Dogged education advocates say they’ve turned in enough signatures to repeal the legislature’s flat tax, which essentially gutted a voter-approved effort to produce more money for schools.
The Invest in Arizona Now Coalition turned in 600 boxes of petitions, seeking a repeal of the state’s new 2.5% income tax limit.
The petition drive marks the first in a series of efforts to undo a slew of new state laws. Other laws facing challenges include voting restrictions and a state ban on school districts and universities from requiring students to wear masks to reduce the spread of COVID and a restriction on local police review boards.
Opponents of the referendums are expected to go to court in an effort to get a judge to throw out the signatures — a ploy that has worked in the past.
The referendum on the big cut in the state’s income tax rate remains among the most controversial, but backers collected twice as many signatures as they needed.
Advocates for the tax cut that would go mostly to corporations and high-income taxpayers say reducing the state’s income tax rate will lure new businesses and residents.
Advocates for education say it effectively guts the voter-approved income tax surcharge for taxpayers making more than $250,000, which would have produced nearly $1 billion annually for one of the worst-funded public school systems in the nation.
Reducing the top state income tax rate to 2.5% would cut state revenues by an estimated 25%. That’s not a big problem this year, with the state sitting on billions in federal COVID relief. But it could cause a crisis for schools down the road, say advocates.
“Our classrooms can’t afford to lose a dollar, much less a billion dollars,” said Beth Lewis, executive director of Save Our Schools Arizona.
Children’s Action Alliance President David Lujan said, “We’re really thrilled we can turn in more than 215,000 signatures to put the horrible flat tax on the November 2022 ballot.” It would take 118,000 valid signatures to put a referendum on the ballot.
The coalition that won passage of Proposition 208 more than a year ago rallied again to back a referendum on the state’s income tax cut. Proposition 208 boosted the top rate for high-income taxpayers by 3.5% — leading to a top rate of about 8%.
Lujan said the wealthiest taxpayers would reap most of the benefits from the flat tax proposal “This is a tax giveaway for the rich that would decimate Arizona’s future by taking away more than $1.5 billion every year that would otherwise go to Arizona’s public schools, affordable housing — for all the priorities that Arizonans care about.”
Arizona Gov. Doug Ducey has staunchly defended the legislature’s big reduction in the top income tax rate. He has vowed to eliminate the state’s income tax altogether if possible. The flat tax could ultimately reduce state revenues by $1.9 billion annually, suggest analysts.
“Each and every Arizona taxpayer, no matter their income, will experience a tax cut under our historic reforms.”
The state legislative budget analysts concluded the flat tax will save people making between $75,000 and $100,000 about $231 annually. It will save people earning between $500,000 and $1 million, about $12,000 annually.
National studies show Arizona continues to rank 48th in per-student spending, with the largest class sizes and among the lowest teacher salaries in the country. The state also generally has below average student test scores and among the lowest high school and college graduation rates.