Rocio Hernandez / KJZZ
Teachers and educators gathered at the Arizona State Capitol on Wednesday, May 26, 2021 to watch lawmakers discuss a state budget proposal and plans for a flat tax rate.
Gov. Doug Ducey was not a fan of Proposition 208, a 2020 election measure to raise taxes for the wealthy to better fund Arizona K-12 schools.
After voters approved the measure in November, Ducey and GOP legislative leaders crafted a plan to reduce and flatten state income tax rates. In doing so, education advocates say the Republican majority on the state Capitol is trying to wipe out the gains made in the poll.
Rocio Hernandez / KJZZ
Phoenix kindergarten teacher Kelley Fisher and other concerned parents and educators gathered on Capitol Hill on Wednesday, May 26, 2021, to oppose a proposed flat tax rate.
“The flat tax is a horrible idea, and not just because of this year, but it’s happening and it will essentially undo what Arizona voters have said they want,” said Kelley Fisher.
Fisher, a kindergarten teacher in Phoenix, joined concerned parents and educators – dressed in Red for Ed shirts – on the Capitol last week. They had limited access to the State House and Senate buildings, but protested outside against the proposed 2.5% flat rate tax.
The GOP’s proposal follows Proposition 208, which levies a 3.5% surtax on wealthy Arizona’s who earn more than $ 250,000 as individuals or $ 500,000 as couples. The surtax would only apply to income in excess of these amounts.
The revenue generated by the surtax – which supporters say could exceed $ 900 million a year – would be used to hire new teachers and increase compensation for educators; mentoring and retention programs; and vocational and technical education.
David Lujan, executive director of the Children’s Action Alliance and one of the proponents of Proposition 208, says the flat tax rate itself will not affect new income from education. But the GOP’s tax plan would create a way for Arizona’s wealthy to avoid paying more taxes.
“The state will basically cover the tax obligations of these rich people through general fund income, which means we will have less money in the general fund to pay for things like money that goes to pay for our public schools. , our roads, our transport, all the other basic needs that the state provides, ”said Lujan.
The cut in revenues undoes the hard work of educators who supported Proposition 208, Fisher said, and ignores the will of voters who decided that the richer Arizonans should pay a larger share.
“Saying ‘No, we don’t care what the voters said, we’re not going to listen to this, we know it better’, get the legislature to say that it really leaves us out, and that’s very disrespectful to my opinion, ”Fisher said.
The flat tax could also cause legal problems for Republican lawmakers.
The Voter Protection Act prohibits the legislature from changing laws approved by voters unless a super majority of lawmakers agree to it. Even then, Lujan says any change must promote the intent of the law.
“I think this goes against the intent of Proposition 208, and I think there is certainly a voter protection issue there,” he said.
Daniel Scarpinato, Ducey’s chief of staff, says there is nothing in the tax plan that changes what voters approved in November – at least not the letter of the law that was on the ballot.
“There is no change to (Prop.) 208,” said Scarpinato. “The surcharge will be paid and the educational community will receive the related dollars. “
But Republicans aren’t just proposing a new 2.5% flat tax – they also want to cap an individual’s total tax liability at 4.5%. If the cap is 4.5% and the top income surtax is 3.5%, the state could only collect another 1% in income tax.
Howard Fischer / Capitol Media Services
Lawyer Paul Eckstein says the lump sum tax can violate the Voter Protection Act, at least indirectly.
“It’s a smart ploy. I think it’s half too smart, ”Eckstein said. “And the clear result is that people with certain incomes pay less tax than they would pay as intended by Proposition 208.”
Rocio Hernandez / KJZZ
Beth Lewis, executive director of Save Our Schools Arizona, says she and other education advocates are ready to launch a referendum against the proposed flat tax plan if that happens.
But that doesn’t mean Prop 208 supporters have a slam dunk affair, he said.
“The argument that members of the legislature make, and will make, is that the surcharge still remains, and therefore, when viewed up close, Proposition 208 is unaffected,” Eckstein said.
If a court challenge is filed, a case against the flat tax plan is almost certainly linked to the Arizona Supreme Court. But proponents of Proposition 208 like Lujan are already plotting a different way to challenge the GOP’s tax cut. In an email to a coalition of education groups, Lujan said a referendum would give voters the final say on the lump sum tax in the 2022 poll.
Beth Lewis of Save Our Schools Arizona said proponents of Proposition 208 were ready to collect signatures to block it, “and I don’t think it will work their way because polls show Arizonans don’t like it. the flat-rate tax ”.
The advocacy group has a track record of success when it comes to blocking Republican laws. In 2017, when the group was in its infancy, they succeeded in passing a law to extend school vouchers.
Opponents of the flat tax are expected to collect more than 118,000 signatures within 90 days of the end of the legislative session.