Detailed Arizona Development
On Election Day, Arizona voters approved Proposition 208, which increases personal income tax rates on certain individuals to provide additional funding for K-12 education. Specifically, effective January 1, 2021, a 3.5 percent additional rate of tax will be imposed on taxable income above $250,000 annually for single persons or married persons filing separately, and on taxable income above $500,000 annually for married persons filing jointly. Arizona’s highest individual rate prior to the measure being approved was 4.5 percent. The measure directs the Arizona Department of Revenue to deposit the revenue accrued as a result of the income tax surcharge into the newly created student support and safety fund.
Recently, two lawsuits were filed seeking to prohibit the enforcement of Proposition 208 on the grounds that it violates the Arizona Constitution. Generally, the plaintiffs allege that the measure needed to be approved by a 2/3 vote of the electorate. It passed by a 51.75 percent margin. The plaintiffs also allege that measure impermissibly attempts to circumvent constitutional limitations on the aggregate expenditures from local revenues for all school districts. Please stay tuned to TWIST for future updates on the tax increase.
This Week's Developments
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