Ride-hailing service provider Lyft (NASDAQ:LYFT) is supporting a proposal to tax the richest Californians an additional 1.75% on income above $2 million, for the next 20 years. The state’s green initiative aims to reduce carbon emissions created by both vehicle usage and wildfires.
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Notably, the state will earn around $100 billion in additional taxes that will be used toward vehicle electrification and wildfire reduction measures. 80% of these will be spent toward EV charging infrastructure and pushing consumers to buy electric vehicles (EVs) and the rest 20% would go to fight wildfires. The proposal, if approved, would increase the upper bracket of taxes to 15.05%, the highest in the U.S.
California has decided to make 90% of ride-sharing miles to be traveled by fully electric vehicles by 2030. Lyft supports a YES campaign which is also backed by the Democratic Party, environmentalists, and union groups, a WSJ report stated. Lyft has reportedly funded $47.8 million to the State Legislative’s proposal labeled “Proposition 30.”
Interestingly, there is a parallel campaign running titled “NO” that opposes the state’s plans to tax the rich. The NO campaign is headed by Governor Gavin Newsom and is backed by California’s most powerful teachers’ union, business group, and the state’s Republican Party. The NO campaign also supports the cause of reducing emissions but is against taxing the rich excessively.
Governor Newsom is also running an ad urging voters to reject the proposal that is due for a vote in November. Last month, the Governor noted, “It’s a big tax increase that disproportionately benefits a few large corporations.” Furthermore, the ad also calls the campaign “a cynical scheme devised by a single corporation to funnel state income tax revenue to their company.”
Meanwhile, Lyft co-founder and CEO Logan Green cited his support for the campaign stating, “What I see in California scares me… This is our new normal: record-setting wildfires plaguing every part of the state, unrelenting drought, and extreme heat.”
Opposers argue that Lyft is supporting the measure because it stands to benefit from the EV incentives of the proposal. Approximately 16% of Lyft’s total rides in 2019 were hailed in California and, thus, is an important market for the company.
Moreover, opposers are worried that increasing the taxes on the rich could demotivate businesses in the state and could also hamper the ability to raise taxes in the future in the event of an emergency. Also, opposers believe that such a huge amount of funding toward decarbonization would reduce the funding toward more important measures such as education, and homelessness.
What is the Forecast for LYFT Stock?
On TipRanks, the average Lyft price forecast is $29.29, which implies a massive 148.8% upside potential to current levels. Also, Street remains split on Lyft stock with a Moderate Buy consensus rating. This is based on 12 Buys versus 12 Holds, and one Sell. Meanwhile, the stock has lost 73.6% so far this year.
