California Ballot Measure to Tax the Rich to Fight Climate Change Became About Lyft

Californians will vote today on Proposition 30, a measure that would help pay for electric cars for low and moderate income Californians, the infrastructure to support them, and more funding to fight wildfires. It will fund these initiatives by taxing the rich, specifically an extra 1.75 percent on earnings over $2 million. And, if the polls are accurate, Proposition 30 will fail.

Why is Prop 30, an idea that is essentially to tax the rich to fight climate change, seemingly faring so poorly in a state where registered Democrats outnumber Republicans almost two to one?

One reason is that Prop 30’s opponents, including the state’s Democratic governor Gavin Newsom as well as the Republican Party and anti-tax stalwarts—like the Howard Jarvis Taxpayers Association and the California Chamber of Commerce—successfully billed it as a corporate handout for Lyft, the ridehailing company. In a frequently-run ad spot, Newsom calls Prop 30 “one company’s cynical scheme to grab a huge taxpayer subsidy.” 

But two experts on the electric vehicle transition and who are familiar with Prop 30 told Motherboard that is not true. 

“I would definitely not characterize it that way,” said Alan Jenn, a researcher at UC Davis who has worked on electric vehicle adoption among ridehail drivers, referring to the corporate handout narrative. “If you look at the bill language itself, there’s no reference at all ot Lyft or Uber or any ridehailing companies.”

Similarly, Gregory Pierce, a professor at the UCLA Luskin Center for Innovation, said “it’s ridiculous” to characterize Prop 30 as a corporate handout. “There is no carveout. There’s nothing about Lyft drivers or Lyft, or anything in particular benefiting them except that Lyft drivers have vehicles like other folks who might benefit from a lot more money for EVs.”

There is no debate that Lyft stands to benefit from Prop 30, which is why it has contributed a whopping $45 million to Yes on 30 (the next highest donor is the International Brotherhood of Electrical Workers PAC with $1 million). California will require ridehail companies to provide virtually all of its rides in electric vehicles starting in 2030, but Uber and Lyft don’t own their fleets, and drivers have little incentive or desire to switch to electric vehicles because they’re expensive and a hassle to charge if you live in an apartment or park on street. The implication from Newsom and other No on 30ers is Lyft wrote the proposition so it wouldn’t have to pay for electric cars itself. 

And many have fallen for it. Five major California papers endorsed No, citing the “special interest money grab,” in the words of the Orange COunty Register editorial board, or The Sacramento Bee’s suggestion that "Prop. 30 is Lyft’s way of getting someone else to pay the bill for the transition from gas- to electric-powered cars."

But this argument misses two fundamental points. The first is that ridehail drivers make up a tiny portion of the cars on California’s roads. Jenn said before the pandemic there were around a couple hundred thousand vehicles registered with Uber and Lyft’s platforms out of 30 million cars statewide. Without any language in the proposition that targets ridehail drivers—and, again, there is none—ridehail drivers make up a tiny proportion of the people the bill would subsidize. To imply it is a corporate handout to Lyft is to ignore the millions of Californians who would get subsidies and have nothing to do with Lyft.

Second, the proposal does offer some targeted measures, Jenn said, but they have nothing to do with Lyft. For example, people who live in high-emission neighborhoods will get extra incentives to buy electric vehicles to help the local air quality, perhaps up to $10,000. “This is supposed to be to help the transition to electrification for some of the folks whom that transition would be costly,” Jenn said.

This isn’t to say Prop 30 is perfect. And it is being criticized on other grounds, such as driving up the marginal tax rate for rich people so high they will leave the state—it is not clear if an extra $17,500 in taxes on every million dollars people earn will be enough to force them out of the state—or that it improperly settles an important policy issue by bypassing the legislature. Another line of argument is there is plenty of other money for EV initiatives from the federal and state level.

But those arguments seem to be less successful than the corporate handout line. For his part, Pierce said it is not clear how the money will be spent besides the top-line commitments to broad goals which he thinks is the most legitimate criticism of Prop 30. He said this lack of clarity is the main factor Californians should take into consideration. “I think the question should be for California voters: Do you think now is the time to commit to a large amount of spending without knowing all the details about how effective it would be if spent for EVs and wildfires?” 

He sees both sides of the argument. Time is running out on reducing emissions. More money is needed and there is no guarantee it will be coming next year. But if the money isn’t spent well or on the wrong programs, then that won’t help much either.

“But there’s no argument about Lyft,” Pierce said. “There’s no argument that we don’t need the money. But is now the time and is this a responsible enough proposal to say yes right now?”