Last week brought some great news! In an opinion authored by Chief Justice Brutinel, the Arizona Supreme Court ruled that Proposition 208 is unconstitutional and remanded the case back to the trial court.
Now, it’s up to that court to determine whether the constitutional Education Expenditure Limit will be exceeded with Prop 208 monies. And with our state spending a record amount on K-12 education, we are nearly hitting it already—even without Prop 208 dollars.
This billion-dollar tax hike placed on the backs of Arizona’s small businesses will push us over. And that means the trial court must rule that Prop 208 is unconstitutional, killing it once and for all.
This is a big win for the State of Arizona and its taxpayers.
For months on end, Prop 208 voters were deceived. Every major funder, advocate, and organization behind the ill-conceived ballot initiative pushed the same narrative. They said that Prop 208 wouldn’t affect the Arizona economy or small businesses.
But with the passage of this disastrous piece of legislation, our state’s tax rate was raised dramatically to 8%, giving Arizona the ninth highest small business tax rate in the nation.
This wasn’t exactly the kick-off to the new year that small businesses were hoping for. And it even led some businesses—like Landmark Recovery which had been headquartered in Scottsdale—to leave the state.
But Prop 208 is now on its death bed. And once it’s officially struck down, Arizona’s economy will have dodged a bullet.
Of course, the Prop 208 crowd hasn’t given up. They are still actively collecting signatures on referendums to stop the historic tax reforms delivered by Arizona Republicans and signed by Governor Ducey at the end of June. And Invest in Arizona, a political committee sponsored by Arizona Education Association and Stand for Children, even filed a lawsuit against SB1783, which was passed to give tax relief to small business owners in our state.
Apparently, they don’t like the idea of providing $1.8 billion in tax relief to the people of Arizona—or giving every Arizona taxpayer a cut.
But what groups like Invest in Arizona don’t understand is that our state is currently sitting pretty, thanks to a $4 billion surplus. And Arizona taxpayers deserve a break, which is why the Arizona Free Enterprise Club and the Goldwater Institute have asked to intervene in Invest in Arizona’s lawsuit.
And it’s also why The Club filed a lawsuit of our own last month against Invest in Arizona’s tax cut referendums.
The time to cut taxes is now. It is undeniable that small businesses were hit hardest by the COVID shutdowns. And many of them are still trying to dig themselves out of the wreckage.
Invest in Arizona and anyone else who was involved in drafting Prop 208 need to accept the fact that this initiative is unconstitutional. The Arizona Supreme Court recognized that last week. And now the trial courts should do the same.
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