of Move LA, a transit advocacy group based around Los Angeles, hosted a series of events about air pollution.
At one event, he asked state climate leaders, including Mary Nichols, Newsom's former top air regulator, this question: If you had $30 billion to spend fighting climate change, what would you do? Many responded by saying they would invest in electric vehicles.
Zane has a long history of pushing Californians to raise taxes to pay for clean transportation. He persuaded Los Angeles voters to pass a sales tax hike to pay for public transit with Measure R in 2008 and again with Measure M in 2016.
“We went to the ballot and it worked,” Zane told KQED in an interview. “LA now has about $120 billion over the next 40 years coming to invest in transportation.”
He thought Newsom would be a partner on a statewide version.
“We finally had somebody who was going to help back the signature drive,” he said. “Suddenly, it's like a scheme. That's just wrong. It's just a mistake.”
Lyft President John Zimmer has also pushed back on Newsom's assertion.
“This is about the health of our neighbors and communities,” he said. “That's why we agreed to get involved when environmental leaders approached us with their plan to reduce California emissions.”
How would it affect the state's finances?
Newsom’s opposition has him siding with conservatives and anti-tax groups like the California Chamber of Commerce and the Howard Jarvis Taxpayers Association.
They point out that the state already has the highest income tax rate in the country. But they also argue that it could disrupt the state’s notoriously complicated finances, in a couple of ways.
Remember, the measure would raise the income tax only on the state’s wealthiest, many of whom rely on the stock market and other investments for their income. Their taxes can fluctuate widely, and one strong recession could crater the program; that’s one reason the LA Times editorial board issued an endorsement for No on Prop. 30. “It doesn’t make sense to pin another priority on such a volatile funding stream,” they wrote.
Also, California’s constitution limits how much the state can spend, and it has reached that limit in recent years. Here, the measure could have another unintended consequence, as it requires California to spend more money, up to $3 billion each year.
California’s Legislative Analyst's Office found that the proposition could “require the state to reduce an equal amount of spending from other programs to ‘make room’ for the new required spending on ZEV [zero-emission vehicle] programs and wildfire activities.”
Would the measure help the state reduce its greenhouse gas emissions?
The Yes on 30 campaign has trotted out prominent Democrats like Oakland Mayor Libby Schaaf, who supports the measure, at a series of campaign events around the state. They note that California's top source of greenhouse gas emissions is transportation and argue that climate change and air pollution are killing Californians.
“Prop. 30 is an innovative measure that all Californians must support, as if their lives depend on it,” Schaaf said at a campaign kickoff event.
But the main impact of the measure, if it were to pass, would not be to increase the number of electric vehicles on the road — although, as Sammy Roth wrote in The LA Times, the measure “could definitely speed things up."
In August, the state’s powerful Air Resources Board passed California's new EV mandate, which bans the sale of gasoline-powered cars and trucks in the state after 2035.
The state's new mandate requires a significant increase in the number of electric cars sold in California, no matter what happens with Proposition 30 in November.
If the measure passes, it would shift who pays for the vehicles, moving some cost onto higher-income taxpayers and away from consumers or carmakers.
This story was made possible as part of The California Newsroom, acollaboration of California’s public radio stations, NPR and CalMatters.