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Arizona Supreme Court to hear new education tax challenge

PHOENIX (AP) – The Arizona Supreme Court will hear on Tuesday a constitutional challenge to a new voter-approved tax on high-income Arizona, designed to boost school funding.

The justices will hear the arguments of lawyers representing the Republican-controlled state Legislature and a group of businesses say the new tax requires a two-thirds vote in the November election, as the tax is levied by the Legislature. The court will also consider whether the new money, given to school districts and chartering schools in grants, would impose schools more than the legal spending limit.

The proponents of the Invest in Education Act, with nearly 52% of the vote in the resolution passed as a vote, state that a two-thirds majority is not required to pass the voter initiative explicitly. And they say that disbursement of funds through grants to schools is often done to avoid triggering spending limits.

A trial court judge sided with the proponents of the initiative when it refused to issue a preliminary injunction blocking the tax in February. In addition to the two-thirds vote requirement and spending limit argument, opponents also said that the measure does not have a source of its own funds to cover implementation costs as the Constitution requires and a provision that allows lawmakers to make new The school funding was prohibited from using the tax.

Maricopa County Superior Court Judge John Hannah Jr. rejected all of these arguments, finding that opponents of Proposition 208 were unlikely. Opponents then asked the state supreme court to take up the case even if it was early in the legal process.

The proposal imposes a 3.5% tax surcharge on incomes above $ 250,000 for 208 individuals or more than $ 500,000 for couples. Proponents say it could raise about $ 940 million per year for schools, although budget analysts at the Legislature estimate it to bring in $ 827 million per year.

The measure was the result of the 2018 teacher strike, which resulted in teachers receiving a 20% wage increase over three years. But the state did not meet his other demands.

Republican government Doug Ducey opposed the measure and told a business group last month that he hoped to either block the Supreme Court measure or bring a way for the Legislature to abolish the new tax.

There are several tracks that the Legislature can take, and one that eliminates a third of the estimated $ 827 million in new revenue, having already passed the Senate. That measure, by GOP Sen. JD Masonard, creates a new tax code section for small businesses, setting the top tax rate at 4.5% but avoiding the new 3.5% surcharge.

Arizona’s small business income is currently taxed on personal tax returns. Opponents tried to convince voters that the new tax would harm small businesses.

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