California voters to consider new tax hike on wealthy to subsidize electric vehicles

Proposition 30 would increase taxes on personal income over $2 by 1.75% if approved by voters.

Updated: July 6, 2022 - 11:29pm

This November, California voters will be asked to approve up to $4.5 billion in new taxes on wealthy residents to fund subsidies for zero-emission vehicle purchases and charging stations.

The initiative, Proposition 30, would increase taxes on personal income over $2 million by 1.75% for wealthy individuals and married couples. The tax revenue would then be split, with 45% for consumer rebates and incentives for zero-emission vehicles, 35% for charging stations and 20% for wildfire prevention. According to the initiative, at least half of the funding earmarked for rebates and charging stations must be directed to low-income communities and households.

Clean Air California, the coalition of organizations sponsoring the ballot initiative, estimates that the measure will impact 0.1% of Californians – around 35,000 residents – who are high-earners and generate $100 billion over 20 years.

The measure will appear on the November ballot alongside several other initiatives that qualified by the June 30 deadline, Secretary of State Shirley Weber announced last week. If voters approve, the Legislative Analyst and Director of Finance estimate that Prop 30 would increase state tax revenue between $3 to $4.5 billion annually.

With four months left until election day, the initiative is already sparking debate between proponents who say it will reduce harmful greenhouse gas emissions by speeding up the state’s transition to electric vehicles and opponents who decry increasing the state’s nation-leading income tax rates.

Prop 30 has broad support from various organizations and associations, including the American Lung Association, the Coalition for Clean Air, CalFire and the State Building and Construction Trades Council of California. They say it will address two primary sources of air pollution and climate change plaguing California – transportation emissions and wildfires – by expanding electric vehicle infrastructure, funding wildfire prevention and making it possible for more individuals and organizations to purchase electric vehicles with rebates.

“California wants to lead the nation on climate change, and this initiative fits into that category,” Veda Banerjee, communications director for the California Environmental Voters, told The Center Square.

It’s facing opposition from associations like the California Chamber of Commerce and the Howard Jarvis Taxpayers Association, who are skeptical of raising taxes as the state swims in record revenues. California has the highest income tax rate in the U.S. at 13.3% and the nation’s highest sales tax rate. With a more than $300 budget and a historic $97 billion surplus for the fiscal year, Jon Coupal, the president of the Howard Jarvis Taxpayers Association, posed the question – “do we even need a new tax?”

“California is just a tax machine cranking out vast amounts of revenue,” Coupal told The Center Square. “If the objectives of this initiative, the spending priorities reflected in this initiative are that important, they should be paid for by the General Fund.”

Coupal also warned that increasing taxes on the state’s highest earners could lead to more residents leaving the state for places like Florida or Texas, where the top marginal rate is zero.

Supporters of the measure argue that the initiative will combat the impacts greenhouse gasses and wildfires have on the health of millions of California residents.

According to the American Lung Association, six of the top 10 most polluted cities in America are in California, with Los Angeles ranking as the number one most polluted city in the nation. Air pollution can cause several respiratory issues, like asthma attacks and shortness of breath, and can lead to heart attack, strokes and premature death, according to the American Lung Association.

Clean Air California estimates that 38 million out of 39 million Californians will be impacted by ozone and particle pollution in 2021. Almost all Californians live in areas that violate national air quality health standards, Bill Magavern, the policy director for the Coalition for Clean Air, told The Center Square.

“All Californians are having our health damaged by air pollution and climate change, and this ballot measure is our best opportunity to, as voters, do something about the huge challenges of air pollution and climate change and allow us to take great leaps in cleaning up transportation and stopping wildfires,” Magavern said.