By Jim Small | AZ Mirror
The Arizona Supreme Court has ruled that voters cannot determine the fate of a flat tax proposal that Republican lawmakers and Gov. Doug Ducey championed last year.
Arizona’s constitution broadly lets voters refer new laws to the ballot, and that’s what happened to the $1.3 billion tax cut package that legislators approved in 2021. However, such referrals are not allowed for laws related to the “support and maintenance” of state government, and the Supreme Court said Thursday that the income tax cuts fall into that category.
That means the November ballot measure won’t happen.
The court ruled in a legal challenge brought by the Arizona Free Enterprise Club, which advocates for lower taxes and less government spending.
Under the tax plan, Arizona will shift to two income tax rates: 2.55% for people who earn $27,272 annually and 2.98% for those who earn more than that. Legislative budget analysts estimate those cuts will reduce state revenues by about $1.3 billion annually.
And if state tax revenues hit certain thresholds over the next few years — $12.8 billion in 2022 and $13 billion in 2023 and subsequent years — lower rates will phase in, ultimately hitting the 2.5% flat rate that was initially proposed. The earliest that can happen is 2023. (Budget analysts said last month that the state is on pace to shatter those marks.)
