Supreme Court won’t let Arizona voters weigh in on big tax cut; state’s highest earners benefit most

“The Supreme Court strikes again,” said David Lujan, executive director and CEO of the Arizona Children’s Action Alliance, part of the Invest in Ed coalition that objected to the tax cut. 

By Mary Jo Pitzl | Arizona Republic

Arizonans will no longer be able to vote for a citizen referendum seeking to overturn a $2 billion tax cut due to a Arizona Supreme Court ruling.

A citizen referendum seeking to overturn a $2 billion tax cut is off the November ballot, the state Supreme Court ruled Thursday, exasperating education supporters but delighting proponents of Arizona’s new flat-rate income tax.

The order came two days after the high court heard arguments that the flat tax, which lawmakers approved last June, can’t face a voter challenge because it was a money matter that provided for the “support and maintenance” of state government.

It overturns a ruling from a Maricopa County Superior Court judge who last year rejected that argument since the tax reduced, and did not add, money to state coffers.

The immediate impact is Arizona’s income tax is on track to drop to 2.5% for all taxpayers by 2024, and Proposition 307, championed by education and civic groups, is off the ballot.

The highest earners in Arizona will see the biggest benefit from the tax change: as much as a $350,000 savings a year when the tax is fully in effect. The lowest earners will benefit about $4 a year, according to legislative budget estimates.

“I’m thrilled,” said House Majority Leader Ben Toma, R-Peoria and the architect of the flat-tax plan, which was part of last year’s state budget. It is the largest tax cut in state history, collapsing a four-tier tax rate that tops out at 4.5% down to 2.5% by 2024.

However, the tax was put on hold last fall when education supporters submitted thousands of voter signatures to refer the matter to the 2022 general election ballot.

“The Supreme Court strikes again,” said David Lujan, executive director and CEO of the Arizona Children’s Action Alliance, part of the Invest in Ed coalition that objected to the tax cut. 

The order comes just one month after Proposition 208, a tax increase on high-income earners intended to benefit schools, was terminated in the wake of another Supreme Court ruling.

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