Activist Group Battling With Arizona Government, Court System Over Ducey's Large Tax Cut

Activist group Invest in Arizona is battling the Arizona government and court system over Republican Governor Doug Ducey's large tax cut.

The coalition stopped the tax cuts by gathering enough signatures to keep the measure from being enacted until voters can decide in November 2022, according to The Associated Press.

"In Arizona, you have to win five or six times if you're trying to get policies that the governor and the Legislature don't want," said Joe Thomas, president of the Arizona Education Association, a group part of the activist coalition. "And so you have to win lawsuits as you're filing, you have to win lawsuits when you deliver your signatures. And then even after we [qualify for the ballot], there will be more lawsuits."

"Millionaires, really must not want to support Arizona students in schools," he added.

The Arizona Free Enterprise Club, a conservative pro-business group, filed lawsuits against the legality of the signatures and referendum. The group's attorneys pointed out that referrals for measures that give "support and maintenance" of state government are prohibited, arguing that tax cut bills would be under this rule.

In reply, the coalition's lawyers said that that rule only applies to bills that raise taxes, not decreases them. No ruling has been given in the case.

Over 118,000 signatures were required to block the measure. Those opposed to the tax cuts managed to file around 220,000 signatures. The Secretary of State's office denied a little over 10,700. Overall, the signatures were found to have a validity rate of over 78 percent by the state's county recorders.

The repeal of the tax cuts will be on the November 2022 ballot as Proposition 307 if it holds against the lawsuits.

For more reporting from the Associated Press, see below.

Doug Ducey, Tax Cuts, Opposition
Those who opposed tax cuts by Arizona Governor Doug Ducey gathered about 220,000 signatures in hopes of putting the measure to a vote in November 2022. In this photo, then-President Donald Trump watches as Ducey speaks at a campaign rally on October 19, 2020, in Prescott, Arizona. Caitlin O'Hara/Getty Images

The new law slashing income taxes by nearly $2 billion a year by phasing in a flat tax that mainly benefits the wealthy could still take effect if a judge sides with tax cut proponents who argue that it is not subject to a voter referendum.

And even if Maricopa County Superior Court Judge Katherine Cooper rejects that challenge, lawyers for a conservative anti-tax group have teed up a second challenge, this to the validity of the signatures that were filed in September and certified as sufficient on Friday.

The certified referendum would repeal Senate Bill 1828, which repeals Arizona's graduated income tax rates, currently between 2.59 percent and 4.5 percent, and establishes a flat 2.5 percent rate once revenue thresholds are met. The vast majority of the tax relief goes to high-earning Arizonans, although proponents say all taxpayers will see some decrease in income taxes.

Education advocates failed to collect enough signatures to block two other tax cut bills enacted by the legislature this year. One creates a new exemption for small business income that would have been subject to a voter-approved surcharge, and another shields high-earning Arizona taxpayers from the same 3.5 percent surcharge approved by voters last year when they passed Proposition 208.

The state Supreme Court in August ruled a part of Proposition 208 that exempts the new revenue from a cap on school spending is unconstitutional, but more legal proceedings will be needed to determine if the entire law will be thrown out.

Arizona's constitution allows voters to block new legislation by collecting signatures from 5 percent of the people who voted in the past general election. If they do, the law is put on hold until voters decide at the next general election.