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Arizona Supreme Courts Upholds Education Wealth Tax

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By Howard Fischer 
Capitol Media Services 

 
PHOENIX -- The Arizona Supreme Court on Thursday ruled the income tax surcharge on the wealthy can remain, at least for the time being. 

 
But how much of the funds can be spent, however, remains in limbo. 

 
The justices rejected arguments by supporters of Proposition 208 that the money that would be raised -- up to $940 million a year -- is a "grant'' to schools. That would have exempted the revenues from a constitutional limit on how much the state can spend overall on education. 
But Chief Justice Robert Brutinel said that doesn't end the matter. 

 
"Because we cannot determine at this preliminary stage of the case the extent to which, if any, such funding will exceed the constitutional expenditure limitation, we decline to enjoin the imposition of the tax,'' he wrote. Instead, the justices sent the case back to the trial court. 

 
"If the trial court finds that the tax revenues allocated will not exceed the expenditure limit, there is no present constitutional violation and Prop 208 stands,'' Brutinel said. 

 
"However, if the trial court finds that (the law) will result in the accumulation of money that cannot be spent without violating the expenditure limit, it must declare Prop 208 unconstitutional and enjoin its operation,'' he continued. 

 
Separately, the court rejected arguments by business interests and some Republican lawmakers who sought to void the entire initiative approved last year that voters lack the legal authority to impose the 3.5% surcharge on incomes above $250,000 for individuals and $500,000 for married couples filing jointly.  

Opponents of Proposition 208 had argued only the legislature can do that. 
And the justices were no more impressed by their contention that even if voters can raise their own taxes, such measures have to be approved by a two-thirds. 

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