New push to tax wealthiest Arizonans for K-12 funding launches

Arizona schools would get nearly $1 billion in new funding annually from a tax on the wealthiest Arizonans, under a proposal unveiled Monday by a coalition of teachers, unions and public education advocates.

The proposed surcharge is the core piece of the Invest in Education Act, which proponents hope to place on the 2020 ballot. The measure would add a 3.5% surcharge on all income earned above $250,000 for individual tax filers and $500,000 for joint filers. 

David Lujan, the director of the Arizona Center for Economic Progress, said the new tax will generate an estimated $940 million each year. The proposed ballot measure would direct that money to public schools.

Organizers must collect signatures from 237,645 Arizona voters by July 2 to qualify the measure for the ballot.

Joe Thomas, president of the Arizona Education Association teachers union, said the initiative was developed after months of consultation with educators and parents. 

“It is an absolute game-changer,” he said.

Half of the money raised by the new tax – an estimated $470 million a year – would be dedicated for hiring new teachers and increasing teacher pay. Arizona has been in the midst of a yearslong teacher shortage, something public education advocates say is driven by low pay. Thomas said there are roughly 1,800 classrooms right now that don’t have a certified teacher, and Invest in Education will dramatically reduce that figure in the future.

Arizona teachers in 2020 are expected to receive the final installment of a three-year pay raise package that Gov. Doug Ducey and lawmakers agreed to in 2018 that aimed to increase teacher pay by 20%. However, Arizona teachers continue to make far below the national average, and their salaries rank among the worst in the United States.

Thomas said the new tax will allow for competitive salaries with neighboring states, which in recent years have recruited heavily in Arizona and lured teachers away.

Another 25% of the money raised by the tax, roughly $235 million annually, would be devoted to increasing wages for support service workers at schools, including classroom aides, security, cafeteria workers and bus drivers.

The rest of the money would be divided to fund career training, mentoring for new teachers and university programs to train new teachers.

Lujan said significant education funding increases are needed to boost long-term economic growth in the state. 

“There are many strategies that will increase educational attainment but nearly all of those strategies will require new investments into public education,” he said. “That is a significant barrier, considering Arizona’s public schools began this school year with less funding than a decade ago.”

The Invest in Education Act is the second attempt by education advocates to increase income taxes to boost funding for public schools. In 2018, a similar measure was removed from the ballot after the Arizona Supreme Court determined that a description of the ballot proposal shared with voters when they signed petitions was misleading.

The new measure is structured differently from the 2018 version, which would have created new income tax brackets and increased the tax rate for higher-income earners. This year’s version simply applies a surcharge on the wealthiest tax filers.

Lujan said the surcharge will apply to only the top 1% of earners in the state. He also noted that those hit with the new tax “will still pay a lower effective tax rate than 25 other states and lower state income taxes than the national average.” The effective tax rate for those people will be 4.4%, compared to 4.6% nationally, he said.

But that won’t mollify the Arizona Chamber of Commerce and Industry, which led the 2018 fight to remove Invest in Education from the ballot and staunchly opposed the proposal.

“The Chamber has long opposed measures that tax productivity, harm small business and make the state less competitive overall,” said Garrick Taylor, a spokesman for the organization.

Taylor said it’s too early for proposals like this, given that the Arizona Legislature is sitting on $1 billion in savings and has a budget surplus that is expected to grow to nearly $1 billion.

“Let’s see how the legislative and executive branches respond to these issues,” he said. “We all want a state that has a brimming pipeline to train today’s students for tomorrow’s jobs.

“We just might have another way of getting there.”