Wealthy Being Forced To Fund Electric Vehicle Rollout In California?

California did not pass an electric vehicle tax bill that would have taxed the state's top earners' income an additional 1.75%.

By Kristi Eckert | Published

California is moving full steam ahead in its quest to transition to electric vehicles. The state has already affirmed and detailed its commitment to ban the sale of any gas-powered vehicles by 2035. However, despite the state’s forward momentum, a proposed bill that would have taxed the wealthy to further incentivize electric vehicle purchases for the masses failed to pass. 

The electric vehicle tax bill in question was called Proposition 30. Essentially, if the bill had passed then the wealthiest earners in the state would have incurred an additional 1.75% income tax. Thus, it looks like the state’s richest folk really dodged a bullet. 

The proposed electric vehicle tax would have taken an enormous amount of money away from top earners. To put it into perspective, if an individual makes $2,000,000 annually a 1.75% tax would mean that $350,000 would be siphoned from their income. There were concerns that this would have pushed those top earners out of the state.

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This concern is especially potent since Bruce Babcock, who is a professor of public policy and University of California Riverside, highlighted that “…California gets more than half of its income tax from the top half a percent of taxpayers.” And large corporations like Tesla have already left California for reasons directly related to the tax burdens there. 

The electric vehicle tax on the wealthy would have had its benefits though. The proposal would have purportedly aided lower-income families looking to purchase an electric vehicle, and 20% of the funds collected would have allegedly gone to wildfire prevention, according to CNN Business. The latter undoubtedly would have greatly benefitted the state. 

Interestingly, the state’s governor, Gavin Newson, who is a fierce proponent of electric vehicle usage, was overtly against passing Proposition 30. Newsom publicly argued that the bill would have disproportionately served ride-sharing companies like Lyft. The governor even pointed out that Lyft was the company that primarily funded the proposition. 

This gives rise to the question: why would the proposed electric vehicle tax have helped rideshare companies like Lyft so profoundly in California? The answer relates directly to the state’s newly passed legislation that requires every automobile on California’s roads to be emissions-free by 2030. Since companies like Lyft and Uber rely on their drivers’ cars to make their business model work, Proposition 30 would have taken the burden off those companies to supply assistance to divers unable to purchase an electric vehicle at full cost. 

To put it simply, Proposition 30 would have saved businesses like Lyft and Uber a lot of money. Still, supporters of the electric vehicle tax on the wealthy backed it with the logic that even if it did directly help rideshare companies that it would not negate the benefits it would have also had for lower-income families. Overall, the fact that the bill didn’t pass does not change the fact that California’s government leaders will need to address this and other overarching issues if they want to reach their 2035 goals.