Home / election 2018 / 2018 Ballot Measures / Foes of education tax proposal base legal challenge on arithmetic

Foes of education tax proposal base legal challenge on arithmetic

Commission recommends more accountability in use of state fees

The fate of whether voters get to decide on an income tax on the wealthy could depend on what math a judge decides is appropriate.

A new lawsuit filed Tuesday by the Arizona Chamber of Commerce and Industry contends the petitions circulated by the #InvestInEd committee are “objectively false and misleading.” Attorney Kory Langhofer wants a judge to block the issue from getting on the November ballot.

Part of Langhofer’s contention is that the measure, if approved, would do more than boost income tax rates on individuals making more than $250,000 and couples in the $500,000-plus range.

He argues it also would rescind a 2015 law that indexes all income tax brackets, a move that would affect those in lower-wage categories and that the 100-word description fails to inform voters of that fact. Jim Barton, attorney for the campaign, counters that Langhofer is off-base and the indexing is preserved.

But much of the litigation is based on numbers — and how voters may understand them.

Langhofer points out that individual Arizonans now pay 4.54 percent on any income of more than $150,000, or $300,000 for couples.

The initiative, if approved, establishes a new 8 percent tax bracket for earnings above $250,000 for individuals and $500,000 for couples. And those in the $500,000 individual and $1 million married category would pay 9 percent on earnings above that level.

Based on that, the initiative description says that the law increases tax rates by 3.46 percent for those in the first category and 4.46 percent for those in the new top bracket.

Langhofer, however, says that the math is bad, at least in how the increase is described.

He said if the rate was really going up just 3.46 percent, someone who owes $17,085 under current law would owe $17,725 under the proposal.

What Langhofer said would be accurate is telling people that the tax rates on income above $250,000 would go up by 76.2 percent — the percent increase between 4.54 and 8.0 percent — translating to a liability of $22,311 if the initiative becomes law.

“The 100-word summary’s representation … hence is false and misled signers into believing the act would enact only modest adjustments to current rates,” Langhofer is arguing. “Accordingly, the initiative petition’s 100-word summary misrepresents a principal provision of the act, is factually false and misleading, and creates a substantial danger of confusing or unfairness.”

And Langhofer wants a judge to rule that every petition with that description — meaning all of them — are invalid and the signatures cannot be counted.

“This lawsuit is such a reach, I can’t even believe it,” Barton said.

He said it is Langhofer who is trying a bit of creative math that didn’t sell any better in 2008 when foes of a proposed percentage point increase in the state’s 5.6 percent sales tax rate told a judge it should be described to voters as a 17.8 percent increase in taxes. The judge threw out that claim.

“I’ve gone to court successfully and had that kind of nonsensical libertarian junk thrown out,” he said, calling it “absolutely deceptive” to claim the initiative would result in a 76 percent tax increase. “It is a 3.46 percent increase.”

If approved, the tax increase would raise an estimated $690 million for education. Proponents contend the state needs a dedicated source of revenues to guarantee not only promised teacher raises but also help bring state per-pupil spending closer to the national average.

Langhofer has another legal theory to try to quash the initiative if his arguments about the 100-word ballot description get no legal traction.

He said Arizona law requires a person who circulates petitions to check whether he or she is paid or a volunteer. But in this case, Langhofer said, the petitions had the check marks already made when they were given to circulators.

While that may be a technical violation, Langhofer pointed out that state lawmakers approved a change in laws earlier this year requiring initiative petitions to be in “strict compliance” with every aspect of election statutes. He said the failure of each circulator to make the check mark means the petition drive did not strictly comply with the law.

No date has been set for a hearing.

One comment

  1. Michael S. Ellegood, P.E.

    The argument by the C of C is nonsense. What the real tragedy is that the initiative was even necessary. We need a dedicated funding source for our public schools but the Legislature kicked the can down the road, got all wrapped around their collective axles in partisanship and no tax pledges and the people, or at least an interest group came up with this. It is bad public policy but should have been expected by the people that we depend on to lead this State.

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