Should both rich and poor get the California gas tax refund?


In a state that is home to the nation highest poverty ratemost billionaires and a shrinking middle class, who deserves financial relief when prices are soaring?

That question is at the center of ongoing discussions at the State Capitol as California is, and is likely to be, grappling with a rise in gas costs a record high budget and surplus.

A group of Democrats proposes to send a discount of $400 to every California taxpayer, regardless of income or whether they own a gas-powered car. Republican lawmakers have called for the gas tax to be suspended, an approach they say would mean faster aid and less negotiation. Gov. Gavin Newsom made a vague promise to “put money back in Californians’ pockets” but has backed out in a pitch to tie discounts to vehicle ownership.

On Friday, the Democratic leadership put forward another proposal that would give Californians at least $200 and increase that amount based on the number of dependents they have. This plan would include households earning up to $250,000 but would exclude higher-income Californians.

While a universal check-for-all program is likely to be well-received by the general public, lawmakers will have to decide how far to stretch potential funding when tracking earnings in the coming months, and how to hierarchy the companies best addresses California’s many needs.

Advocates across the state say aid should start with more for those who need it most, rather than an equal share for everyone.

Assembly spokesman Anthony Rendon (D-Lakewood) said he supports a plan that gives more to low-income Californians, citing the state’s huge wealth gap.

“That’s exactly the kind of thing that I advocate,” Rendon said in an interview with the Times on Wednesday. “Providing direct checks to CalWorks beneficiaries or even sending a check to a certain tier of taxpayers — all of those are things that could be great.”

Rendon said in a statement Thursday that the $400-for-all plan “eliminates some of the pitfalls of other proposals like a gas tax holiday,” which Democrats said wouldn’t help consumers as much as a cash payment, which they can spend on groceries, rent and other necessities. Democratic lawmakers are also backing a plan not specific to drivers, citing climate concerns.

The spokesman said the latest plan, led by Rep. Cottie Petrie-Norris (D-Irvine), “shows Californians that the Legislature aims to back them.” But he also said Wednesday that he would not support a proposal to send checks to the very wealthy, citing Los Angeles-based billionaire philanthropist Gary Michelson, whom he called a friend, as an example.

“[Michelson] is a darling of a man, but he doesn’t deserve a check either,” said Rendon. “A lot of people have suffered lately. A lot of Californians are struggling and we are looking for a solution to financially support those Californians in particular.”

Senate Speaker Pro Tem Toni Atkins (D-San Diego) said earlier this week she is urging “significant relief, particularly for low- and middle-income Californians” and “not just for those who are drivers.”

Under a plan unveiled Friday, an estimated 90% of taxpayers would receive a $200 refund under the proposal. The plan also provides an additional $200 for each dependent to help larger families who are facing higher costs.

Undocumented immigrants and low-income Californians who do not have to file taxes would also receive refunds under the plan.

A new report by the nonpartisan Public Policy Institute of California found that higher-income families would spend more on gas and receive the greatest benefit from a gas tax refund or tax exemption.

Republican lawmakers backed the $400-for-all plan but are still pushing for a gas tax cut in addition to a rebate. They argue that all taxpayers deserve a cut in government budgets, especially as the wealthiest pay more in taxes.

“It’s a reasonable response,” Assembly Member Kevin Kiley (R-Rocklin) said at a news conference Thursday. “We have this surplus, what should we do with it? Maybe we should give it back to the people we got it from.”

Mike Herald, director of policy advocacy for the Western Center on Law & Poverty, sees the fairness issue differently.

The price of gas is the same for everyone, even if incomes vary, he said. While some people living in poverty cannot afford a car, low-income Californians have fewer opportunities to work from home during the pandemic, and a car is a lifeline.

“We often do things like this where we issue policies that disproportionately affect people on low incomes, and then when we get into those kinds of crisis situations, we don’t always make sure that the people who are already paying are also paying many.” the first to get relief,” Herald said.

Questions about justice have put Democrats, who are pushing the universal rebate plan, in a tight spot.

MP Jesse Gabriel (D-Encino), who touted the $400 universal plan, said it doesn’t have to be a rebate for everyone or a rebate only for low-income residents — it could be both.

“The size of the surplus allows us to do both,” Gabriel said at a press conference on Thursday. “That will not remain the only proposal on the table. That’s not the only thing we can do.”

The current proposals would have a wider reach than the governor’s “Golden State Stimulus” Last year’s pandemic relief scheme that only benefited taxpayers making up to $75,000 a year.

According to poverty measures adjusted for California’s cost of living, middle-class income for a family of four renting in Los Angeles County could reach more than $227,605 and as much as $261,623 in parts of the Bay Area.

“Of course we know that [the $75,000 limit] is not high enough to be middle class in many parts of the state, and I suspect that’s part of the tension the government is focusing on — it’s trying to address that there are low-income Californians who are very negative about rising Costs are impacted, but so are middle-income Californians who are challenged by the state’s cost of living,” said Chris Hoene, director of the California Budget & Policy Center. “The reality is that there are many different ways that people of different incomes are getting by in this state.”

But Hoene, whose group advocates for programs targeting the state’s lowest-income residents, called the Golden State Stimulus “well structured” and said his primary concern was to trim the state budget in favor of the wealthy.

“Basically, what we want to avoid is wasting state resources by lending to Californians who are not currently in need,” he said.

Newsom administration officials said details of its tax refund plan would be announced next week, noting initiatives already in place “focused on improving affordability,” including state-funded health care and childcare.

“The governor is committed to bringing real relief to struggling Californians. We’re working on a proposal that will help Californians with rising gas prices and fund public transportation so they can take the pressure off drivers directly,” spokeswoman Erin Mellon said Thursday.

More than a third of Californians live at or near the poverty line. At the same time, nearly one in four tax returns filed in 2019 came from taxpayers with annual adjusted gross income of more than $100,000, according to data compiled by the state Franchise Tax Administration.

Families in the state’s lowest income bracket spend a larger proportion of their budgets on gasoline than other income brackets, according to the PPIC report. According to the report, middle-income families also spend more of their budgets on gasoline than high-income families.

Sarah Bohn, the institute’s economics and poverty researcher, said a more targeted approach to the lowest-income families is best, but a review for everyone would probably be easier for the state — and some middle-class Californians who don’t who are entitled to social assistance could also claim the assistance.

“I think the ideal way to do that is to target those who are really weighed down by higher prices and haven’t experienced revenue increases as much as other groups. But this is difficult; We don’t have many mechanisms for that,” said Bohn. “A lot of middle-class families actually spend most of their resources on basic things in their budget and then don’t have a ton left.”

Discussing rebates has sparked a series of debates about the kind of government policy changes California needs in the face of a record-high budget, with advocacy groups clamoring for more permanent measures rather than slashing one-off checks.

Climate activists said any rewards for owners of gas-powered vehicles go against California’s environmental goals.

Matthew Lewis, a spokesperson for California YIMBY — which stands for “Yes, in my backyard” — seized the moment to urge state officials to reconsider housing policies and workers’ reliance on commuting.

“It’s good policy to help low-income people by giving them money, but frankly, if the government is serious about addressing what these people really need, it’s affordable housing closer to their jobs. Giving people gas tax rebates will not solve this problem,” he said. “This is climate policy. The amount you charge for gas is a climate policy, so let’s treat it like that.” Should both rich and poor get the California gas tax refund?

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