Regulatory policy

Arizona Supreme Court reinstates massive income tax cuts | PA power and politics

PHOENIX (AP) — The Arizona Supreme Court ruled Thursday that voters in the state had no right to reject a massive income tax cut approved by the Republican-controlled Legislature and Governor Doug Ducey last year.

The ruling means a tax cut is in effect that will reach almost $2 billion when fully in place and will mainly benefit the wealthy.

The High Court has overturned a lower court judge who ruled in favor of education advocates who collected enough signatures under the state’s referendum law to prevent them from taking effect until what voters can weigh in November.

Lawyers for the Arizona Free Enterprise Club, a pro-business conservative group that lobbies for lower taxes and regulations, argued that the state constitution does not allow dismissals for measures providing for the ” support and maintenance” of the state government and that the tax reduction bill falls into this category.

The Supreme Court agreed in a brief order issued just two days after hearing arguments in the case. The order signed by Chief Justice Robert Brutinel does not explain the court’s reasoning, saying a full notice will be released later.

The trial court judge had said the constitutional provision only blocked referendums on bills that appropriated money, and since the tax cut bill did not, it was subject to the voter review.

Ducey, a Republican who lobbied for an expansion of the court in 2016 that allowed him to appoint six of the seven justices, welcomed the decision.

“This decision is another great win for our state’s taxpayers and it couldn’t have come at a better time,” he said in a statement. “With inflation hitting Arizonans hard, this move ultimately means more of their hard-earned money can stay in their wallets.”

Most residents won’t see much help, as the vast majority of tax cuts go to the wealthy.

Legislature budget analysts said the average Arizonan earning between $75,000 and $100,000 would save $231 a year in income taxes. Meanwhile, the average taxpayer earning between $500,000 and $1 million a year will save more than $12,000, according to Legislative budget analysts.

The coalition of progressive groups that backed the referendum criticized the Supreme Court for “removing the rights of ordinary Arizonans, in an effort to protect the wealthy.”

“The ballot was Arizona’s last line of defense against Ducey’s crowded Supreme Court – today that defense fell,” said the statement from two groups supporting Invest in Arizona. “Despite the explicit and strong language of the Arizona Constitution granting the people an equal right to legislate, they were excluded.”

The Arizona Center for Economic Progress and the Children’s Action Alliance said voters repeatedly supported measures that increased funding for schools, child care and other progressive causes, only to see them blocked by the High Court or erased by the Legislative Assembly. Earlier this year, a Supreme Court ruling scrapped a tax on the wealthy designed to fund schools that voters approved in 2020.

It came after lawmakers passed legislation during last year’s session that would have cut the planned $900 million in funding by more than half.

Free Enterprise Club president Scot Mussi called the Supreme Court’s decision a “huge win for taxpayers.”

“Investing in Arizona and out-of-state special interest groups need to come to terms with this reality and stop making a joke of the referendum process,” Mussi said in a series of tweets.

Arizona’s constitution allows voters to block newly enacted laws by collecting the signatures of 5% of qualified voters. If they do, the law is suspended until the next general election.

Capitol lawmakers were divided along party lines, just as they were last year when majority Republicans who hold naked majorities in the House and Senate enacted the tax cuts without Democratic support.

Representative of House Majority Leader Ben Toma said the decision brings clarity and certainty, and means the historic tax relief is not in effect. Senator Rebecca Rios, who leads minority Democrats in her chamber, said she was “disappointed to say the least.”

“A true democracy should have no problem allowing this to pass before the voters of Arizona,” Rios said in a statement. “Republicans continue to attack our schools, teachers, and students, despite a majority of Arizonans making it clear time and time again that they want meaningful investments in our public schools.”

Republicans planned to circumvent the referendum by repealing the tax cuts and passing larger ones, but that will no longer be necessary.

Under the new law, rates for most taxpayers would fall to 2.5% and revenues would be reduced by $1.9 billion once the tax cuts are fully in place. That’s down from a range of 2.59% to 4.5%. Arizona state budget this year. Arizona’s current budget is $12.8 billion.

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