I'm a fan of having a fixed connection fee. But varying it by income seems stupid. Why are you making transfer payments so complicated? If poor people in the state need more money, then just do that. This adds needless overhead and is unnecessarily complicated. Poor people pay a higher proportion of their income on _lots_ of things and it would be assinine to try and price every single one of them based on income rather than just doing a single, simple transfer payment.
Because they want to tax the middle class, not the rich.
The amount they charge won't make a dent in the .1% - but it'll be a hit to many people in the top 10%.
An extra $100 in taxes a month to a family making $180k (with house prices and taxes as high as they are in California) is not peanuts. That's literal line-items for middle class families: the cable bill, the car insurance, your kid's music lessons, etc.
$100 is peanuts to someone in the top .1%, though. That's just another Breakfast at Tiffany's.
It does feel like another attempt to milk the middle class by classifying them as "rich". We should stop treating productive people like doctors, trades people, engineers, small business owners, etc. who have worked their way into a ~150-500k range as if they are millionaire hedge fund managers or something.
The same thing happened with Obamacare, affordable for everyone meant almost free if you are poor and crazy expensive if you are making >50k. Meanwhile improving infrastructure or addressing why stuff is expensive is not even part of the discussion.
Its even more devious than that. This is household income, so two parents each making 90k - restaurant managers, entry-level corporate employees, etc. - would also qualify for the highest income tax bracket. 90k is not a high salary in much of California either, this isn't just for higher-earners.
I'm not even sure it would do that. Many "wealthy" people show virtually no income. This will create one more incentive to hide income for those who can afford to do so. And one more tax on those who don't play games with taxes.
Exactly! They should just lower taxes on poor people and increase taxes on rich people. No need to create administration overhead and costs (sucking more value from poor people).
This seems so obvious, but I am curious why someone thinks this is a good idea? My only guess is the people driving this change don't have the power to do it 'right' so this is the closest they can do?
California likes to do complicated stuff like this because it provides the appearance of improvement without threatening the status quo.
Rent control is a great example. It decreases housing supply, so it increases returns on investment for real estate in California, and increases homelessness. However, the politicians get to claim it does the opposite of those things because basic macroeconomics are too nuanced for campaign slogans.
Honestly rent control isn't as simple as you specified either. Implying that there are no benefits to rent control for those living in rent controlled units is just as deceptive as claiming that rent control will help everone.
The underhanded "rent would be lower so everyone would pay less" is fundamentally flawed. Certainly you can argue some people pay more due to rent control but we cannot pay more on average unless you decide to ignore that getting rid of rent control would also increase demand while increasing supply.
A "classic" scenario with rent control is a tenant lives in a home for 10 years and has below market rent. The LL wants the tenant to leave, so the landlord create more housing units [0].
But everyone throws their arms up, because the tenant can't afford market rent. A battle in court proceeds and the tenant ends up receiving a $100k buyout to leave.
Based on this relatively common situation, rent control prevents more housing from being built and causes prices to increase (the $100k buyout needs to come from somewhere).
Environmental review is just another way of saying NIMBY.
Developers building non-rental housing don't care about rent control. In fact, they benefit from rents being high, and from there being a housing shortage, as it makes non-rental housing more financially attractive.
Developers building rental housing shouldn't care much about it, either, as their financing is dependent on what they are going to rent the units out for, not what some grandma who lived in her apartment for 30 years is paying. Grandma's not part of the tenant market for new units, L5 SWEs making 400k/year are.
What % of a development's budget goes to this? I expect it to be less than 2% on the average, across the whole city.
It's not the first, second, or even fifth reason for the supply-side shortage. The costs are passed on to the buyers/renters, and despite that, demand continues to massively exceed supply.
Rent control is amazing deal for old people: Multi-million dollar payouts and insanely cheap rent, but these benefits are paid by the future generation of residents.
As you said, eliminating rent control would lower prices by 2% on average (saving future residents millions) and helps projects be built faster (by removing red tape).
If it was anywhere other than CA, I'd guess that this was the only way they thought they could pass increased transfer payments. But with the current power balance in CA, I find that hard to believe. Maybe they just think this will be more politically palatable than changing taxes? If so, I'm skeptical it will work out for them. This is pretty blatantly obvious.
It moves part of the rate to a fixed payment, and its still subject to the usual periodic CPUC rate process, which includes cost analysis, so if their costs really were going down, they’d see the rates cut.
The point is to deal better with the economics of established widespread distributed generation and to avoid disencentives to displacing existing residential gas use with electricity, and to similarly improve the incentive structure of home-charged BEVs vs. gasoline vehicles. Doing that takes splitting payment for generation (per kW) from connectivity (fixed) rather than inflating per kW costs to capture the average costs of connectivity.
> They should just lower taxes on poor people and increase taxes on rich people.
CPUC can change utility fees statewide, but any statewide tax change would take legislation, and if it includes an increase of any kind, anywhere, would take a supermajority in both houses of the legislature, and changing that would take a Constitutional amendment.
Government can create incentives for the people through taxes, but the people create incentives for government through Constitutional structures.
Of course, once CPUC has the proposed set up, and before it goes into effect, nothing stops the legislature (which is above CPUC), if it can find the votes, from eliminating the income gradated fixed fee portion of the rate, funding utilities the average cost of that out of state funds for all hookups, and adopting appropriate additional taxes to cover it (or any of a variety of other ways of moving the income gradation into the tax system), and while that would be a better way to do things, its better to do it the way proposed than not at all, which is the more likely result of relying on a legislative supermajority.
Adjusting taxation to benefit people with less wealth while using public money to help people is too difficult to actually accomplish because people with more wealth use that wealth to game the system in ways that helps them preserve (and grow) their wealth.
If that were true the top 10% income bracket wouldn't be paying the extreme majority of all the income taxes in the US (around 73% of all income taxes). Instead they'd pay very little.
The US is a highly progressive taxation country. By comparison, Scandinavian countries are far less progressive on taxation, the burden is spread wider, you're made to pay for eg your healthcare costs in said countries via high taxation. Also compare the typically modest US sales tax levels vs the high VAT taxes across Europe and elsewhere.
Here are the facts for the US taxation profile.
Top 1% of income earners - share of all income: 22%, share of all income taxes paid: 42%. Average income tax rate: 26%.
So you've got the top 1% paying 42% of all income taxes. If they actually controlled taxation (ie if the US system of government worked by bribery as is so often incorrectly claimed), it's very clear that wouldn't be how things work.
5% to 1% bracket - share of all income: 16%, share of all income taxes paid: 20%. Average income tax rate: 17%.
10% to 5% bracket - share of all income: 11%, share of all income taxes paid: 11%. Average income tax rate: 13%.
25% to 10% bracket - share of all income: 21%, share of all income taxes paid: 15%. Average income tax rate: 10%.
50% to 25% bracket - share of all income: 19%, share of all income taxes paid: 9%. Average income tax rate: 7%.
Bottom 50% - share of all income: 10%. Share of all income taxes paid: 2%.
Taxpayers in the US earning under $42,000 had an average income tax rate of 3%.
> If that were true the top 10% income bracket wouldn't be paying the extreme majority of all the income taxes in the US (around 73% of all income taxes
“Income taxes” are only about 57% of federal taxes on income. And the other 43% are bottom-weighted payroll taxes.
Everyone paying the government instead of a healthcare insurance company does not make the US more progressive. Yet your evidence implies that is the case.
Similarly talking about progressive income tax and ignore other forms of taxation is silly. Way more than 3% of the lower 50% income goes to taxes they just aren't federal income tax.
Because rich folk have the means to figure out loopholes to get around that. The old "i'm a philanthropist! (and totally not doing it for the tax breaks)" nonsense, along with the whole "and that's why Warren Buffett pays less taxes than his secretary!"
It never makes sense to do it for the tax breaks. unless your income tax rate was 101%, then the reduction in your taxes is always less than the donation, meaning it's always a net loss to you. Remember, donations lower the total taxable income, not the total amount paid, so it's effectively like you never earned the money you donated.
> The old "i'm a philanthropist! (and totally not doing it for the tax breaks)" nonsense,
How does this work? Suppose that someone donates $1 million to charity. They don't pay income tax on that money -- but they no longer have the money. I suppose that they could try to get clever about it by making a "buy yachts for our donors" charity, but that's explicitly illegal under the 501(c)(3) requirements.
Big donors do effectively direct the agenda of charities, and while direct “buy yachts for out donors” things are usually hard to get away with, there are lot of other ways for charities to be used for donor personal benefit, e.g., as a vehicle for social influence operations, political (as long as it isn’t too nakedly and specifically centered on a specific election) and commercial propaganda, and other things rich people would spend money on to benefit themselves and the businesses from which they derive income with or without a tax break for doing it.
often they'll loan out pieces of art to museums, so they get the tax benefit and they get to keep the art pieces. I'm not sure how many of them are giving cash away to non-profits they don't have some controlling interest in (seems it would be rare but maybe I'm wrong)
You're somewhat misremembering a real thing. It's possible to profit by donating a piece of art to a museum and claiming its value to be much greater than what you'd get on the open market. This is tax fraud, though, and the IRS will probably notice.
I've not researched this as much as I'd like to, but as far as I know, the entire point of this change is to facilitate/incentivize people to finally move away from natural gas to electric appliances.
To do this, folks will need a financial incentive to switch, which means an effective tax, but utilities can't really do that, so the idea is to just have everyone pay a large base for electricity, and then have diminishing returns on usage... where that doesn't exist for gas usage.
Think about your typical California resident's home set up. They have wall plugs, but then they will have a gas stove, gas heater, and gas water heater... and because of the "historic" nature of CA (non)development, many of these appliances literally belong in wasteful era of the 1960s.
The new structure will be painful for folks unwilling to switch to induction/electric range/stove, heat pump, and electric water heater, which is where the income-based rates become relevant. Every person of every income will have an incentive to switch to electrification, but a flat-tax would basically wreck poor folks, while providing zero incentive to change for wealthier folks.
In theory, I honestly think it's a pretty smart way of doing things, but there are some notable priors and caveats. The first prior I have is that climate change matters, and swapping natural gas usage for electric will actually notably reduce GHG emissions (I think this is the case). The caveats are that they need to come out and say this is about climate change (they do in the actually detailed texts -- https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energ... -- but they don't actually address it when discussing it. The second caveat I have is that this actually fucks over renters pretty hard.
That payment you are referring to is a Universal Basic Income, and there's nothing "simple" about it. The chances of it getting implemented state-wide are ~0. Meanwhile a utility company has control of its rates and can choose to push changes via those.
UBI is far from the only way to do a single transfer, and it certainly can be simple (from the perspective of actually running it, if not from the politics perspective). But I was not suggesting a change to the benefits system in CA. I was suggesting using whatever existing benefits programs there are (of which I'm sure CA has many), rather than trying to create a new one. California has _lots_ of ways of getting money to poor people, including changing the tax structure. There is no need to create a completely novel, complicated way of getting them more money.
> PG&E has to get these things approved by Sacramento
San Francisco, actually. CPUC has HQ in SF with Sac and LA field offices.
> just like a UBI would be.
The revenue for a UBI would take a legislative supermajority (because of Constitutional rules related to taxation), a change in utility rates takes a CPUC majority. Its a smaller margin in a different body.
So, no, the approval is not “just like a UBI would be”.
