California Gov. Gavin Newsom (D) has lent his voice to the campaign opposing a ballot measure to tax the state’s rich to fund electric car adoption and wildfire mitigation.
A television ad by the “No on Prop. 30" campaign, released September 13, features the governor — an otherwise staunch advocate of electric vehicles who supported a new rule banning sales of new gas-powered cars in the state by 2035 — slamming the ballot measure as a “Trojan horse” backed by app-based ride-hailing company Lyft to fund its own business model.
“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 said. “Put simply, Prop. 30 is a Trojan horse that puts corporate welfare above the fiscal welfare of our entire state.”
Proposition 30, which qualified for the ballot this summer, would use most of the revenue from an additional 1.75 percent tax on personal income over $2 million to fund incentives for Californians to buy electric cars and to pay for expanded EV charging infrastructure in the state. It would also use 20 percent of the revenue to fund efforts to combat the state’s wildfires. The tax would begin in 2023 and is projected to generate $3.5 billion to $5 billion annually for 20 years, through 2043. However, it contains a provision that could end it as soon as 2030 if the state meets key greenhouse gas reduction goals earlier than expected.
Newsom’s criticism echoes that of other opponents of the measure, who have pointed to Lyft’s strong financial support for it. Opponents note that the initiative’s use of the revenue to fund the transition to EVs in California would benefit the company's business model, since app-based ride-hailing companies must shift to providing most trips through primarily electric cars by 2030, per state requirements. Lyft has also pledged to voluntarily make that transition.
Newsom had already stated his opposition to Proposition 30. In a joint statement with the California Teachers Association in July, Newsom argued that California already has ambitious programs to combat climate change and promote electric cars, including lawmakers’ move this year to authorize $10 billion toward EV adoption and charging infrastructure. The teachers union is angry because the measure would bar any of its revenue from going to education, as is normally required under Proposition 98. The ballot measure would put "a special interest lock box on income taxes that traditionally would fund" spending on education, healthcare, and public safety, California Teachers Association President E. Toby Boyd said in the statement.
Jon Coupal, president of the Howard Jarvis Taxpayers Association, a major California tax watchdog group that also opposes the measure, told Tax Notes that the teachers union’s ire was also likely raised because the ballot initiative was advanced without its input and the measure's passage could politically limit the ability of the union and its allies to seek future tax increases on higher earners.
In a response to Newsom’s ad, the campaign for Proposition 30 — "Yes on 30: Clean Air California" — said in an emailed statement that “it is disappointing that the governor would side with the California Republican Party and a handful of San Francisco billionaires who would rather kids breathe toxic, polluted air than pay their fair share,” arguing that “Prop 30 is supported by the American Lung Association, California state firefighters, and the California Democratic Party because it will prevent catastrophic wildfires and reduce the tailpipe emissions polluting our air.”
The proposition's proponents have previously disputed that the measure is simply a creation of Lyft's. In July Bill Magavern of the Coalition for Clean Air told Tax Notes that the proposal “originated with conversations among environmental groups and labor unions and companies” about ways to combat climate change and air pollution.
Although Newsom is siding with a key ally in the teachers union, he is at odds with his own party and is part of a coalition opposing the measure, which includes business groups like the state’s chamber of commerce, as well as tax watchdogs like the Howard Jarvis association, itself no fan of Newsom’s policies.
The Howard Jarvis association contributed to ballot arguments against Proposition 30 and has criticized the proposed tax as excessive, noting that California already imposes highly progressive taxes on higher earners. Notably, because of the state’s income tax rate structure and temporary tax rates on higher levels of personal income previously approved and then extended by voters, Proposition 30 would result in a combined temporary top marginal income tax rate of 15.05 percent on personal income over $2 million until 2030, when the previously approved temporary rates are due to expire.
The Proposition 30 campaign counts among its supporters CAL FIRE Local 2881, the union representing firefighters with the California Department of Forestry and Fire Protection; the California State Association of Electrical Workers; and the Union of Concerned Scientists. Proponents argue that the tax would apply to only the top 0.2 percent of income earners in California and would help fund the state’s transition to electric cars in a way that would cushion the cost to poorer and middle-income residents. The campaign also recently touted a report by the Wildfire Conservancy that — while neither endorsing nor opposing the measure — identified benefits that would accrue from Proposition 30’s increased funding for efforts to combat wildfires.
“The study found that passage of Proposition 30, the Clean Air Initiative, would bolster the number of state firefighters and could reduce the number of large (greater than 10 acres) wildfires by 150 a year, help prevent up to 500,000 acres per year from being burned, and avoid up to 12 million metric tons of carbon emissions,” according to a September 13 release by the campaign.