California Gov. Gavin Newsom (D) claimed earlier this year that the “future is electric.” In 2020, he signed an executive order to phase out the sale of all new gasoline-powered cars by 2035. Now, he’s aligned himself with California Republicans to fight a new tax hike. However, unlike the various other tax increases opposed by the state’s Republicans that adversely impact the middle class, the tax hike Newsom has elected to fight would be one specifically imposed on the ultra rich.

The tax hike

Proposition 30 calls for a 1.75% tax hike on those earning over $2 million annually. It has been touted as a means to help subsidize the statewide adoption of so-called “zero-emission” vehicles and the development of EV-charging infrastructure.

According to the California Legislative Analyst’s Office (LAO), the tax hike would go into effect January 2023 and last until California “is able to drop its statewide greenhouse gas emissions below certain levels,” or, failing that, until January 2043.

About 45% of the revenue from the new tax would go toward payments to help buy new electric vehicles (e.g., cars, vans and pick-up trucks). In addition to helping households and businesses “pay for part of the cost of new passenger ZEVs,” money confiscated from high-income taxpayers would also be allotted for the government’s acquisition of large EVs such as trucks and buses.

Another 35% would subsidize the installation and operation of EV charging stations, which will be located in both private and public locations, and 20% would go toward wildfire response and prevention. Priority would be given to expenditures on hiring, training, and retaining state firefighters.

The money will not be disbursed on a consistent basis. Instead, “at least half of the money must be spent on projects that benefit people who live in or near heavily polluted and/or low-income communities.” The affluent areas home to some of those who will be taxed under the initiative will have to compete with rural areas for the remainder of the funds.

The LAO claimed that the tax would raise between $3.5 billion and $5 billion annually, “growing over time.”

The LAO noted that, in light of recent efforts to increase the number of EVs sold and on the roads, “the additional funding from the proposition to help buy new ZEVs would not have much effect on the total number of ZEVs driven in California.” It would, however, “shift who pays for the ZEVs. That is, more costs would be covered by revenue from the new tax on high-income taxpayers instead of by vehicle sellers and/or buyers.”

The tax’s supporters include the CA Association of Electrical Workers, Cal Fire Local 2881, the California Democratic Party, the American Lung Association, Lyft, and a host of municipal authorities across the state.

Neel Sannappa, a Democratic political analyst, claimed the tax would “help middle-class families transition to zero-emission vehicles,” as well as strengthen the electric grid, which is already under immense strain.

The multimillionaire’s Robin Hood

In a television ad attacking the proposition, Newsom suggested that the proposed tax hike was “devised by a single corporation to funnel state income taxes to benefit their company. Put simply, Prop. 30 is a Trojan horse that puts corporate welfare above the fiscal welfare of our entire state.”

The corporation Newsom referenced in the attack ad was Lyft. Newsom and other critics have suggested that Lyft, which has allegedly donated over $35 million in cash and in-kind contributions to support the measure, would directly benefit from it.

The Guardian reported that the perceived benefit to Lyft is that its drivers, who are responsible for their own vehicles, would be better able — as a result of the multi-millionaire-sourced subsidy — to acquire an EV by the state’s 2030 regulatory deadline.

Denny Zane, founder of Move LA, a public transit lobby group, said the accusations were “just false,” noting that Lyft had offered its support only after environmental groups and policy makers had drafted the idea.

Bill Magavern, one of the authors of the bill and the policy director of Coalition for Clean Air, told KUSI that the “initiative was devised by an environmental-labor-business alliance, and it provides absolutely no special benefits to any company or any special interest.”

Magavern characterized Newsom’s opposition as giving in to the wishes of the wealthy: “You’ve got billionaires and their allies who don’t want to pay their fair share of taxes.”

The attack ad featuring Newsom was paid for in part by a California-based billionaire, Michael Moritz, a repeat Lincoln Project donor who has reportedly spent $1 million to fight Proposition 30.

Bob Emery, a wealthy San Francisco real estate investor, donated nearly $500,000 to the opposition campaign. Former Apple board member and Silicon Valley venture capitalist Arthur Rock donated $499,000. Gap Inc. director William Fisher donated $980,000 to the “No on 30” campaign in September.

In addition to the support from the ultra rich, “No on 30” also garnered support from the California Teachers Association, which was antipathetic because 40% of the state’s budget, as mandated in 1998, must go to public education, but as this would be a special fund, revenue might be withheld from education coffers.

Republican political analyst Cathy Abernathy told Fox40 that part of the reason Newsom and the California Teachers Union don’t like the proposition is because it “is a special fund, permanently separate and apart from the General Fund or any other state fund or account. And in Section (c), moneys deposited into the fund and any interest earned shall not be permanently or temporarily borrowed, loaned or otherwise transferred to the General Fund or other fund in the state treasury.”

In other words, the Newsom administration wouldn’t be able to use it as a slush fund.

Proposition 30 will be on the ballot in California in the upcoming November election.

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SACRAMENTO, Calif. (AP) — A California ballot measure that would tax the rich to help put more electric cars on the road may seem tailor-made to win support from Democrats in a state known for climate leadership, but Proposition 30 has one notable opponent: Gov. Gavin Newsom. That’s put the Democratic governor on the opposite side of his own party and against his traditional environmental allies.

The proposition before voters would add a 1.75% tax on personal income of more than $2 million, or fewer than 43,000 people. State analysts estimate it would raise up to $5 billion a year, mostly to help people buy electric vehicles and to build charging stations, with some also dedicated to resources for fighting wildfires.

Environmental and health group backers say California needs dedicated funding to speed the transition away from gas-powered cars and help lower planet-warming emissions. Transportation accounts for 40% of California’s greenhouse gas emissions, and increasingly deadly wildfires are another major source of carbon.

“We can’t meet our climate goals without something like this,” said Mary Creasman, chief executive officer for California Environmental Voters. “It’s either going to be all of us who pays, or it’s going to be the wealthiest who can afford to pay.”

Newsom has branded Proposition 30 as a money grab by ridesharing giant Lyft, which has spent at least $45 million backing it. State regulators have mandated that all rideshare trips be zero-emission by 2030. Uber has not taken a position on the measure.

“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 says in one TV ad.

Supporters reject that characterization, saying that Lyft got involved after environmental groups were already discussing a ballot measure. Creasman said it was important to “call our own team and governor out for lying” about the origins of the measure.

In an election year where Newsom is expected to cruise to reelection for a second term, the fight over Proposition 30 has become perhaps the most contentious of the season for Democrats. It comes months after state air regulators approved a Newsom-backed plan to ban the sale of most new gas-powered cars in the state by 2035. Newsom notes that he has already dedicated $10 billion to various programs aimed at boosting EV adoption over the next six years.

Half the money raised in Proposition 30 for electric vehicles would go into an equity account designed to expand transportation options and limit air pollution in low-income or disadvantaged neighborhoods. It could be used to help people buy electric cars or to put cleaner delivery trucks, buses and even e-bikes on the roads.

Wildfires, too, have become an increasingly urgent problem as climate change makes the state hotter and drier. Most of the state’s deadliest and most destructive wildfires have occurred in the last few years, and the state estimates wildfires released more than 85 million metric tons of carbon emissions in 2021 — more than the annual emissions from electricity.

Lyft says it supports the measure because reducing emissions is good climate policy.

“Proposition 30 funds this through a tax on individuals who earn more than $2 million a year. I’m fortunate enough to be impacted by this tax and happy to pay it to help turn back the clock on this existential threat,” Logan Green, the company’s chief executive officer, wrote in a blog post.

Joining Newsom in opposing the measure are the California Teachers Association, the California Chamber of Commerce and some venture capitalists who are helping fund the “No” campaign.

The money raised by the tax wouldn’t count toward a state budget rule that says a certain percentage of revenue must go to K-12 education, a provision the teachers don’t like. Meanwhile, the nonpartisan Legislative Analyst’s Office said the proposal could force lower spending in other areas based on certain budget rules, something supporters of the measure dispute.

Business groups note that California’s personal income tax is already the highest in the nation, and the ballot measure would put it over 15% for the highest earners. Loren Kaye, foundation president for the California Chamber of Commerce, also warned that a rapid expansion of electric vehicles could strain the energy grid, an argument the Newsom administration has rejected.

Backers of Proposition 30 include the California Democratic Party, the Clean Air Coalition, the Natural Resources Defense Council and the American Lung Association, which have rejected characterizations that the measure is designed to benefit Lyft specifically, noting there’s no provision that would expressly set aside money for rideshare drivers.

While Newsom’s existing commitment to electric vehicle infrastructure is significant, the state needs a more stable long-term revenue source, supporters argue. The tax increase would last for 20 years if the measure passes.

“We need a consistent, reliable source of funding that keeps us going through good budget years and bad budget years,” said Bill Magavern, policy director for the Coalition for Clean Air. Referring to Lyft, he added, “If the goal is to limit pollution, does it matter who is driving the EV?”

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