California's gas prices are the most expensive in the country and are at $6.32 per gallon, as opposed to $4.90 nationally in the report from the American Automobile Association. This season, Newsom offered a rebate of $400 for California motorists, and asked the legislature to delay an increase in the gas tax of 3 cents per gallon which was set to be implemented by a previous legislation backed by Democrats. The legislature was not willing to delay the tax hike, but they did negotiate with Newsom regarding the distribution of rebate checks.
The final plan will grant California households the equivalent of $1,050 to help them pay for fuel costs. Capital Public Radio reported:
In the tax rebate program, households earning as high as $75,000 for individuals, or $150,000 for joint filers would get $350 for each taxpayer, and an additional $350 for households with at minimum one dependent. Thus, a single parent will receive $700, while families with two parents would get $1,050.
The amount would be reduced by $250 for each taxpayer in households with a total of $125,000 for individuals, or $200,000 for joint filers and up to $200 per taxpayer for households that earn as much as $250,000 for individuals, or $500,000 in joint filings. In both of these levels, parents will receive an additional $200 or $250 depending on whether they have at minimum one dependent.
Californians with incomes of more than $200,000 for an individual, or $500,000 for joint-filers, will not be eligible for a rebate. The relief package includes $1.1 billion in aid to people who receive Supplemental Social Security, also known as CalWORKs.
CalMatters mentions that the deal will also assist the state in implementing what's called the Gann limit which was a reform plan adopted in the 1970s and prohibits lawmakers from exceeding a specific amount of spending per capita. If the state is spending more than the amount allowed then it must issue taxpayers a refund. Instead, the rebate for gas is redistributive and targeted at those with low incomes.
The gas rebate would be the third stimulus Newsom has implemented, following his “Golden State Stimulus” that provided $600 to families with low incomes in 2021. Then there were the similar checks Newsom faced in recall elections, issued for two thirds of California households as part of the “California Comeback Plan” later in the year. Democrats are facing a tough midterm election in November.
Vice President Joe Biden has proposed a national gas tax holiday for the summer — a plan that his former running mate, the then-candidate Barack Obama, dismissed in 2007 as a “gimmick” offered by his opponents in a low-cost and desperate effort to gain votes.
Certain economists have observed that gas tax holidays, which are temporary, and stimulus checks increase the rising inflationary pressures making prices rise across the board which is affecting low-income families.
California's gasoline prices are unusually high due to a mix of factors. These include the restrictions in local manufacturing, sluggish supply chains due to the limited refinery capacity, heavy regulations, as well as high taxes. Democrats do not have plans to alter these policies.