Opinion | A Lyft for California’s Tax Rates

The deceptively titled Clean Cars and Clean Air Act last week qualified for the general election ballot after getting an $8 million charge from San Francisco-based Lyft. The initiative would raise the top income-tax rate on earners making more than $2 million by 1.75 percentage points to 15.05%, giving California the highest rate in the country after New York City (14.8%) displaced it last year. Quite the honor.

Eighty percent of the tax’s estimated $3 billion to $4.5 billion in annual proceeds would go to zero emission vehicles and the other 20% to wildfire prevention. The latter is intended to broaden the measure’s appeal beyond coastal elites—or at least those who won’t be hit by the higher rate.

The measure says that 22.5% of the revenue should fund an “equity and air quality account” for EV subsidies for lower-income folks such as Lyft drivers. Lyft’s apparent motive for bank-rolling the initiative is the new California Air Resources Board (CARB) mandate that ride-share companies ensure 90% of their vehicle miles are driven in electric cars by 2030.

Lyft and

Uber

don’t employ drivers directly, but they will have no choice other than to require drivers to lease or buy an EV. This could severely limit their supply of drivers since most low-income drivers can’t afford EVs even with the $7,500 federal tax credit and a $4,500 state rebate. Lyft drivers make on average about $32,000 a year, while the average price of an EV is more than $60,000.

While the climate left has insisted EV prices would fall as battery technology improves, auto makers are raising prices to compensate for increasing material costs.

Tesla

has raised its long-range Model 3 base price by about $10,000 since last March to $57,990.

If the supply of ride-share drivers were to shrink—as occurred during the pandemic owing to enhanced unemployment benefits—customer fares would increase. This would reduce demand and make ride-sharing a privilege of the affluent. CARB’s mandate is a major threat to ride-share companies in California.

Lyft and its competitors could challenge the mandate in court, lobby legislators to override it, or support a referendum to do so. Instead, Lyft is abetting its hostage takers by campaigning to raise taxes, which will drive more people to lower-tax climes like Texas and Florida.

California has a $100 billion budget surplus this year thanks to federal largesse and a capital-gains windfall. Democrats in Sacramento have plenty of money to spend on EV subsidies without raising taxes. But they’ve discovered they can conscript businesses into raising taxes for them so they don’t have to prioritize spending or be held politically responsible.

This takes Stockholm Syndrome to a new level. Don’t be surprised if other auto makers join Lyft’s tax campaign to help meet California’s mandate that zero emission vehicles make up 100% of new car sales in 2035. We’d sympathize with these businesses if they weren’t such willing accomplices of progressives.