All California taxpayers would receive $400 rebates to defray gas prices under new proposal

On Wednesday, a bipartisan group of Democratic state legislators proposed sending a $400 rebate to every California taxpayer to help mitigate the impact of the recent spike in fuel prices.

The plan comes as demand rises to assist Californians in dealing with rising gasoline prices and rising expenses of food, housing, and other everyday necessities.

Republican lawmakers have pushed for a temporary suspension of the state’s highest-in-the-nation gas tax — 51 cents per gallon — but that looks unlikely due to Democratic parliamentary leadership opposition.

“This proposed $400 refund would pay the current 51 cents-per-gallon gas tax for an entire year, or 52 visits to the pump for the majority of automobiles,” the lawmakers said in a letter to Gov. Gavin Newsom, Assembly Speaker Anthony Rendon (D-Lakewood), and Senate President Pro Tem Toni Atkins (D-San Diego).

“Notably, we believe that a rebate is a better approach than suspending the gas tax, which would have a severe impact on funding for critical transportation projects and provides no guarantee that oil companies would pass on the savings to consumers,” the letter, obtained by The Times on Wednesday, stated.

The governor has been working with the Legislature to draught a tax relief plan after promising last week in his state of the State speech to put money “back in the wallets” of Californians who the dramatic increase in gas prices has financially hurt.

Officials with the Newsom administration have stated that numerous proposals are being considered; however, suspending or cutting the state gas tax is not likely.

Last week, Rendon and Atkins issued a joint statement to halt the proposal, stating that it would give insufficient aid and may slash money for critical road and bridge repairs across the state.

Rather than that, they advocated for broad tax relief to assist Californians with growing prices for petrol and food, housing, and other needs.

Assemblymembers Cottie Petrie-Norris of Laguna Beach, Cecilia Aguiar-Curry of Winters, Rebecca Bauer-Kahan of Orinda, Jesse Gabriel of Encino, Adam Gray of Merced, Jacqui Irwin of Thousand Oaks, Evan Low of Campbell, Blanca Rubio of Baldwin Park, Sharon Quirk-Silva of Fullerton, and Carlos Villapudua of Stockton introduced the proposal Wednesday, along with one independent, Assembly.

Numerous members of the Assembly Democratic caucus are seen as business-aligned moderates. They have set a news conference for Thursday to present further facts.

Republican leaders promptly endorsed the legislation and pledged to continue pushing for the gas tax suspension.

“This bill should be expedited to the Governor’s desk and targeted directly at working Californians who feel the pinch at the pump,” Assembly Republican Leader James Gallagher of Yuba City said Wednesday evening.

In their letter to Newsom, the lawmakers stated that the plan should be discussed during the state’s budget deliberations, which will begin in late April.

California’s tax surplus has varied in early estimates and will not become clearer until people submit their taxes next month. Nonetheless, most estimates have been far higher than the Democratic effort’s predicted $9 billion costs.

While politicians emphasize the advantage to all taxpayers — even those without legal immigrant status — California’s tax structure is heavily skewed toward the wealthy.

According to data published by the state Franchise Tax Board, nearly 1 in every 4 tax returns submitted in 2019 were by taxpayers earning more than $100,000 in yearly adjusted gross income.

Over 1.4 million taxpayers earning more than $200,000 per year, based on 2019 figures, would be eligible for $400 rebates under the idea, which would cost over $567 million. Recent tax statistics may indicate that the overall amount of the refund paid to high-income taxpayers has increased.

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If adopted by Newsom and signed into law, the idea would undoubtedly come closest to achieving the promise of California’s voter-approved government spending cap.

When revenues rise faster than most general government expenditure over two years, the 1979 legislation demands a combination of taxpayer rebates and additional school financing.

According to analysts, the state is expected to exceed the expenditure cap next year. Democrats avoided blanket refunds last year by spending almost $12 billion on a COVID-19 pandemic stimulus program open to California residents earning less than $70,000 a year.

In 2017, the Democratic-controlled Legislature approved Senate Bill 1, signed into law by then-Gov. Jerry Brown, imposing the state’s first gas tax hike in 23 years — 12 cents per gallon — to fund road and bridge repairs.

The law provides for annual increases in the tax on July 1, depending on the rise of the California consumer price index.