Prop 30: Income Tax on Millionaires for Electric Cars

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Rejected
The Question: 

Should the tax rate on personal income above $2 million be increased by 1.75 percent and the revenue dedicated to zero-emission vehicle subsidies, zero-emission vehicle infrastructure, such as electric vehicle charging stations; and wildfire suppression and prevention programs?

The Situation: 

California is currently experiencing severe drought, increasingly devastating wildfires, and poor air quality. Gas-powered cars and wildfire smoke are the two largest sources of greenhouse gas (GHG) emissions in the state. State law requires California to reduce its GHG emissions level to 40 percent below 1990 levels by 2030. State law also requires that ride-sharing companies like Lyft and Uber have 90% of their drivers using zero-emission vehicles (ZEVs) by 2030. But ZEVs, like electric or hydrogen-powered cars, are expensive and therefore unaffordable for many residents, and the state lacks sufficient charging and fueling stations to support increased use of ZEVs. The California Department of Forestry and Fire Protection (CalFire), the state agency responsible for wildfire suppression and, with other state agencies, prevention, is facing rising costs for its programs as fires become increasingly catastrophic.

The State recently committed to spending $10 billion over the next five years on ZEVs, and on average it currently spends $2–4 billion annually on wildfire response.

The Proposal: 

Prop 30 would increase the income tax rate by 1.75% on individual incomes above $2 million. These funds, net of expenses, would be allocated as follows:

  • 45 percent of funds would promote the purchase of ZEVs, including subsidies and rebates for passenger vehicles (cars) and medium- and heavy-duty vehicles like trucks and buses;
  • 35 percent of funds would increase the availability of ZEV infrastructure, including electric charging stations close to single- and multifamily dwellings;
  • 20 percent would help fund wildfire suppression and prevention.

Prop 30 stipulates that at least half of the funds allocated for ZEVs and ZEV charging must primarily benefit low-income and disadvantaged communities. It also requires that CalFire make hiring and training additional firefighters a top priority for its funds.

The tax increase would end on January 1, 2043; or, earlier if there are three consecutive calendar years in which statewide GHG emissions are 80 percent below 1990 levels.

Fiscal Effect: 

Prop 30 would generate $3.5–5 billion in revenue in most years, increasing over time. That would amount to $2.8–4 billion annually in ZEV funding and $700 million to $1 billion annually for wildfire response. The measure could help decrease state and local costs for wildfire suppression and prevention, though the size of the fiscal effects is difficult to predict.

Support & Opposition
Supporters Say: 
  • Existing programs are insufficient to address California’s poor air quality, which is largely caused by automobile exhaust and wildfire smoke.
  • Prop 30 would make electric vehicles more affordable and would create well-paying green jobs.
  • Prop 30 would fund critically needed programs to prevent catastrophic wildfires and protect homes.
  • Strict accountability would ensure that these funds are spent as intended.
Opponents Say: 
  • California is already spending more than $50 billion for a multiyear climate investment, including $10 billion for ZEVs.
  • There is no guarantee that Prop 30 will make ZEVs affordable for most California families.
  • Prop 30 locks money from income taxes, normally a major source of school funding, into special interests.
  • Prop 30 is Lyft’s attempt to get taxpayers to help foot the bill for the requirement to increase the number of ZEVs used.