California progressives have held ride-sharing companies hostage to their climate agenda. Now Lyft is trying to escape by hustling high-income taxpayers. Evidenced by the November ballot initiative the company is mobilizing to dip the wealthy into subsidizing state-mandated electric vehicles for its drivers.
Last week, the misleading Clean Cars and Clean Air Act headline qualified for the general election ballot after receiving an $8 million charge from San Francisco-based Lyft. The initiative would raise the top tax rate on income over $2 million by 1.75 percentage points to 15.05%, giving California the highest rate in the nation after New York (14.8%) moved it last year. Quite an honor.
Eighty percent of the estimated $3 billion to $4.5 billion in annual revenue from the tax would go to zero-emission vehicles and the remaining 20 percent to wildfire prevention. The latter aims to broaden the appeal of the measure beyond the coastal elites, or at least those who will not be affected by the higher rate.
The measure says 22.5% of revenue should fund an “equity and clean air account” for electric vehicle subsidies for low-income people such as Lyft drivers. Lyft’s apparent motive for funding the initiative is the California Air Resources Board’s (CARB) new mandate that ride-sharing companies ensure that 90% of their vehicle miles traveled are traveled in electric cars by 2030.
Lyft and Uber do not employ drivers directly, but they will have no choice but to require drivers to rent or buy an electric vehicle. This could severely limit their supply of drivers, since most low-income drivers cannot afford electric vehicles, even with the $7,500 federal tax credit and a $4,500 state rebate. Lyft drivers earn an average of around $32,000 a year, while the average price of an EV is over $60,000.
While the climate left has insisted that prices for electric vehicles will fall as battery technology improves, automakers are raising prices to offset rising material costs. Tesla has raised its base price for the long-range Model 3 by about $10,000 since last March to $57,990.
If the supply of rideshare drivers were to decrease – as has happened during the pandemic due to increased unemployment benefits – customer rates would increase. This would reduce demand and make carpooling a privilege reserved for the wealthy. The CARB mandate is a major threat to ride-sharing companies in California.
Lyft and its competitors could challenge the mandate in court, pressure lawmakers to overturn it, or support a referendum to do so. Instead, Lyft encourages its hostage takers by campaigning to raise taxes, which will drive more people to low-tax climates like Texas and Florida.
California has a $100 billion budget surplus this year thanks to federal largesse and a windfall of capital gains. Sacramento Democrats have plenty of money to spend on electric vehicle subsidies without raising taxes. But they’ve found they can compel corporations to raise taxes for them so they don’t have to prioritize spending or be held politically accountable.
This takes Stockholm Syndrome to a new level. Don’t be surprised if other automakers join Lyft’s tax campaign to help meet California’s mandate that zero-emission vehicles account for 100% of new car sales by 2035. We would sympathize with these companies if they were not such willing accomplices of the progressives. .
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