Prop 208 – a permanent $1 billion income tax hike – will appear on November ballot in Arizona. If approved, this massive tax hike, the largest in Arizona history, would give the Grand Canyon State the unwelcome distinction of being home to one of the highest income tax rates in the country.
“Advertised as the ‘InvestInEd’ initiative, Prop. 208 would do nothing to actually improve education outcomes,” wrote Grover Norquist, president of Americans for Tax Reform in a recent OpEd in the Arizona Capitol Times. “It would not expand parental choice. It would not call for higher standards. It is basically a slush fund for bureaucrats.”
Prop 208, if approved, would impose a new 3.5 “surcharge” on single filers who earn more than $250,000 a year and married couples who earn more than $500,000. This amounts to a 77.7% tax increase that would be nearly impossible to repeal.
“Backers of Prop. 208 have been claiming this massive increase in Arizona’s top marginal individual income tax rate would only impact ‘the rich.’ But that is not true,” explained Norquist. “Prop. 208 proponents ‘forget’ to mention that small business owners also pay individual income taxes. In reality, around 50% of those whose tax rates would be targeted are small businesses, many of whom have already been struggling from weeks of forced shutdowns to slow the spread of the coronavirus.”
Adding insult to injury, Prop 208 would also jeopardize future jobs and opportunities for Arizonans. “[I]t has been well documented that income tax rates are a key determinant of business location and investment,” wrote Norquist. “Currently, Arizona’s top marginal individual income tax rate of 4.5% is fairly competitive.”
“Nearly doubling this rate to 8% would give Arizona the unwelcome distinction of being home to the 10th highest top marginal individual income tax rate in the country (behind California, New York, and New Jersey) and the second highest rate in the region,” explained Norquist. “Why would anyone want to invest in Arizona when there are so many other states that would allow them to keep more of their hard-earned money?”
Prop 208 would devastate Arizona’s economy, while doing nothing to actually improve education. “If Arizona really wants to improve education, it should expand parental choice,” wrote Norquist. “Giving all parents and students – regardless of income or address – the ability to choose the school that works best for them is the best way to improve education and education outcomes.”
To read Norquist’s full OpEd, click here.