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Judge: Arizona voters have right to decide tax cut repeal

December 23, 2021 GMT

PHOENIX (AP) — A judge has ruled Arizona voters have a constitutional right to decide a referendum in November 2022 that seeks to repeal tax cuts that were approved by the Legislature and signed into law by Republican Gov. Doug Ducey.

Maricopa County Superior Court Judge Katherine Cooper rejected arguments from tax cut proponents that the tax cut bill was not subject to a voter referendum. The referendum would block a new law that slashes income taxes by nearly $2 billion a year by phasing in a flat tax that mainly benefits the wealthy.

Lawyers for the Arizona Free Enterprise Club, a conservative pro-business group that pushes for lower taxes and regulations, argued the state constitution does not allow referrals for measures that provide for “support and maintenance” of state government and that tax cut bills fall into that category.

But Cooper, whose ruling was issued on Monday and became publicly available on Wednesday, said the constitution blocks referendums for appropriations and noted the tax cut law in question did not appropriate money.

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Kory Langhofer, one of the lawyers for the Arizona Free Enterprise Club, said the group will appeal the decision.

A coalition opposed to the tax cuts collected signatures to ask voters to repeal the tax cuts. The judge has not yet ruled on the anti-tax group’s challenge of the validity of the signatures.

The referendum would repeal Senate Bill 1828, which was approved earlier this year and repeals Arizona’s graduated income tax rates, currently between 2.59% and 4.5%, and establishes a flat 2.5% rate once revenue thresholds are met. The vast majority of the tax relief goes to high-earning Arizonans, although proponents say all taxpayers will see some decrease in income taxes.

The tax cuts are blocked from taking effect until voters either affirm or reject them at the November 2022 election. They could take effect sooner if the Free Enterprise Club succeeds either in its appeal of Cooper’s ruling or its challenge to the validity of the qualifying signatures.

Arizona’s constitution allows voters to block new legislation by collecting signatures from 5% of the people who voted in the past general election. If they do, the law is put on hold until voters decide at the next general election.

Tax cut opponents had to file more than 118,000 valid signatures to block the law and place it on the November 2022 ballot. They filed nearly 220,000 signatures, and the Secretary of State’s office rejected just over 10,700. The office then sent a 5% sample of the remaining signatures to the state’s 15 county recorders for a check. That review found a validity rate of more than 78%, far more than the minimum 43% passage rate.