Traffic piles up on a highway near Sacramento. By 2035, all new cars and light trucks sold in California must be electric or plug-in hybrids. (Photo: David Butow/For The Times)
LOS ANGELES — At first glance, Proposition 30 is pretty simple: Raise taxes on the wealthiest Californians. Get between $30 billion and $90 billion over the next 20 years. Use 80% of the money to subsidize electric vehicles and charging stations, and 20% for wildfire suppression and prevention.
The fight for votes has provoked many slogans and great expense.
Supporters say Proposition 30 is essential to addressing climate change. Opponents say it is not.
Opponents say the higher taxes will go after the wealthy, job-creating people of the state. Supporters say the wealthy can afford it, and there is no evidence high-income people are fleeing the state.
But nothing in California politics is simple, and Proposition 30 has sparked a furious debate and a strong campaign financed with more than $60 million in political donations. Most of it is spent on direct mail, TV commercials and social media campaigns that tend to wrap the issue in slogans and emotions.
Not sure how to vote on the topic and want more information on what’s at stake? This is what you should know:
Aren’t electric vehicles and charging stations already heavily subsidized?
Yes. The California Air Resources Board says the state has spent $6.5 billion so far on emission reduction programs for cars, trucks and other forms of transportation. The new state budget adds $10 billion over the next five years. Those figures don’t include federal subsidies for electric vehicles, also known as EVs.
Why would more money be needed?
Supporters say rampant wildfires are an early warning of a bigger disaster to come if climate problems aren’t addressed. With transportation accounting for 40% of the state’s greenhouse gas emissions, it’s essential to switch to electric vehicles as quickly as possible and comply with new California rules aimed at phasing out the sale of new cars and trucks. light cars running on gasoline and diesel by 2035. More money will help, they say.
In addition, revenues from the state’s cap-and-trade carbon credit market, a major funder of emissions-reduction programs, have proven erratic and unpredictable. California’s cap-and-trade program requires companies to buy permits to release greenhouse gas emissions and created a market for pollution credit trading, which essentially allows large carbon emitters to buy and sell unused credits from other companies with the goal of keeping everyone at or below a certain total.
Electric vehicle buyers also sometimes have to wait months for rebates. Proposition 30 would reduce uncertainty, supporters say.
Opponents of Proposition 30 say the $16.5 billion in past and future spending should be enough.
Couldn’t the Legislature fix the carbon credit problem on its own?
Yes. But that is true for many proposals that reach voters. The Legislature revamped the cap-and-trade system with some reforms, but could do more to strengthen the program and smooth funding, according to climate economist Danny Cullenwald.
Cullenwald, who takes no position on Proposition 30, said fears of a revenue shortfall from the cap-and-trade program later in the decade are “entirely credible.” He said state lawmakers “could take significant steps to minimize these risks, but I don’t see any sign that such steps are being seriously considered.”
Critics of Proposition 30 point out that the state’s tax system is also notoriously erratic, relying heavily on capital gains income that rises and falls with the stock market and the broader economy. Top earners contribute an unbalanced share of the state’s personal income tax revenue, so when they do well, the state does well. When your investments plateau, so does the state’s revenue.
Aren’t the new electric vehicles a luxury that people with no disposable income can’t afford?
The measure requires that 50% of the funds go to low-income car buyers and charging stations in low-income neighborhoods.
So who would pay?
California residents with annual income over $2 million would see their top marginal state tax rate increase by 1.75 percentage points, from 13.3% to 15.05%, on their income over $2 million. The tax increase would disappear in January 2043, or sooner, if California can significantly reduce its greenhouse gas emissions statewide.
Who are the biggest supporters of the measure?
Climate activists, climate-conscious politicians, the California Democratic Party, and the ride-hailing company Lyft.
Under a state law passed last year, 90% of the miles logged by Uber and Lyft drivers in California must be in electric vehicles by 2030.
Today, the vast majority of ride-sharing vehicles are owned or leased by people who have contracts with Lyft and Uber. Lyft, which helped write Proposition 30 and has contributed $45 million to the “yes” campaign, wants state help to meet that state mandate: more state money to encourage Lyft drivers to buy electric vehicles and fund a largest network of public chargers.
Uber, which has kept a low profile on Proposition 30, told The Times by email that the company “was not involved in the drafting of Proposition 30, and we have no association with the campaign.”
Several unions are also active, for and against. The International Brotherhood of Electrical Workers likes the fact that Proposition 30 would likely create thousands of jobs for electricians. But the California Federation of Teachers and the California Teachers Association. They have come out strong against the measure.
The proposal establishes a trust fund for the money and prohibits the Legislature from touching it. But because it’s not part of the state’s general fund, teachers see it as a way to get around the state’s constitutional mandate that a certain portion of new general fund spending go to schools. They are concerned about the continued creation of such exclusions to circumvent the requirements for education funding.
Who else is against?
Rich people. The California Republican Party. Governor Gavin Newsom.
Newsom is challenging his own party to fight the measure. He calls it “fiscally irresponsible” and “a Trojan horse that puts corporate welfare before the fiscal welfare of our entire state.”
Among those lining up to donate money to bring down the measure are venture capitalists Bruce Dunlevie, Michael Moritz and David Marquardt, former Well Fargo CEO Richard Kovacevich and former Oakland Athletics owner Lewis Wolff. Netflix CEO Reed Hastings recently gave $1 million to the No on 30 campaign.
What’s wrong with taxing the rich?
Nothing, according to supporters like Assemblywoman Buffy Wicks (D-Oakland): “Our high-income people, frankly, can afford these things.”
The danger, opponents say, is that raising what is already the highest top marginal tax rate in the country will reflect badly on California’s business environment and could drive wealthy people away to other states.
Much research has been done on migration in and out of California. Most show that it is low-income people who tend to move out of state. As for the wealthy fleeing California in a big way, “I don’t think that’s happening yet,” said Patrick Murphy, an expert on California budgets at the Opportunity Institute. But amid huge economic uncertainty and another tax hike, “we could be getting closer to that point.”
An analysis of the ballot measure by the Legislative Analyst’s Office concluded that “some taxpayers would likely take steps to reduce the amount of income taxes they owe,” which could lower overall state tax revenue and affect revenues. programs outside of Proposition 30.
“The degree to which this would happen and how much the state could lose as a result is unknown,” the analysis stated.