Arizona Proposition 207, Tax on Incomes Exceeding $250,000 for Teacher Salaries and School Operations Initiative (2018)
| Arizona Proposition 207 | |
|---|---|
 | |
| Election date November 6, 2018 | |
| Topic Taxes and Education | |
| Status Not on the ballot | |
| Type State statute | Origin Citizens |
Arizona Proposition 207, the Tax on Incomes Exceeding $250,000 for Teacher Salaries and School Operations Initiative, was not on the ballot in Arizona as an initiated state statute on November 6, 2018.
Proposition 207 would have increased taxes on income above $250,000 and allocated revenue to teacher salaries and school operations and maintenance purposes.[1]
On August 29, 2018, the Arizona Supreme Court removed Proposition 207 from the ballot because petitions did not state that the measure would eliminate indexing tax brackets to changes in the Consumer Price Index.[2]
Overview
How would have Proposition 207 affected taxes and education revenue?
Proposition 207 would have increased the number of state income tax brackets from five to seven. The ballot initiative would have increased the tax rate for individual filers as follows:[1]
- from 4.54 percent to 8.0 percent on income between $250,001 and $500,000.
- from 4.54 percent to 9.0 percent on income above $500,000.
The ballot initiative would have increased the tax rate for married, joint filers as follows:[1]
- from 4.54 percent to 8.0 percent on income between $500,001 and $1.0 million.
- from 4.54 percent to 9.0 percent on income above $1.0 million.
As of 2018, the highest bracket for individual filers was $150,001 or more at 4.54 percent and the highest bracket for joint filers was $300,001 or more at 4.54 percent.[1]
Revenue from Proposition 207's proposed tax brackets (the percentage points above the existing 4.54 percent) would have been distributed as follows: 60 percent to teacher salaries and 40 percent to school operations and maintenance. Proposition 207 would have added compensation increases for student support personnel and full-day kindergarten to the list of school operations and maintenance purposes.[1]
Would the proposed tax brackets have been indexed to inflation?
As of 2018, the state's personal income tax brackets were indexed to annual changes in the metropolitan Phoenix Consumer Price Index (CPI). David Lujan, treasurer of the Invest in Education PAC, said Proposition 207's tax brackets would also be indexed to changes in the CPI. Mike Braun, director of the Arizona Legislative Council, disagreed with Lujan, saying the initiative's tax brackets would not be adjusted. He said, "It might be that the drafters of the initiative intended that the dollar amounts in the new tax brackets be adjusted for inflation. The language of the initiative does not accomplish this purpose, however."[3] Maricopa Superior Court Judge Connie Contes, in a case regarding the initiative's ballot language, said Proposition 207 would repeal the indexing law.[4]
How was Proposition 207 related to the #RedForEd walkout?
Teachers began a statewide walkout on April 26, 2018, after protesting throughout the month at schools and the state capitol for higher salaries and education funding. Known as #RedForEd, the walkout lasted six days, ending on May 3, 2018, after the governor signed legislation increasing teacher salaries.[5] Proposition 207 was proposed during the walkout on April 30. Noah Karvelis, an organizer for Arizona Educators United, the group that started #RedForEd, said Proposition 207 was the next step for the movement. He said, "If we didn’t have the ballot initiative in our back pocket, it’d be a different discussion. We’ve learned that these legislators will only do so much — and that then you have to take the power into your own hands. That’s what this initiative does."[6]
Gov. Doug Ducey (R) said he viewed teachers involved in the #RedForEd walkout as distinct from the activists behind Proposition 207. He said, "For the activists, for the government union, [the walkout] was never about teacher pay. What it was truly about is what will likely be on the ballot this November, which is a tax increase. I am going to continue to be on the side of the teachers." Karvelis responded, "It was never about a tax increase. It's always been about students, teachers and Arizona's future. Now, Arizonans finally have a chance at funding our schools."[7]
Who was behind the campaigns surrounding the ballot initiative?
The Invest In Education Committee led the campaign in support of Proposition 207. As of August 20, 2018, the committee raised $2.34 million, including $1.43 million from the National Education Association and $518,640 from Stand for Children, Inc. Arizonans for Great Schools and a Strong Economy, along with the PAC AZ Small Businesses Against Prop 207, raised $1.23 million to oppose Proposition 207. The largest donor to the opposition was the Arizona Chamber of Commerce & Industry, which contributed $911,812.[8]
Text of measure
Full text
The full text of the measure is available here.
Support
The Invest in Education Committee led the campaign in support of Proposition 207. The campaign described the ballot initiative as an effort to restore "critical funding for education so that Arizona schools can keep and attract the best teachers and provide our children with the quality education that they deserve."[9]
Supporters
Officials
- David Garcia (D), 2018 gubernatorial candidate[10]
Organizations
- Arizona Education Association[11]
- Children's Action Alliance[11]
- National Education Association[11]
- Stand for Children, Inc.[12]
Arguments
The Invest in Education Committee provided the following the argument for the ballot initiative:[13]
| “ |
Year after year, politicians have willfully ignored the needs of children, teachers and communities. Shamefully, Arizona ranks nearly last in the country for per-pupil spending. Reckless tax cuts and corporate giveaways have starved our school system of essential dollars, leaving our children woefully disadvantaged in today’s modern economy. Consider this:
There is no doubt about it - Arizona is in crisis when it comes to education. This initiative is the responsible route to a dedicated funding source to get needed resources into Arizona classrooms. As we all know, a strong education is absolutely central to creating a strong future - for our children and our community. Proposition 207, the Invest in Education Act, makes an urgent investment in our children. Its passage is absolutely critical for the creation of a strong, vibrant Arizona.[14] |
” |
Opposition
Arizonans for Great Schools and a Strong Economy, also known as No on Prop 207, led the campaign in opposition to Proposition 207.[15]
Opponents
- Americans for Prosperity Arizona[16]
- Arizona Chamber of Commerce & Industry[17]
- Arizona Free Enterprise Club[18]
Arguments
Jaime Molera, chairperson of Arizonans for Great Schools and a Strong Economy, said:[19]
| “ |
The more Arizonans learn about the tax increase initiative, the less they like it. Not only would it double the income tax on many small businesses, but it would roll back a law that prevents all Arizonans’ income taxes from rising due to inflation. On top of all that, it wouldn’t even deliver the teacher pay raises its proponents have promised. It’s a bad deal all the way around.[14] |
” |
Campaign finance
| Total campaign contributions: | |
| Support: | $2,337,453.42 |
| Opposition: | $1,232,796.92 |
The Invest In Education Committee, a political action committee (PAC), was registered to support Proposition 207. As of August 20, 2018, the PAC raised $2.34 million and expended $1.42 million. The National Education Association was the largest contributor to the Invest In Education Committee, donating $1.43 million.[8]
There were two PACs registered to oppose Proposition 207—Arizonans for Great Schools and a Strong Economy and AZ Small Businesses Against Prop 207. As of August 20, 2018, the committees raised 1.23 million and expended $19,533. The Arizona Chamber of Commerce & Industry was the largest donor to the opposition, contributing $911,812.[8]
Support
The following table includes contribution and expenditure totals for the committee in support of Proposition 207:[8]
|
| |||||||||||||||||||||||
Donors
The following were the top five donors who contributed to the support committee:[8]
| Donor | Cash | In-kind | Total |
|---|---|---|---|
| National Education Association | $1,428,000.00 | $0.00 | $1,428,000.00 |
| Stand for Children, Inc. | $500,000.00 | $18,639.96 | $518,639.96 |
| Arizona Education Association Education Improvement Fund | $337,984.20 | $0.00 | $337,984.20 |
| Children's Action Alliance | $41,658.82 | $87.00 | $41,745.82 |
| Arizona Interfaith Network | $5,000.00 | $0.00 | $5,000.00 |
Opposition
The following table includes contribution and expenditure totals for the committees in opposition to Proposition 207:[8]
|
| |||||||||||||||||||||||||||
Donors
The following were the top six donors who contributed to the opposition committees:[8]
| Donor | Cash | In-kind | Total |
|---|---|---|---|
| Arizona Chamber of Commerce & Industry | $900,000.00 | $11,811.92 | $911,811.92 |
| William H. Brady III | $64,000.00 | $0.00 | $64,000.00 |
| Meritage Homes | $50,000.00 | $0.00 | $50,000.00 |
| John Cotton | $25,000.00 | $0.00 | $25,000.00 |
| E.K. Gaylord | $25,000.00 | $0.00 | $25,000.00 |
| Greater Phoenix Leadership | $25,000.00 | $0.00 | $25,000.00 |
Reporting dates
In Arizona, ballot measure committees filed a total of six campaign finance reports in 2018. The filing dates for reports were as follows:[20]
| Campaign finance reporting dates for 2018 ballot | ||
|---|---|---|
| Date | Report | Period |
| 1/15/2018 | Final 2017 Report | 10/01/2017 - 12/31/2017 |
| 4/16/2018 | Report #1 | 1/01/2018 - 3/31/2018 |
| 7/16/2018 | Report #2 | 4/01/2018 - 6/30/2018 |
| 8/20/2018 | Report #3 | 7/01/2018 - 8/11/2018 |
| 10/15/2018 | Report #5 | 8/12/2018 - 9/30/2018 |
| 10/29/2018 | Report #6 | 10/01/2018 - 10/20/2018 |
| 1/15/2019 | Final 2018 Report | 10/21/2018 - 12/31/2018 |
Background
Arizona public school teachers walkout
- See also: Statewide public education strikes, 2018
Arizona teachers began a statewide walkout—the first ever in the state—on April 26, 2018, after protesting throughout the month at schools and the state capitol for higher salaries and education funding.[21] A teacher vote between April 17 and 19 resulted in the decision to walkout on April 26. The vote was organized by Arizona Educators United, which describes itself as "an education group created to support Arizona educators."[22][23] The strike lasted six days, ending on May 3, 2018, after Gov. Doug Ducey (R) signed an education bill raising teacher salaries by 20 percent by 2020 and allocating $371 million to restore recession-era cuts over five years.[24]
Changes to state income tax
As of 2018, the state of Arizona had five brackets for the personal income tax. For individual filers, the tax brackets ranged from 2.59 percent on income below $10,001 to $5,771 plus 4.54 percent for income in excess of $150,000. Proposition 207 would have increased the number of tax brackets from five to seven and increase the tax rate on earners making more than $250,000. For individual filers, the new tax brackets would have been (1) $10,331 plus 8.00 percent for income between $250,001 and $500,000 and (2) $30,331 plus 9.00 percent on income in excess of $500,000. The following tables compare the current and proposed income tax structures in Arizona:[1]
Current tax structure
| Personal income tax rates in Arizona, 2017 rates (unadjusted for inflation) | |||
|---|---|---|---|
| Individual | Joint | ||
| Amount | Tax | Amount | Tax |
| $0 – $10,000 | 2.59% | $0 – $20,000 | 2.59% |
| $10,001 – $25,000 | $259 + 2.88% | $20,001 – $50,000 | $518 + 2.88% |
| $25,001 – $50,000 | $691 + 3.36% | $50,001 – $100,000 | $1,382 + 3.36% |
| $50,001 – $150,000 | $1,531 + 4.24% | $100,001 – $300,000 | $3,062 + 4.24% |
| $150,001+ | $5,771 + 4.54% | $300,001+ | $11,542 + 4.54% |
Proposed tax structure
| Personal income tax rates in Arizona, 2018 rates under Proposition 207 | |||
|---|---|---|---|
| Individual | Joint | ||
| Amount | Tax | Amount | Tax |
| $0 – $10,000 | 2.59% | $0 – $20,000 | 2.59% |
| $10,001 – $25,000 | $259 + 2.88% | $20,001 – $50,000 | $518 + 2.88% |
| $25,001 – $50,000 | $691 + 3.36% | $50,001 – $100,000 | $1,382 + 3.36% |
| $50,001 – $150,000 | $1,531 + 4.24% | $100,001 – $300,000 | $3,062 + 4.24% |
| $150,001 – $250,000 | $5,771 + 4.54% | $300,001 – $500,000 | $11,542 + 4.54% |
| $250,001 – $500,000 | $10,331 + 8.00% | $500,001 – $1,000,000 | $20,622 + 8.00% |
| $500,001+ | $30,331 + 9.00% | $1,000,000+ | $60,662 + 9.00% |
Salaries of teachers in the states
According to the National Education Association, the average salaries of teachers in the U.S. ranged from $42,925 in Mississippi to $81,902 in New York. The national average was $58,479 in 2017. Arizona had the eight lowest average of the states—$47,403. The following is a map of average teacher salaries in the states:[25]
Path to the ballot
Process in Arizona
In Arizona, the number of signatures required to qualify an initiated state statute is equal to 10 percent of the votes cast for the office of governor in the most recent gubernatorial election. Petitions can be circulated for up to 24 months. Signature petitions must be submitted four months prior to the election at which the measure is to appear.
The requirements to get initiated state statutes certified for the 2018 ballot:
- Signatures: 150,642 valid signatures were required.
- Deadline: The deadline to submit signatures was July 5, 2018.
If the secretary of state certifies that enough valid signatures were submitted, the initiative is put on the next general election ballot. The secretary of state verifies the signatures through a random sampling of 5 percent of submitted signatures working in collaboration with county recorders. If the random sampling indicates that valid signatures equal to between 95 percent and 105 percent of the required number were submitted, a full check of all signatures is required. If the random sampling shows fewer signatures, the petition fails. If the random sampling shows more, the initiative is certified for the ballot.
Getting Proposition 207 on the ballot
The ballot initiative was filed on April 27, 2018.[1] On July 5, 2018, the support campaign announced that more than 270,000 signatures for the ballot initiative. At least 150,642 of the signatures (about 55.79 percent) needed to be valid for the initiative to make the ballot. On August 17, 2018, the elections office reported that enough signatures were found to be valid and certified the initiative for the ballot. Counties conducted a random sampling of 11,664 signatures and found 8,900 of them (76.30 percent) valid.[26][27]
Molera v. Reagan
| Lawsuit overview | |
| Issue: Did the 100-word petition summary need to include information about Proposition 207's elimination of the law indexing tax brackets to inflation? | |
| Court: Arizona Supreme Court | |
| Ruling: Ruled in favor of plaintiffs, removing Proposition 207 from the ballot | |
| Plaintiff(s): Jaime Molera and Jennifer Henricks | Defendant(s): Arizona Secretary of State Michele Reagan |
| Plaintiff argument: The title and summary used on petitions was inaccurate and misleading, invalidating the petition, and other laws governing the initiative process were not followed. | Defendant argument: The initiative petition met all necessary requirements to remain eligible for the ballot and the petition language was accurate. |
Source: Tucson.com
On July 24, 2018, Jaime Molera, a member of the Arizona Chamber of Commerce board of directors, and Jennifer Henricks filed a lawsuit Maricopa County Superior Court arguing that the title and summary used on petitions for the ballot initiative was inaccurate and misleading and that other laws governing the process were not followed during circulation. The lawsuit stated that the summary should have referred to the tax increase as 3.46 percentage points and 4.46 percentage points instead of as 3.46 percent and 4.46 percent. The lawsuit argued that, since the largest increase would double the existing top rate of 4.54 percent, describing the tax as a 4.46 percent increase was inaccurate and misleading. The lawsuit also argued that the initiative would eliminate automatic indexing of the state's tax brackets to inflation and that the petition language did not state this. Proponents, however, denied that the initiative would remove the indexing.[28][29]
On August 16, Judge James Smith ruled against the plaintiffs and allowed the initiative to remain eligible for the ballot. Concerning the difference between using percentage points and percent, Judge Smith stated, “While that likely would be more precise, the existing summaries are not fatally misleading without that verbiage.” Smith's ruling also noted that the full text of the initiative was available to any potential signers who were confused or wanted more details. Smith did not rule on whether or not the initiative would remove indexing, but stated that the petition language was sufficient because it included the key provisions. Smith also ruled that the state's 2017 law requiring strict compliance with all state laws governing the initiative process was unconstitutional. His decision stated that the constitution protects the initiative process and that substantial compliance is sufficient to qualify for the ballot.[28] Plaintiffs appealed to the Arizona Supreme Court.
On August 29, 2018, the Arizona Supreme Court removed Proposition 207 from the ballot because petitions did not state that the measure would eliminate indexing tax brackets to changes in the Consumer Price Index.[2]
See also
External links
Information
Support |
Opposition |
Footnotes
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Arizona Secretary of State, "Initiative Petition," accessed April 30, 2018
- ↑ 2.0 2.1 Tucson.com, "Arizona Supreme Court throws 'Invest in Ed' initiative off ballot," August 29, 2018
- ↑ The Verde Independent, "Arizona K-12 education tax hike on rich could take away tax break for others," July 14, 2018
- ↑ Tucson.com, "Judge: Education tax on Arizona's richest would affect other taxpayers, too," August 25, 2018
- ↑ The Arizona Republic, "Voters could have say on education funding, teacher pay," April 28, 2018
- ↑ Jacobin, "The Outcome in Arizona," accessed August 28, 2018
- ↑ AZCentral, "Gov. Doug Ducey: Arizona's #RedForEd school walkout 'was never about teacher pay'," July 7, 2018
- ↑ 8.0 8.1 8.2 8.3 8.4 8.5 8.6 Arizona Secretary of State, "Campaign Finance Committee Search," accessed August 28, 2018
- ↑ Invest in Education Committee, "Homepage," accessed August 28, 2018
- ↑ David Garcia, "Candidate for Governor Garcia Endorses Invest in Education Act," April 30, 2018
- ↑ 11.0 11.1 11.2 Arizona Secretary of State, "Campaign Finance Report," July 16, 2018
- ↑ Arizona Secretary of State, "Campaign Finance Report," August 20, 2018
- ↑ Invest in Education Committee, "FAQ," accessed August 28, 2018
- ↑ 14.0 14.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Arizonans for Great Schools and a Strong Economy, "Homepage," accessed August 28, 2018
- ↑ Facebook, "Americans for Prosperity," August 27, 2018
- ↑ KTAR, "Arizona initiative to fund education by raising taxes qualifies for Nov. ballot," August 21, 2018
- ↑ Arizona Secretary of State, "Campaign Finance Report," August 24, 2018
- ↑ Arizonans for Great Schools and a Strong Economy, "Campaign to defeat huge income tax hike raises $1.2 million," August 21, 2018
- ↑ Arizona Secretary of State, "Elections Calendar & Upcoming Events," accessed December 6, 2017
- ↑ AZ Central, "Here's why Arizona teachers are walking in – not out for now – in #RedForEd movement," April 4, 2018
- ↑ The Hill, "Arizona teachers begin voting on whether to strike," April 18, 2018
- ↑ Twitter, "Arizona Teachers United," accessed April 20, 2018
- ↑ Arizona Capitol Times, "Ducey signs education spending plan," May 3, 2018
- ↑ National Education Association, "Rankings of the States 2017 and Estimates of School Statistics 2018," accessed August 27, 2018
- ↑ KTAR, "Invest in Ed ballot initiative meets deadline, turns in voter signatures," July 5, 2018
- ↑ Cite error: Invalid
<ref>tag; no text was provided for refs namedSoSStatus - ↑ 28.0 28.1 Tucson.com, "Voters will get the final say on measure to tax Arizona's rich for education," August 16, 2018
- ↑ Maricopa County Superior Court, "Molera v. Reagan," accessed August 20, 2018
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