Arizona’s new budget protects businesses from the tax impact of the Prop. 208 | national news
(The Center Square) – Arizona Gov. Doug Ducey has given the green light for the largest income tax cut in state history, including a provision to protect businesses from the “Red for Ed” tax.
The Education Investment Law imposed an additional 3.5% tax on people with incomes over $ 250,000, totaling an 8% income tax on Arizona’s highest earners to fund the education system. This resulted in Arizona’s income tax ranking among the top 10 in the country. Invest in Ed followed the Red for Ed movement of 2018, in which the governor bowed to demands by increasing teachers’ salaries by 20%. Opponents claim that the pay increases were not enough because they did not take inflation into account.
Proposition 208 was withdrawn from the 2018 poll by the Supreme Court due to a misleading description of the initiative’s effect. However, judges allowed the measure to be on the ballot in 2020 and the Arizonans voted to make the tax increase a law of the state.
The move met with opposition from the Arizona Chamber of Commerce and Industry, the Arizona Tax Research Association and tax conservatives, including Ducey.
Over a three-year period and starting January 1, 2022, Budget 2022 initiates the transition from Arizona’s five-bracket tax system to a 2.5% flat tax regardless of income. Each Arizonan will see a decrease in their income tax rate due to the historic tax reduction, although higher earners will see a larger reduction as they earn proportionately more.
“Providing Arizona small businesses with more working capital and tax relief at this critical time, without having a negative fiscal impact on the state, is a responsible public policy that I and all lawmakers should. support, ”said Rep. Joseph Chaplik, R-Scottsdale. in a report.
Ducey signed the fiscal year 2022 budget 71 days after the scheduled closure of the legislative session.