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State Senate to vote on bill that could impact how much money Prop 208 raises for public education

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Posted at 5:09 PM, Feb 25, 2021

PHOENIX — State Senator J.D. Mesnard, (R) Chandler District 17 says he is taking supporters of Prop 208 at their word when they say raising money for education shouldn’t be put on the backs of small business owners.

Mesnard is the author of SB 1783 which he says creates a new tax category for small business owners whose income passes through their business.

“What we are doing here is creating an optional tax that sets at 4.5% for those who wish to avail themselves,” Mesnard said. “This tax rate allows us to craft a tax code geared toward helping small businesses.”

Under Mesnard’s plan, eligible tax filers will have the choice between the new tax category or the Prop 208 surcharge.

“This bill is not about small businesses, it’s a tax break for the wealthiest 1% of Arizona,” David Lujan, the Director of the Arizona Center for Economic Progress said.

Lujan says what the new tax category allows is for filers to have income from business, trusts and estates exempted from the Prop 208 surcharge.

Lujan, who supported Prop 208, sees SB 1783 as a way to circumvent an election.

“1.7 million Arizonans voted for Prop 208. They want to get this money to the schools and it’s a shame we have some legislators trying to ignore the will of the voters,” Lujan said.

The numbers vary. But Prop 208 is supposed to raise between $827 million and $940 million a year for public education. It places a 3.5% surcharge on single tax filers who earn $250,000 or more and $500,000 for couples who file a joint tax return.

Mesnard says funding for public education increases when economic development is strong. He sees the bill as a way of protecting business and making Arizona more attractive to those looking to move here. “It’s not just a simple, ‘we have a surcharge to fund education,’ that’s certainly the case, but also we need to make sure our economy is churning along, and this bill is designed to do that,” Mesnard said.

Senator Mesnard says he doesn’t know how much money his tax plan will cost public education. Lujan estimates it could be nearly half, $400 million. The Senate is scheduled to vote on the bill next week.