Backers of Prop 208 Are Trying to Stop Tax Cuts That Benefit All Arizonans

Backers of Prop 208 Are Trying to Stop Tax Cuts That Benefit All Arizonans

Arizona taxpayers have had good reason to celebrate over the past few months. Not only did Republicans deliver historic tax cuts earlier this year, but the Arizona Supreme Court ruled that Prop 208 is unconstitutional.

This should be a time of rejoicing for the people of Arizona who will get some much-needed relief while still trying to recover from COVID shutdowns.

But the backers of Prop 208 won’t give up. They are angry and upset that their unconstitutional tax hike was struck down. Now, their latest move is to target the $1.8 billion tax cut that would establish a flat tax and provide a tax cut to all Arizonans.

Last week, Invest in Arizona, a political committee sponsored by the Arizona Education Association and Stand for Children, submitted a referendum to put the historic tax cuts on the ballot for voters to decide its fate.

And not surprisingly, this effort has a few similarities to last year’s Prop 208 campaign.

Let’s start with the signature collection effort, which was bought and paid for by the teachers’ union and Stand for Children. During the final weeks of their signature collection campaign, these two special interest groups flooded the streets with hundreds of paid circulators in an attempt to buy their way onto the ballot. In total, they employed 619 paid circulators, many of which likely have criminal records and were not properly registered with the Secretary of State.

Then, there’s the lies.

In the case of Prop 208, voters were consistently lied to about how the tax wouldn’t affect small businesses. But it did, which resulted in several small businesses leaving the state.

And the lies didn’t stop there. Prop 208 backers also said that the tax did not try to skirt the constitutional expenditure limitation. Thankfully, this lie ultimately doomed the measure in the Arizona Supreme Court.

Now, with this referendum, the lies continue.

Invest in Arizona is telling voters that the legislature cut education funding, which is blatantly false. Conservative leaders passed the historic $1.8 billion tax cut while spending a record high amount for education with hundreds of millions in new funding for K-12 and universities.

And to top it all off, Invest in Arizona is telling the people of Arizona that signing the referendum will restore over $1 billion in education funding. But this is a total lie! The referendum has nothing to do with education!

More than likely, this entire effort is just as unconstitutional as Prop 208. That’s why the Club filed a lawsuit challenging the legality of referring the tax cuts to the ballot. Right now, our case is currently awaiting a hearing in Superior Court, and we are optimistic that it has a high chance of success.

After all, Arizona Secretary of State Katie Hobbs has decided to remain neutral, despite being named in the lawsuit. And Attorney General Mark Brnovich field a motion for leave, along with an amicus brief urging the court to rule in our favor.

But regardless of what happens at the Superior Court, we are committed to pursuing our legal challenge all the way to the Arizona Supreme Court, if necessary. And as the process for reviewing the validity of the referendum signatures begins, you can rest assured knowing that the Club will be watching to ensure that all illegal and fraudulent signatures are removed from the petition total.

Invest in Arizona may not like it, but the people have already spoken. The tax reform package was voted on and approved by 90 lawmakers who were duly elected by the people of Arizona. And it was signed by Governor Ducey who was also duly elected by the people or Arizona. That means it should be here to stay.

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The Democrats’ $3.5 Trillion Tax Bill Would Be Devastating for Our Country

The Democrats’ $3.5 Trillion Tax Bill Would Be Devastating for Our Country

What would you do with $3.5 trillion? It’s hard to even wrap your head around how big that number is, isn’t it?

But think of it this way. 1 billion seconds is equal to 30 years, which is around the length of a career. But 1 trillion seconds? That’s equal to 30,000 years, which is longer than human civilization!

It’s a ridiculously big number, and yet, our government regularly throws around trillions of dollars like it’s nothing. But someone is paying for it, and you can probably guess who that is. That’s why the Democrats’ $3.5 trillion tax bill is especially concerning.

But it’s not even just about the money. It’s what the Democrats are trying to ram through in this giant bill.

Every Liberal Cause You Can Think Of

Because this package is a budget reconciliation, it could pass through the Senate with a slim majority, meaning that not a single Republican would need to sign on. And this has Democrats licking their chops. Among the lowlights of this bill are:

    • A National Energy Tax. Democrats are looking for backdoor ways to tax American families and advance the Green New Deal, similar to what our Corporation Commission has been trying to do here in Arizona. Hidden within this $3.5 trillion bill is a “methane fee,” which would impose a new tax on natural gas. If it passes, families across the country should expect their monthly energy bills to rise with virtually no environmental benefit.
    • Amnesty for Illegal Immigrants. We currently have a crisis at the border with one Arizona sheriff fearing a “perfect storm.” And when Vice President Kamala Harris outlined the Biden administration’s amnesty plan on Univision, more than 7,000 immigrants from Honduras started making their way to the U.S. Imagine what would happen if this amnesty plan now becomes reality.
    • Universal Pre-K and Free Community College. This is just what we need, right? More government-funded education. It’s bad enough that public school districts turned their backs on parents and students during the COVID-19 pandemic. But as part of this bill, they’ll now take on universal pre-k, so they can start indoctrinating children even earlier. Factor in free community college, which basically expands high school to six years, and you have a recipe for disaster.

Largest Piece of Legislation Ever

Not only would this $3.5 trillion bill be the largest tax increase since 1968, but it would be the largest piece of legislation in the history of the world. So naturally, Nancy Pelosi and others from the Left are trying to rush it through Congress.

Thankfully, some Democrats are pushing back, including Arizona Senator Kyrsten Sinema, who’s concerned about such a high price tag—as well she should be.

The American people are still reeling from government shutdowns and other economic losses that occurred during the pandemic. And with our national debt currently sitting at $28.4 trillion, adding more to that debt would be dangerous.

Kyrsten Sinema and other moderate Democrats need to continue speaking up and oppose this tax bill. Because if it passes, it could destroy the United States as we know it.

Help Protect Freedom in Arizona by Joining Our Grassroots Network

Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

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Prop 208 Ruling Destroys Narrative that K-12 Education is Underfunded

Prop 208 Ruling Destroys Narrative that K-12 Education is Underfunded

For over a decade, Arizona Democrats and the education lobby have been beating the same K-12 drum that our schools are underfunded, spending is at historic lows, and that the legislature refuses to invest more in K-12. And every establishment media outlet and so-called “investigative journalist” in Arizona have been more than happy to parrot this narrative for them. Most articles and opinion columns published by the Arizona Republic read more like repackaged press releases from the Arizona Education Association than anything resembling a real news story.

But unfortunately for the Democrats and their pals in the media, the recent Arizona Supreme Court decision on Prop 208 just blew their K-12 funding narrative into pieces. Under the court’s 6-1 decision, the majority ruled that any revenue generated from the Prop 208 income tax surcharge is not exempt from the constitutional K-12 expenditure cap, so if the tax hike would cause K-12 funding to exceed the cap, then the measure is unconstitutional.

This shouldn’t be a problem, right? According to the backers of Prop 208 and the Media, we haven’t been properly funding K-12 for decades.

Yet the lone dissent in the decision referred to the majority opinion as “almost certainly dooming the measure.” Dooming the measure? If Republican lawmakers have truly slashed education funding, if we haven’t been properly funding K-12 for decades, how could we be hitting a constitutional spending limit that hasn’t been reached since 2008?

That’s because everything the education establishment and the media has been telling you about K-12 funding levels in Arizona has been one big lie. Education spending in Arizona is at an all-time high, and we know this because we are hitting the K-12 constitutional spending cap.

The K-12 Constitutional Spending Cap Explained

In 1980, Arizona voters approved a series of constitutional tax and spending reforms at the ballot. These reforms were a bipartisan effort to address concerns of reckless spending and skyrocketing property tax increases throughout the state. One of those approved reforms was a limit on the amount K-12 school districts were allowed to spend.

This expenditure limitation is not determined by partisans at the legislature and cannot be manipulated so that politicians can hide how much funding they are providing to K-12. It’s an objective, formula-based spending cap calculated by nonpartisan bean counters on the Economic Estimates Commission consisting of a representative from the Department of Revenue and two other economists.

It’s calculated like this: the Commission takes the funding baseline from the 1979-1980 budget year, adjusts it every year for both student population growth and inflation, and then adds an additional 10% on top. In other words, the spending cap has been allowed to grow annually for 40 years to include both population growth and inflation, plus an additional 10%.

Additionally, this cap doesn’t include multiple funding sources that have been exempted from the cap. For example, the hundreds of millions coming from the Federal Government through the Covid spending packages do not apply toward the expenditure limitation. So when the cap is reached, Arizona taxpayers will know—based on an objective measurement—that K-12 spending is at a historic high.

The Economic Estimates Commission estimates that the education spending cap for FY 2022 will be just over $6 billion. Based on the recently enacted budget, we anticipate that Arizona will exceed the cap, which is why we expect Prop 208 to be ruled unconstitutional and struck down later this year.

Some may be asking: did the backers of Prop 208 know that their measure may trigger the education spending cap, thus tossing their measure into legal jeopardy? Perhaps they were believing their own press clippings about schools being underfunded?

This is the part that should make taxpayers’ blood boil. Not only did the education lobby know that 208 would trigger the expenditure limitation, but snuck language into their ballot measure to sidestep the cap by calling the tax surcharge revenue a “grant.”

That’s right—while they were selling the public on the myth that schools are underfunded and that we need to tax the “rich”, their lawyers concocted a legal strategy to sell judges on the idea that their tax is really a “grant” to avoid hitting a spending cap they knew we were going to hit.

Fortunately for taxpayers and small business owners, the Supreme Court saw through their scam and didn’t  come up with some sort of John Roberts-style legal reasoning to save the measure.

One would hope that the education left would have learned a hard lesson from this blunder, but don’t count on it. Instead, their strategy seems to be gaslighting the public into thinking the expenditure limitation is archaic because it was set in 1980. Spreading falsehoods is almost second nature to them. Remember, these are the same people that claimed 208  wasn’t a tax on small business, yet have turned around and sued over SB 1783 because it might prevent small business owners from paying the 208 tax.

Until now the left has believed they can promote false narratives, with the help of the media, about K-12 funding and get away with it. Not anymore – the jig is up, and the lies have been exposed. K-12 funding is at record high levels and because of that, the Arizona Supreme Court decision will likely sink Prop 208 and take this narrative down with it.

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Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

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The Arizona Supreme Court’s Ruling Against Prop 208 Is a Big Win for Taxpayers

The Arizona Supreme Court’s Ruling Against Prop 208 Is a Big Win for Taxpayers

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.

Help Protect Freedom in Arizona by Joining Our Grassroots Network

Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

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We’re Suing Invest in Arizona and Katie Hobbs to Protect Tax Cuts for All Arizonans

We’re Suing Invest in Arizona and Katie Hobbs to Protect Tax Cuts for All Arizonans

Who doesn’t want more money in their pocket? After a brutal year that featured COVID lockdowns, small businesses and families trying to make ends meet could certainly use some.

And Arizona Republicans delivered.

At the end of June, the state legislature passed a $1.8 billion tax cut, the single largest tax cut in Arizona history. And Governor Ducey didn’t waste any time before signing the budget, which shouldn’t come as a big surprise. As Senator Mesnard explained while voting in favor of the budget:

At the end of the day, when this passes, every single taxpayer in Arizona will get a cut. Every single one.

It was certainly a day worth celebrating. But not everyone joined the party.

Apparently, Invest in Arizona, a political committee sponsored by Arizona Education Association and Stand for Children, isn’t happy with the idea of every Arizona taxpayer receiving a cut. In an effort to block the historic tax cuts, the group filed three referendums that include components from three bills passed this legislative session:

    • SB1828, which provides tax relief for all Arizonans and establishes a single income tax rate of 2.5%, subject to the attainment of certain general fund revenue thresholds.
    • SB1827, which establishes a maximum income tax rate of 4.5%.
    • SB1783, which provides the option to small business owners to file and pay their taxes as a small business.

But what Invest in Arizona doesn’t understand is that taxpayers like you deserve a break. And with Arizona sitting pretty thanks to a $4 billion surplus, the time is now. That’s why the Arizona Free Enterprise Club filed a lawsuit last month against Invest in Arizona’s tax cut referendums.

These three bills weren’t just historic tax cuts that benefit all Arizona taxpayers. They also directly provide for the support and maintenance of the state, were key aspects of the state’s budget, and therefore are not referrable by Invest in Arizona.

The Arizona Constitution even provides that legislative actions “for the support and maintenance of the departments of state government and state institutions” may not be the subject of a referendum. And as our complaint contends, these provisions “provide for, and directly relate to, the generation of revenues that are remitted to the general fund and appropriated to various agencies, departments and instrumentalities of the state government.” That means they are not referable.

It also means that Arizona Secretary of State Katie Hobbs, who is named in the lawsuit, must refuse to accept for filing, verification, or certification any petition in support of these three referendums.

Now, it’s up to the Maricopa County Superior Court to do what’s right by granting our motion for preliminary injunction and ultimately deciding in favor of every Arizona taxpayer.

This tax reform package wasn’t adopted by unelected bureaucrats. It was voted on and approved by 90 lawmakers who were duly elected by the people of Arizona. And the tax package was then signed by Governor Ducey, who was also duly elected by the people of Arizona.

Invest in Arizona may not like it, but the people have already spoken. And that means these historic tax cuts should be here to stay.

Help Protect Freedom in Arizona by Joining Our Grassroots Network

Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.

Backers of Prop 208 Are Trying to Stop Tax Cuts That Benefit All Arizonans

Democrats Complain About Welfare for the Wealthy, Then Vote for Welfare for the Wealthy

It turns out that Arizona Democrats like welfare for the wealthy after all. After spending weeks railing against a historic $1.8 billion, across the board tax cut that will benefit all Arizona taxpayers and small businesses, Democrats in the House and Senate overwhelmingly voted in favor of SB1124, legislation that (as Senator Javan Mesnard described during his vote explanation) is the definition of welfare for the wealthy.

SB 1124 was the ultimate special interest tax package, so loathsome that it was snuck through the last week of session to avoid the stench of lobbyist backscratching. In reality it was the only way they could put taxpayers on the hook for over $200 million to fund an absurd Low-Income Housing Tax Credit (LIHTC) and Angel Investor Tax Credit program that will do nothing but line the pockets of wealthy Developers and Venture Capitalists.

But this didn’t seem to bother most Democrats, who on one hand refer to broad based tax cuts as “racist,” but are perfectly fine doling out tax carveouts and subsidies to their wealthy allies.

So now we are stuck with a Venture Capital Program that is government picking winners and losers at its worst. The Angel Investor tax credit shields “qualified investors” (i.e. rich people with political friends) from risk by giving them tax credits for their investments. And the icing on the cake—any profits from these taxpayer backed investments are exempt from capital gains taxes. This is welfare for the wealthy—and Democrats happily passed it with the help of a few Republicans.

The Low-Income Housing Tax Credit scam may be even worse. This is a program that has been riddled with fraud and abuse, with banks being forced to issue multi-billion dollar settlements after being caught colluding with developers to manipulate the price they pay for credits to drive down their overall tax liability.

Basically, a developer will qualify for these credits and then sell them to banks and investors who provide the upfront funding. But state level tax credits are less valuable to investors, and they end up buying them for around fifty cents on the dollar. Meaning that of the $160 million program created in SB1124, $80 million goes only to line the pockets of banks and investors, leaving the remaining half for actual development.

The billions that have been spent on these programs across the country have not shown to increase the number of affordable housing units, and they cost above market rate to build. With this vote, lawmakers and Governor Ducey have only given a handout to banks and investors so that a select few developers can build high rises in places like Phoenix and Tucson. It’s atrocious tax policy and a poor solution to help the poor.

So, while Republicans passed an incredible tax package just weeks ago, unfortunately they immediately followed it with the worst of tax policy—Democrat beloved welfare for the wealthy. As Senator Petersen put it, these are not programs dreamed up by lawmakers. They are sweetheart deals brought in by special interest lobbyists, working for a handful of wealthy individuals trying to get their tax liability as close to zero as possible.

This bill should have gone down in flames. Democrats, there’s no hiding it—you support welfare for the wealthy. Republicans, this is a vote that conservatives will not forget.

Help Protect Freedom in Arizona by Joining Our Grassroots Network

Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.