Arizona Reduce Number of Income Tax Brackets to Flat Rate of 2.50% Referendum (2022)

Arizona Reduce Number of Income Tax Brackets to Flat Rate of 2.50% Referendum
Election date November 8, 2022
Topic Taxes
Status Not on the ballot
Type Referendum	Origin Citizens

The Arizona Reduce Number of Income Tax Brackets to Flat Rate of 2.50% Referendum was not on the ballot in Arizona as a veto referendum on November 8, 2022.

A "yes" vote would have been to uphold SB 1828, which would:  * reduce the state's income tax from four brackets (ranging from 2.59% to 4.50%) to two brackets (2.55% and 2.98%) and * further reduce the tax brackets to a flat rate of 2.50% when state revenue exceeds $12.976 billion.

A "no" vote would have been to repeal SB 1828, thus maintaining the state's income tax as four brackets (ranging from 2.59% to 4.50%).

Overview

What did the veto referendum seek to repeal?

The veto referendum was designed to repeal Sections 13 and 15 of Senate Bill 1828 (SB 1828).

Together, Sections 13 and 15 reduced the state's income tax brackets from four to two and further reduce the tax brackets to a flat rate when state revenue exceeds $12.976 billion ($12,976,300,000).

Under SB 1828, the state's four tax brackets were reduced to two on December 31, 2021. The tax rates would be, for a single filer, 2.55% on income of $27,272 or less and $695, plus 2.98%, on income above $27,272. The two tax brackets would be reduced to a flat rate of 2.5% when state revenue exceeds $12.976 billion.

As of 2021, the highest income tax rate in Arizona was 4.50% on income above $159,000 (single filing) or $318,000 (joint filing).

A "yes" vote on a veto referendum in Arizona was to uphold the legislation. A "no" vote was to repeal the legislation.

Who was behind the veto referendum?

Invest in Arizona was leading the campaign for the veto referendum (a "no" vote on the legislation). The ballot measure committee was known as Invest in Education in 2020 and supported Proposition 208, which voters approved. Proposition 208 was designed to enact a 3.50% income tax surcharge and allocate the revenue to education and teacher-related programs. Senate Bill 1828, Sections 13 and 15, would not make a direct change to the income tax surcharge. Invest in Arizona collected signatures for a second veto referendum related to revenue generation from Proposition 208, but not enough signatures were found valid. David Lujan, CEO of the Children's Action Alliance, said the tax changes "are attempting to give huge tax cuts to the rich, which is just disastrous for our future." State Sen. J.D. Mesnard (R-17) responded to the referendum, saying, "[a]ll we’ve done … is make sure that we are not going to drive taxpayers out of the state and actually create a situation where you have less revenue going to our education system because less people are living here."

Text of measure

Full text

The full text of the ballot measure is below:

Support for a "No" vote

Invest in Arizona was leading the campaign in support of a "no" vote on the veto referendum. The campaign sponsored the veto referendum. Invest in Arizona was called Invest in Education in 2020 and supported Proposition 208, which voters approved.

Supporters

Organizations

• Arizona Education Association
• Stand for Children, Inc.

Arguments

• Rebecca Gau, executive director of Stand for Children Arizona: "By passing these sneaky budget schemes, this small group of politicians is helping their rich friends avoid paying their fair share to public schools. Worst of all, they are trying to silence voters."

Campaign finance

See also: Campaign finance requirements for Arizona ballot measures

The campaign finance information on this page reflects the most recent scheduled reports that Ballotpedia has processed, which covered through March 31, 2022. The deadline for the next scheduled reports was July 15, 2022.

One PAC, Invest in Arizona, was registered to support a "No" vote on the veto referendum. The PAC raised $5.29 million, including $2.45 million from Stand for Children, Inc. and $2.38 million from the National Education Association .

Ballotpedia had not identified committees registered to support a "Yes" vote on the veto referendum.

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	Cash Contributions	In-Kind Contributions	Total Contributions	Cash Expenditures	Total Expenditures
Support	$0.00	$0.00	$0.00	$0.00	$0.00
Oppose	$5,021,471.80	$267,728.13	$5,289,199.93	$4,998,429.42	$5,266,157.55

Support for "No" vote

The following table includes contribution and expenditure totals for the committee that supported a "No" vote of the veto referendum.

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Committees in support of Arizona Reduce Number of Income Tax Brackets to Flat Rate of 2.50% Referendum (2022)
Committee	Cash Contributions	In-Kind Contributions	Total Contributions	Cash Expenditures	Total Expenditures
Invest in Arizona	$5,021,471.80	$267,728.13	$5,289,199.93	$4,998,429.42	$5,266,157.55
Total	$5,021,471.80	$267,728.13	$5,289,199.93	$4,998,429.42	$5,266,157.55

Donors

The following were the top five donors to the committee.

Donor	Cash Contributions	In-Kind Contributions	Total Contributions
Stand for Children, Inc.	$2,316,006.00	$138,614.97	$2,454,620.97
National Education Association	$2,378,221.00	$0.00	$2,378,221.00
Arizona Education Association	$154,920.00	$0.00	$154,920.00
Arizona Interfaith Network	$63,500.00	$0.00	$63,500.00
Children's Action Alliance	$2,000.00	$0.00	$2,000.00

Background

Arizona Proposition 208

See also: Arizona Proposition 208, Tax on Incomes Exceeding $250,000 for Teacher Salaries and Schools Initiative (2020)

In 2020, voters approved Proposition 208, which was designed to enact a 3.50% income tax, in addition to the existing income tax (4.50% in 2020), on income above $250,000 (single filing) or $500,000 (joint filing). Proposition 208 required revenue from the 3.50% income tax to go toward to teacher and classroom support staff salaries, teacher mentoring and retention programs, career and technical education programs, and the Arizona Teachers Academy.

Invest in Education led the campaign in support of Proposition 208. Amber Gould, a high school teacher and state director of the National Education Association, was chairperson of Invest in Education. The campaign received $22.9 million. Stand for Children, Inc., a 501(c)(4) nonprofit that focuses on education policies, provided $9.8 million to Invest in Education. The National Education Association, a 501(c)(5) teachers’ organization, contributed $7.8 million.

Arizonans for Great Schools and a Strong Economy led the campaign against Proposition 208. Jaime Molera, a former Arizona Superintendent of Public Instruction, was chairperson of the campaign. The Arizona Chamber of Commerce and Industry organized the campaign committee. The campaign, along with the No on 208 PAC, received $8.3 million, including $640,000 from SAC Holding Corp. and $350,000 from the Arizona Chamber of Commerce.

Senate Bill 1828

Senate Bill 1828 (SB 1828) was an omnibus taxation bill introduced on May 24, 2021. The Arizona State Senate voted 16-14 to pass the legislation. The Arizona House of Representatives voted 31-29 to pass SB 1828. Legislative Republicans were unanimous in their support of the bill, and legislative Democrats were unanimous in their opposition to the bill. Gov. Doug Ducey (R) signed SB 1828 on June 30, 2021.

Breakdown of Senate votes on SB 1828
Party Affiliation	Yes	No	Abstain	Total
Democrat	0	14	0	14
Republican	16	0	0	16
Total	16	14	0	30

Breakdown of House votes on SB 1828
Party Affiliation	Yes	No	Abstain	Total
Democrat	0	29	0	29
Republican	31	0	0	31
Total	31	29	0	50

2021 income tax structure

As of 2021, Arizona had four tax brackets for the personal income tax. The following is an outline of the tax brackets for single filers and joint (married) filers:

Personal income tax rates in Arizona, 2021 rates
Individual		Joint
Amount	Tax	Amount	Tax
$0 - $26,500	2.59%	$0 - $53,000	2.59%
$26,501 - $53,000	3.34%	$53,001 - $106,000	3.34%
$53,001 - $159,000	4.17%	$106,001 - $318,000	4.17%
$159,001 and over	4.50%	$318,001 and over	4.50%

Path to the ballot

Process in Arizona

See also: Laws governing the initiative process in Arizona

In Arizona, the number of signatures required to qualify a veto referendum for the ballot is equal to 5 percent of votes cast for governor in the most recent gubernatorial election. Signatures for veto referendums are due 90 days following the adjournment of the legislative session at which the targeted bill was approved.

The requirements to get veto referendums certified for the 2022 ballot:

• Signatures: 118,823 valid signatures for referendums targeting bills passed in both the 2023 and 2024 legislative sessions.
• Deadline for 2021 bills: 90 days following adjournment of the 2021 session
• Deadline for 2022 bills: 90 days following adjournment of the 2022 session

If the secretary of state certifies that enough valid signatures were submitted, the veto referendum goes on the next general election ballot.

Stages of this veto referendum

The campaign Invest in Arizona filed the veto referendum on July 2, 2021. Signatures were due on September 28, 2021. Invest in Arizona reported filing more than 215,000 signatures.

On November 19, 2021, the office of Secretary of State Katie Hobbs announced that enough signatures were valid for the veto referendum to appear on the ballot in 2022.

Arizona Free Enterprise Club v. Hobbs

  

Lawsuit overview
Issue: Whether the Arizona Constitution prohibited veto referendums against bills that provide for support and maintenance of the state government.
Court: Arizona Supreme Court
Ruling: Arizona Supreme Court found that sections 13 and 15 of SB1828 do fall into the support and maintenance exception of the Arizona Constitution, therefore, the issue cannot be put before voters on the ballot.
Plaintiff(s): Arizona Free Enterprise Club, et al.	Defendant(s): Katie Hobbs, et al.
Plaintiff argument: The Arizona Constitution does not allow for referendum of legislative actions “for the support and maintenance of the departments of state government and state institutions.”	Defendant argument: The veto referendum will leave the state with additional funds, and does not appropriate money. Therefore, the referendum can be subject to voters.

  Source: [1]

The Arizona Free Enterprise Club challenged the veto referendum as unconstitutional in the Maricopa County Superior Court on July 21, 2021. The Arizona Free Enterprise Club argued that the Arizona Constitution prohibited veto referendums against bills that provide for support and maintenance of state government and that tax bills fall under this umbrella. Lawyers for the initiative campaign argued that tax decreases do not provide for support and maintenance of state government and therefore can be referred to voters through the veto referendum process.

On December 22, 2021, Maricopa Superior Court Judge Katherine Cooper ruled against the Arizona Free Enterprise Club, stating that the veto referendum was constitutional. She said that because the veto referendum would leave the state with additional funds, rather than less, the measure would not hinder the support and maintenance of state government.

On April 21, 2022, the Arizona Supreme Court ruled that voters cannot determine the flat tax proposal through a referendum, reversing the order of Judge Cooper. The court ruled that sections 13 and 15 of SB1828 fall into the support and maintenance exception of the Arizona Constitution. As a result, the referendum was taken off the ballot, and SB1828 was slated to go into effect in January 2025.

The Supreme Court released the full opinion on August 20, finding that referendums cannot repeal tax decreases or increases, except in cases when a tax would fund a new government department. Judge John Lopez IV wrote, "A revenue measure is exempt from referendum, regardless of the increase or decrease in revenue, provided it is for the support and maintenance of existing departments of the state government and state institutions." Justices Bill Montgomery and James Beene dissented.

How to cast a vote

See also: Voting in Arizona

Click "Show" to learn more about voter registration, identification requirements, and poll times in Arizona.

How to cast a vote in Arizona

Poll times In Arizona, all polling places are open from 6:00 a.m. to 7:00 p.m. local time. An individual who is in line at the time polls close must be allowed to vote. Registration Check your voter registration status here. To vote in Arizona, one must be a citizen of the United States and a resident of an Arizona county. A voter must be 18 years or older on or before Election Day. To be eligible to vote in an election one must register at least 29 days prior to the election. Individuals can register online, in person at the county recorder's office, or by mail. Automatic registration Arizona does not practice automatic voter registration. Online registration See also: Online voter registration Arizona has implemented an online voter registration system. Residents can register to vote by visiting this website. Same-day registration Arizona does not allow same-day voter registration. Residency requirements Arizona law requires 29 days of residency in the state before a person may vote. Verification of citizenship See also: Laws permitting noncitizens to vote in the United States Arizona requires voters to submit proof of citizenship with their voter registration application to vote in state and local elections. According to the Arizona Secretary of State's website: "A registrant who attests to being a citizen but fails to provide proof of citizenship and whose citizenship is not otherwise verified will be eligible to vote only in federal elections (known as being a 'federal only' voter)." Accepted proof of citizenship include: An Arizona Driver's License/Identification Number Indian Census Number, Bureau of Indian Affairs Card Number, Tribal Treaty Card Number, or Tribal Enrollment Number A photocopy of U.S. naturalization documents A photocopy of a birth certificate and supporting legal documentation (i.e., marriage certificate) if the name on the birth certificate is not the same as your current legal name. A photocopy of a U.S. passport. A photocopy of a Tribal Certificate of Indian Blood or Bureau of Indian Affairs Affidavit of Birth. On August 22, 2024, the U.S. Supreme Court issued an emergency order partially granting the Republican National Committee and Arizona Republicans' request to enforce a 2022 law related to proof of citizenship requirements. The court allowed the enforcement of the provision requiring the state to reject state voter registration forms submitted without proof of citizenship. Previously, a person who submitted a state voter registration form without proof of citizenship could still be a federal only voter. After the court's ruling, a person unable to provide proof of citizenship would need to submit a federal voter registration form in order to vote in federal elections. All 49 states with voter registration systems require applicants to declare that they are U.S. citizens in order to register to vote in state and federal elections, under penalty of perjury or other punishment. As of November 2024, five states — Alabama, Arizona, Georgia, Kansas, and New Hampshire — had passed laws requiring verification of citizenship at the time of voter registration. However, only two of those states' laws were in effect, in Arizona and New Hampshire. In three states — California, Maryland, and Vermont — at least one local jurisdiction allowed noncitizens to vote in some local elections as of November 2024. Noncitizens registering to vote in those elections must complete a voter registration application provided by the local jurisdiction and are not eligible to register as state or federal voters. Verifying your registration The Arizona Voter Information Portal, run by the Arizona Secretary of State's office, allows residents to check their voter registration status online. Voter ID requirements Arizona requires voters to present photo identification or two forms of non-photo identification while voting. The following were accepted forms of identification as of July 2024: Click here for the Arizona Citizens Clean Elections Commission's page on accepted ID to ensure you have the most current information. Voters can present one of the following forms of ID that contain the voter’s photograph, name, and address: Arizona driver’s license U.S. federal, state, or local government-issued ID, issued with printed name and address Arizona ID card Tribal enrollment card or other form of tribal ID If a voter does not have one of the above forms of ID, the voter can present two of the following forms of ID that contain the voter’s name and address: Utility bill in the voter's name Bank or credit union statement that is dated within 90 days of the date of the election Valid Arizona vehicle registration Arizona vehicle insurance card Indian census card Property tax statement Recorder's certificate or voter registration card Tribal enrollment card or other tribal ID Valid U.S. federal, state, or local government-issued ID with a printed name and address or Any mailing in the voter's name that is labeled "official election material"   Additionally, if a voter presents photo ID that does not list an address within the precinct in which he or she wants to cast a vote, that person may present the photo ID with one non-photo identification material from the second list above. The identification material should include the voter’s address.

See also

2022 measures

• 2022 ballot measures
• Taxes on the ballot
• 2022 legislative sessions

Arizona

• Arizona ballot measures
• Arizona ballot measure laws

News and analysis

• Ballot measure lawsuits
• Ballot measure readability
• Ballot measure polls