A $400 tax refund to offset California’s high gas prices? That’s how it would work


A group of Democratic lawmakers on Thursday proposed sending every California taxpayer a $400 tax refund check to help ease the financial pain they’re suffering from gas prices and the rising cost of basic necessities.

But it’s by no means a done deal, so don’t expect to see any checks in the mail next week.

The following is known so far:

Who would receive tax refunds and when would they be sent?

All Californians paying state income taxes would receive a $400 rebate regardless of income. So in theory, billionaire Facebook co-founder Mark Zuckerberg and the manager of your local In-N-Out would both get a $400 rebate. Since the payments would be sent to each individual taxpayer, married couples would receive $800.

MP Cottie Petrie-Norris (D-Irvine) said the rebates should be sent out as soon as possible and the state should not wait for the Legislature and Gov. Gavin Newsom to agree on the full state budget, which traditionally closes at the end of June .

“Our goal is to do that in the spring, and all the people here are going to be working really, really hard to get there,” Petrie-Norris said at a news conference Thursday outside the state Capitol.

Petrie-Norris said the intention of the group of Democratic lawmakers — which included moderate lawmakers — was to bring as much relief as possible to as many Californians as possible. However, she acknowledged that decisions about who would receive a rebate and how much they would receive would be negotiated in negotiations with legislative leadership and the governor.

Republican Assembly Chairman James Gallagher of Yuba City said he supports the proposed tax refunds as the Newsom administration expects a budget surplus of $45 billion. Gallagher also wants to suspend the state gas tax.

“There is an urgent need right now given the high costs across the board, not just for petrol but all of our day to day living expenses have increased. People need relief now,” Gallagher said.

Why $400?

Petrie-Norris said the $400 tax refund figure was used because it represents the amount a typical Californian pays in state excise taxes on gasoline per year. She said California drivers fill up their gas tanks an average of 52 times a year. California’s highest gasoline tax is 51 cents per gallon.

“This is a year-round gasoline tax holiday,” she said.

Why not just lower the state gas tax?

Republican lawmakers are pushing for a six-month suspension of the state gas tax, arguing that it would be the most effective way to provide direct financial relief to Californians battered by high gas prices.

“The thing about a gas tax suspension is that of course it’s aimed at people who are feeling the pain,” said Assembly Member Kevin Kiley (R-Rocklin). “People who drive the most because, say, they live in a rural area, or maybe have a long commute to work, or maybe have multiple children they have to drive to school, will see the benefit relative to face the pain they are feeling right now.”

Kiley’s gas tax suspension bill fell through Monday in the Democrat-controlled state assembly, though lawmakers said they plan to force another vote on the proposal next week.

Assembly Speaker Anthony Rendon (D-Lakewood) and Senate Representative Tem Toni Atkins (D-San Diego) said the gas tax cut would jeopardize critical repair work on California’s crumbling roads, bridges and other key transportation projects. They also said it would not provide any significant financial assistance to Californians.

Both the governor and Democratic lawmakers also said there was no guarantee oil companies would cut gas prices if the tax were suspended, warning that companies could pocket the savings instead of handing them to drivers at the pump to pass on.

Kiley dismissed this as political shenanigans. He noted that Democratic Gov. Ned Lamont of Connecticut has asked his state legislature to suspend one in two taxes on 25 cents a gallon gasoline through the end of June. Kiley also noted that the impartial Legislative Analyst’s Office announced a February report that cutting California’s gas tax would save drivers money when they gas up.

“Available evidence suggests that lower excise taxes would likely result in lower retail prices. The exact impact on retail prices is uncertain, but most of the tax rate change would likely carry through to prices at the pump,” the report said.

What are the odds of a $400 tax refund going through?

It’s clear that the governor and the Democratic and Republican leaders in the Legislature want to give tax breaks to Californians, who have been hit hard by high gas prices and rising costs for groceries, housing and other necessities. However, due to the give and take in most Sacramento spending negotiations, the odds that the $400 tax refund proposal will go through are not high.

Newsom and the Democratic Legislature leadership continue to negotiate the best ways to ease the financial pain at the pump, and some of the ideas discussed include sending tax rebates to Californians with registered cars and sending out stimulus checks. In his January budget proposal, Newsom called for the cancellation of a July increase in California’s gas tax, suggesting he’s not totally opposed to messing with the state’s fuel taxes.

A tax refund or stimulus could also be tailored to Californians most in need. In response to the COVID-19 pandemic, the governor and legislature approved a “Golden State Stimulus” program that sent $600 in checks to residents earning up to $75,000 a year. A $400 tax refund to offset California’s high gas prices? That’s how it would work

Grace Reader

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