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Greener—and Poorer

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eye on the news

Greener—and Poorer

Lower-income people shoulder a disproportionate share of the costs of California’s environmental policies. November 9, 2021
California
Politics and law
Infrastructure and energy

The Biden-Harris administration has praised California’s progressive elected officials as model leaders on climate and environmental issues. But what have those state leaders and their policies actually produced? A fixation on renewable energy, along with the closure of natural gas and nuclear plants, has helped drive the cost of electricity and gas in California higher than anywhere else in the continental U.S. And the lion’s share of these costs is borne by low-income families. Adjusted for cost of living, California has the nation’s highest poverty rate—about 7.1 million people—due in part to the high costs of essentials like housing, gas, and electricity.

This is largely the result of California’s regressive tax policies. The state sales tax, property tax, and any user fee, be it a road toll or bus fare, hits lower-income workers harder because these levies take no account of the payer’s lower earnings. A $100 fee hits the budget for a lower-tiered earner harder than it does a higher-tiered one. Consider the gas tax. One of the biggest financial shocks for consumers in recent months has been the ever-escalating cost of fueling their cars. A gas tax is a recessive excise tax that disproportionately penalizes lower- and middle-class households, since they spend a larger proportion of their annual income on gasoline than do high-income families.

California’s gas tax grew even worse for families this year when an automatic tax increase went into effect in July, thanks to Senate Bill 1, passed in 2017. The law incrementally and automatically raises the fuel excise tax each year, ostensibly to help fund road and bridge repairs. Californians affected by the bill have pleaded with Governor Newsom to intervene, given recent economic troubles, but he has remained silent on the issue. According to the Bureau of Labor Statistics, at $4.44 a gallon, Los Angeles-area consumers paid 32.1 percent more than the $3.361 national average in August 2021. These costs put a disproportionate burden on low-income residents.

Many progressive elected leaders favor nudging residents away from gas-powered cars altogether in favor of electric vehicles. But EVs cost on average between $10,000 and $15,000 more than a similar gas-powered model. EVs make up a mere 3 percent of car sales nationwide, but about 40 percent of EV registrations are in California. Nearly 80 percent of battery-powered cars sold last year in the United States were Teslas. A midrange Tesla costs $60,000 and up, but it’s a great deal for high-income earners in California, due to a $7,500 federal tax credit and generous state incentives and subsidies—“Green Welfare for the Rich,” as the Wall Street Journal described it.

Los Angeles County’s transit agency is now considering using congestion pricing to charge those driving on the roads and highways that they are already paying for with their state taxes, including at the pump. This pricing structure would charge drivers based on how far they travel, and how congested roads are when they travel. In essence, this is a toll, for which both high- and low-income drivers pay the same rate. You don’t have to be an economist to understand that low-income households typically drive more miles each day to get to work, since they can’t afford to live in more expensive urban areas where most of the jobs are.

The state’s green push has even followed Californians into their homes, where environmental groups want a complete ban on natural gas. The use of natural gas in buildings, however, accounts for only about 10 percent of California’s overall greenhouse gas emissions, according to the California Air Resources Board. Nevertheless, more than 40 cities and counties in California have tightened rules on natural gas in new housing, and a few have banned its use entirely, including San Francisco. Natural gas has been an important means of home heating for years, powering furnaces, water heaters, and clothes dryers, among other appliances. The main difference between gas and electric appliances is cost. A gas dryer will finish a load of laundry in about half the time of an electric dryer. For some reason, California’s green policymakers can’t grasp this.

Higher electric bills are no sweat for coastal elites, who have dramatically lower utility bills since temperatures in those areas rarely exceed 80 degrees and air conditioning isn’t needed for more than a few weeks during the year. If you drive 45 miles inland, however, where home prices are dramatically more affordable, 110 degrees is often the norm for summer months, making air conditioning essential. A family in the affluent enclave of Santa Monica could easily see less expensive electric bills than a family in Pomona. In other words, it costs more to be poor in California, thanks to the state’s hyper-regressive green policies.

Photo: GaryKavanagh/iStock

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