Wealthy Californians Face A Tax-The-Rich Onslaught At Ballot Box

Wealthy people may be less likely to depart: A study by researchers at Cornell University and the U.S. Treasury showed that millionaires are “highly embedded” in their states and tax changes have had small effects on their migration. Many of the richest Californians also have strong ties to industries like tech and entertainment that are deeply rooted in the state.

Proposition 30 aims to raise money for helping Californians buy electric vehicles, build charging stations and hire firefighters for wildfires. Its biggest financial supporter has been Lyft Inc., which donated at least $45 million, in advance of a state rule requiring rideshare companies to use zero-emission vehicles for 90% of their customer miles driven by 2030. 

Newsom, a Democrat running for re-election in November, called Proposition 30 “a special interest carve-out” to put the interests of Lyft ahead of California’s welfare. He argues that the state has already dedicated $10 billion toward electric-vehicle related programs, and pointed to the role of wealthy taxpayers in fiscal booms and crippling deficits.

“California’s tax revenues are famously volatile, and this measure would make our state’s finances more unstable—all so that special interests can benefit,” the governor said in a statement.

The state posted a record $97.5 billion surplus in this year’s budget, the largest in its history, thanks to soaring financial and real estate markets that padded wealth for its highest earners. 

But that’s likely to change as the economy slows. The state’s nonpartisan legislative advisor warned in August that revenue from California’s three major tax sources will likely fall short of forecasts during the current fiscal year.

—With assistance from Carey Goldberg and Ben Steverman.
This article was provided by Bloomberg News.