California considers taxing the rich to help put more EVs on the road

A California ballot measure that would tax the rich to help put more electric cars on the road may seem tailor-made to win support from Democrats in a state known for climate leadership, but Proposition 30 has one notable opponent: Gov. Gavin Newsom. That's put the Democratic governor on the opposite side of his own party and against his traditional environmental allies.

The proposition before voters would add a 1.75% tax on personal income of more than $2 million, or fewer than 43,000 people. State analysts estimate it would raise up to $5 billion a year, mostly to help people buy electric vehicles and to build charging stations, with some also dedicated to resources for fighting wildfires.

Environmental and health group backers say California needs dedicated funding to speed the transition away from gas-powered cars and help lower planet-warming emissions. Transportation accounts for 40% of California's greenhouse gas emissions, and increasingly deadly wildfires are another major source of carbon.

“We can't meet our climate goals without something like this," said Mary Creasman, chief executive officer for California Environmental Voters. “It's either going to be all of us who pays, or it's going to be the wealthiest who can afford to pay."

Newsom has branded Proposition 30 as a money grab by ridesharing giant Lyft, which has spent at least $45 million backing it. State regulators have mandated that all rideshare trips be zero-emission by 2030. Uber has not taken a position on the measure.

“Don’t be fooled, Prop. 30′s being advertised as a climate initiative, but in reality it was devised by a single corporation to funnel state income taxes to benefit their company,” Newsom says in one TV ad.

Supporters reject that characterization, saying that Lyft got involved after environmental groups were already discussing a ballot measure. Creasman said it was important to “call our own team and governor out for lying" about the origins of the measure.

In an election year where Newsom is expected to cruise to reelection for a second term, the fight over Proposition 30 has become perhaps the most contentious of the season for Democrats. It comes months after state air regulators approved a Newsom-backed plan to ban the sale of most new gas-powered cars in the state by 2035. Newsom notes that he has already dedicated $10 billion to various programs aimed at boosting EV adoption over the next six years.

Half the money raised in Proposition 30 for electric vehicles would go into an equity account designed to expand transportation options and limit air pollution in low-income or disadvantaged neighborhoods. It could be used to help people buy electric cars or to put cleaner delivery trucks, buses and even e-bikes on the roads.

Wildfires, too, have become an increasingly urgent problem as climate change makes the state hotter and drier. Most of the state’s deadliest and most destructive wildfires have occurred in the last few years, and the state estimates wildfires released more than 85 million metric tons of carbon emissions in 2021 — more than the annual emissions from electricity.

Lyft says it supports the measure because reducing emissions is good climate policy.

“Proposition 30 funds this through a tax on individuals who earn more than $2 million a year. I’m fortunate enough to be impacted by this tax and happy to pay it to help turn back the clock on this existential threat,” Logan Green, the company’s chief executive officer, wrote in a blog post.

Joining Newsom in opposing the measure are the California Teachers Association, the California Chamber of Commerce and some venture capitalists who are helping fund the “No" campaign.

The money raised by the tax wouldn't count toward a state budget rule that says a certain percentage of revenue must go to K-12 education, a provision the teachers don't like. Meanwhile, the nonpartisan Legislative Analyst's Office said the proposal could force lower spending in other areas based on certain budget rules, something supporters of the measure dispute.

Business groups note that California's personal income tax is already the highest in the nation, and the ballot measure would put it over 15% for the highest earners. Loren Kaye, foundation president for the California Chamber of Commerce, also warned that a rapid expansion of electric vehicles could strain the energy grid, an argument the Newsom administration has rejected.

Backers of Proposition 30 include the California Democratic Party, the Clean Air Coalition, the Natural Resources Defense Council and the American Lung Association, which have rejected characterizations that the measure is designed to benefit Lyft specifically, noting there's no provision that would expressly set aside money for rideshare drivers.

While Newsom's existing commitment to electric vehicle infrastructure is significant, the state needs a more stable long-term revenue source, supporters argue. The tax increase would last for 20 years if the measure passes.

“We need a consistent, reliable source of funding that keeps us going through good budget years and bad budget years," said Bill Magavern, policy director for the Coalition for Clean Air. Referring to Lyft, he added, “If the goal is to limit pollution, does it matter who is driving the EV?"