The California Chamber of Commerce Board of Directors has voted to oppose the California Tax on Income Above $2 Million for Zero-Emissions Vehicles and Wildfire Prevention Initiative. The measure will appear on the November 2022 California ballot.
In a statement released today, CalChamber President and CEO Jennifer Barrera pointed out that the initiative ignores the economic challenges currently faced by California businesses.
“California already has the highest personal income tax, gas tax, and sales tax rates in the country,” said Barrera. “We are dealing with record high inflation and economists are predicting a recession. The last thing California needs right now is a tax increase. Higher taxes—especially now—are off the table.”
Oppose: A Tax on Income for Zero-Emission Vehicles
The California Tax on Income Above $2 Million for Zero-Emissions Vehicles and Wildfire Prevention Initiative proposes to increase the tax on personal income above $2 million by 1.75%. The income tax increase would raise about $3 billion to $4.5 billion a year (depending on the state of the economy), and end on January 1, 2043, or, beginning in 2030 following three consecutive years in which greenhouse gas emissions were at least 80% below 1990 levels. Revenue from the tax increase would be allocated for zero-emissions vehicle subsidies, zero-emission vehicle infrastructure, such as electric vehicle charging stations, and wildfire suppression and prevention programs.
California has the highest personal income tax rate in the country at 13.3%, while Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming do not impose any income tax. In 2019, the top 8% of income taxpayers paid 75% of the state’s personal income tax (PIT) revenue. In the 2022 budget year, PIT revenue will account for nearly two-thirds of all state General Fund revenues.
The CalChamber opposes the California Tax on Income Above $2 Million for Zero-Emissions Vehicles and Wildfire Prevention Initiative because layering more taxes on top of the current PIT rate of 13.3% will inevitably drive more high earners out of the state and decrease General Fund dollars.
“Given the state’s current ability to spend on nearly any desired cause, tax increases are unnecessary, and efforts should be focused on how existing General Fund dollars can be spent on assisting Californians,” Barrera said.