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PROPOSITION 208: State starts collecting tax to pay for education. But for how long?

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Posted at 5:06 PM, Jan 04, 2021
and last updated 2021-01-04 20:33:55-05

On New Year's Day, the state of Arizona began assessing a 3.5% income tax surcharge on Arizona’s wealthiest wage earners.

In November, voters passed Proposition 208 - a measure supporters say will raise $940 million a year to fund K-12 public education.

“We are trying to recover from COVID and we get kicked in the gut when we’re trying to get up,” My Sister’s Closet CEO Ann Siner said back in November.

Siner is fighting the tax. “I pay over 50% in taxes,” she said then. “You add another 4% on that, I’m 61 years old, maybe I’ve had enough.”

The Goldwater Institute is leading the court challenge arguing voters have no right to levy a tax on their own and only the legislature can do it.

It's asking Maricopa County Superior Court Judge John Hannah to issue a stay blocking the collection of the tax until a court decides whether it is constitutional.

Supporters of Prop. 208 like David Lujan of the Arizona Center for Economic Progress think otherwise. “Arizona’s constitution gives the people of Arizona broad authority to pass initiatives including tax increases like prop 208,” Lujan said.

The Arizona Department of Revenue agrees with Lujan, putting it’s former director Carlton Woodruff at odds with Governor Ducey.

The Governor replaced Woodruff the day after the agency’s attorney told Judge Hannah to let the tax take effect. Ducey opposed Prop. 208 and supports the court challenge to stop it from being implemented.

Judge Hannah heard arguments in late December. His ruling on whether to issue a stay is expected to come at any time. If the court decides the tax is constitutional, proceeds from it will not become available until April 2022.