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The drive of special interests to raise taxes is relentless, and democratic guardrails can be an important taxpayer defense. That’s the logic behind an Arizona effort to lift the threshold for raising taxes by ballot measure. Passing it would help keep the state off the well-trod road to fiscal serfdom.
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The proposal will appear as a ballot measure in November, giving voters a chance to set a higher bar for lifting tax rates. If passed it would amend the state constitution to require a 60% majority to raise taxes through any future referendum. Current law requires a two-thirds majority to raise taxes through legislation but only a simple majority to do so by plebiscite.
A higher wall against tax hikes would help sustain Arizona’s economic progress. Its 4.5% top income-tax rate is lower than every neighbor except zero-tax Nevada, and it’s set to fall to 2.5% by 2024. Keeping rates low has helped the state grow. It was the fourth-fastest growing state by population last year, edging out Florida and Texas. Its new residents are finding jobs: Employment rose 25% in the past decade, compared with 19% in neighboring California.
Legislators approved the ballot measure in June. State Rep.
Tim Dunn
led the effort, saying it should be tough to enact hard-to-change measures like ballot-approved taxes. “When you have something that you can’t change without going back to the voters,” Mr. Dunn said, “I think we should have overwhelming support.” A 60% threshold ensures broad consensus before rates can be raised by referendum.
That view is born of recent hard experience when Arizona voters in 2020 narrowly passed a union-backed ballot measure imposing a 3.5-percentage-point surcharge on incomes above $250,000. Courts tossed the surtax for violating the state spending cap on education, but it was a near miss.
The point is to make it harder for Arizona to join states that raise taxes as a first fiscal resort rather than examine spending. New Jersey and Connecticut once drew businesses and residents fleeing New York City’s crushing costs with low tax rates. When they imposed an income tax, politicians in both states promised to keep the rate low. But they’ve risen again and again under public-union pressure, and New Jersey’s top income-tax rate is now 10.75% and Connecticut’s is 7%.
Arizona Gov.
Doug Ducey
has demonstrated how to fund budget priorities while keeping tax rates in check. He approved a 20% raise for teachers after a showdown with the union in 2018, along with an extra $1.2 billion in school funding last year. In the same period he signed a tax cut to enact a 2.5% flat rate on incomes. State economists still project a $4 billion surplus through 2024.
Progressives say the supermajority measure threatens democracy. But many states set a high bar for major policy changes, even by referendum. Nine states require supermajorities for ballot measures that change certain laws, including tax statutes, according to the National Conference of State Legislatures. A supermajority provision protects democracy by making it harder for special interests to pick taxpayer pockets.
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Appeared in the September 9, 2022, print edition.
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