California has led the way in enacting ambitious legislation that seeks to ban the sale of internal combustion engine vehicles by 2035. One would therefore assume that any proposed law that furthers this objective would gain near-unanimous support from the governor and key advocacy groups, but this isn’t the case with regard to Proposition 30.
This ballot measure wants the rich — specifically those earning at least $2 million annually — to incur an additional 1.75% tax that will go toward helping people in poorer communities access electric vehicles. Some of that money would also be directed toward combating wildfires, an occurrence that has become more severe in recent years and threatens to worsen the climate change situation due to the millions of tons of carbon released into the atmosphere as those fires rage in the state.
The measure’s noble intentions notwithstanding, Governor Gavin Newsom has come out openly to oppose the ballot initiative. He says that it is a ploy by ridesharing company Lyft to have tax dollars go toward helping its drivers. Lyft has injected about $45 million into the campaign drumming up support for this initiative, which is slated to go before voters in a few weeks during the midterm elections.
Supporters of the measure say that the state is in dire need of a reliable source of funding to keep its EV incentives programs running in years when the state has favorable or unfavorable budget conditions. The money from this tax wouldn’t go to a general pool; rather, it would go directly to the spending accounts of the purpose for which it was created. Analysts say the program can provide a sure source of funding for EV adoption programs for the next 20 years, and this stability would create a meaningful impact in the disadvantaged communities where such help is needed.
However, opponents say the rich are already heavily taxed, with this proposal taking the income tax to at least 15% for the state’s wealthiest people. Currently, California has the highest income tax rate in the country. The California Teachers’ Association is also opposing the measure because no funding from this tax will go toward supporting K-9 education. The state’s Chamber of Commerce as well as several venture capitalists are funding the opposition campaign to this ballot measure.
With the Democratic Party in the state fully supporting the proposal, Newsom is set on a collision course with his party at a time when his reelection is almost a done deal. California is a major market for electric vehicles, so the outcome of this contest is likely to be closely watched by entities such as Mullen Automotive Inc. (NASDAQ: MULN) because it could impact how easily lower-income earners could purchase EVs.
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