So long as Arizonans resist future tax-hike attempts, the state can be assured of economic growth that will pay for better schools.
So long as Arizonans resist future tax-hike attempts, the state can be assured of economic growth that will pay for better schools for all.
E arlier this month, a trial-court judge in Phoenix drove a stake through Arizona’s largest tax increase: Proposition 208. The decision brought an end — at least for now — to the latest progressive effort to raid the paychecks of the state’s entrepreneurs and other successful working people.
That effort first began in 2018, when public-school teachers across the state led an illegal strike that shut down most public schools for over a week. Falsely claiming that the state’s schools were money-starved, school employees refused show up for work and instead stormed the halls of the state capitol building under the “Red for Ed” banner, demanding that lawmakers spend more.
The legislature eventually caved, agreeing to increase teacher salaries by 20 percent. But that wasn’t enough for progressives, who followed up by launching a ballot initiative called “Invest in Ed,” which imposed a new 4.5 percent income tax (euphemistically called a “surcharge”) on people earning more than $250,000 per year. Although the initiative’s backers claimed the tax would not fall on small businesses, the opposite was true: Proposition 208 made no distinction between personal income and the income of small-business owners. As a result, the proposition effectively doubled taxes on owners of small businesses, the largest engine of job and wealth creation in the state. Raising taxes in the midst of a drastic economic downturn — the pandemic combined with escalating inflation — is a formula for catastrophe. Indeed, a Goldwater Institute analysis indicated that the initiative would eliminate 100,000 jobs and drive away so much business that it would result in an overall reduction in state revenue.
Even more noteworthy was the way the initiative’s backers tried to brush aside the state constitution. Thirty years ago, voters adopted a constitutional amendment that limited government spending in hopes of preventing the state from running itself into California-style debts. But instead of either following that constitutional provision or changing it, Proposition 208’s backers simply included a provision that declared its initiative exempt. In other words, although the initiative was not a constitutional amendment — i.e., just an ordinary law — it pronounced itself immune from the state’s highest law.
That, of course, didn’t work. Taxpayers and legislators represented by the Goldwater Institute swiftly filed a lawsuit against the initiative, and last August, the state supreme court declared what should have been obvious: “Prop. 208 cannot constitutionally authorize spending in violation of the Education Expenditure Clause. . . . A statute cannot circumvent or modify constitutional requirements.” And because the initiative’s spending provisions were invalid, its tax provisions were invalid, too. After all, it would make no sense to impose a tax to collect money that can’t be spent.
The justices sent the case back to the trial court to do the final math, determining how much of the initiative’s spending mandates would exceed the constitutional boundary. Since both supporters and opponents of the measure agreed that 208 would take total spending above the limit next year, the trial judge was left with no choice but to declare the entire thing void on March 11.
That’s a victory for anyone who wants Arizona to remain an attractive environment for economic growth. The Grand Canyon State is consistently rated among the best places to run a business in terms of taxes and regulations, and, thanks to seven years of moderately conservative leadership, it enjoys low unemployment, a modest debt, and a rising average per-capita income — about $66,000, up from $58,000 in 2013. What’s more, Arizona has led nationally in student academic gains and offers more educational options than almost any state, with a variety of charter schools and the state’s Empowerment Scholarship Account program, which enables parents to choose the best options for their children.
For progressives, though, Arizona’s modest taxes are indications of failure because they suggest that citizens are being allowed to keep more of what they earn, instead of handing it over to bureaucrats. Never mind that the state has steadily increased school spending by a total of some 40 percent over the past four decades, and now, taxpayers spend more than $14,000 per Arizona K–12 pupil. Progressives find it hard to resist the mythology of the cash-strapped public school, because the truth — that the shortcomings of public education are inherent consequences of politicization, bureaucracy, and the mishandling of the money poured into them — would clash too obviously with their preconceptions.
That means progressives — who have never met a tax increase they didn’t like — will almost certainly try again. But as long as voters respect the rights of wage-earners and parents, and as long as the state’s courts enforce the state constitution, Arizonans can be assured of a future of economic growth that will pay for both a rising standard of living and better schools for all.