Attempts to cancel Arizona tax cuts facing court challenge
(The Center Square) – The Arizona Free Enterprise Club (AFEC) filed a lawsuit on Wednesday to stop a petition filed by the Invest in Arizona campaign, which would allow Arizonans to vote on the state’s new flat-rate income tax in 2022.
The Arizona free-market advocacy group, club president Scot Mussi, and Yavapai County registered voter Diane Schafer are listed as plaintiffs. It argued that the referendum drive by Invest in Arizona, a political committee sponsored by Arizona Education Association (AEA) and Stand for Children, violates Article 4 of the Arizona Constitution, which prohibits referendums of legislation concerning revenues and appropriations “for the support and maintenance of the departments of state government and state institutions.”
The lawsuit read that filing the petitions would “injure the Plaintiffs and all Arizona taxpayers by unconstitutionally delaying the effective date of non-referrable laws duly enacted by the elected Legislature and approved by the Governor.”
The Invest in Arizona campaign, officially launched on July 17, must gather 118,823 valid petition signatures by September 28 to refer three education bills passed this legislative session to the 2022 ballot. If Secretary of State Katie Hobbs verifies enough signatures, the tax cuts would be put on hold until the election. Invest in Arizona supporters would then campaign for Arizonans to vote NO on the referendums, and if successful, Gov. Doug Ducey’s tax cuts would not take effect.
Invest in Arizona’s referendums seek to challenge Senate Bills 1783, 1827, and 1828. The SB 1828 referendum would overturn the 2.5% flat tax. The SB 1827 measure would overturn the 4.5% income tax cap. Finally, the SB 1783 referendum would remove the new tax bracket created for small businesses.
Mussi said the new legislation benefits taxpayers in Arizona.
“All 3 bills directly provide for the support and maintenance of the state, were key aspects of the state’s budget & therefore are not referrable.”
Invest in Arizona said that Ducey’s tax cuts in the last session undermined the will of voters who passed Proposition 208, which placed a 3.5% income tax surcharge on those in the top-earning bracket in Arizona to fund education.
“It’s time to let the voters decide if we should reject Governor Ducey’s handout to millionaires and instead Invest in Arizona,” AEA President Joe Thomas said in a statement. “Our students and beautiful state are worth it.”
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