Since the proposition to double Arizona’s income tax was unveiled in early May, proponents of the measure emphatically promised voters that the only people affected by the tax increase was the “rich.”

That promise has already expired. Last month after filing 270,000 signatures with the Secretary of State, it was revealed that the “Invest in Ed” initiative would eliminate the inflation indexing of our income tax brackets and reset every tax bracket to 2014 levels.  The primary purpose for indexing the income tax brackets for inflation was to shield low and middle-income taxpayers from the cost of living inflation tax that occurs over time.

The irreversible elimination of inflation indexing would result in everyone’s income taxes going up in Arizona – to the tune of $49 Million in the first year, a figure that will grow exponentially over time.

Even worse, there is no real opportunity to fix this problem.  If this measure is passed, the proposition would be voter protected, meaning that it cannot be changed by the legislature. Even if a ¾ majority vote of the legislature agreed to bring back inflation indexing, it would still be illegal since lowering taxes would not further the intent of the proposal.

As more analysis is being done on this initiative to make Arizona the 5th highest income tax state in the country, the clearer it has become that the Washington DC Labor Unions that financed this measure cared little about making sure that all of their claims were even accurate.

But as the saying goes, “the devil is in the details,” and the proposed largest tax increase in our state’s history has a lot of hidden, unexpected, and negative consequences for the future of Arizona.

 

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The Arizona Free Enterprise Club is a free market policy and advocacy group dedicated to promoting a strong and vibrant Arizona economy.