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AZ Supreme Court Agrees with Goldwater—Protects Arizonans from Tax-Raisers

August 19, 2022

The Arizona Supreme Court issued a final opinion today explaining its April ruling that blocked a referendum on the state’s recently enacted tax cuts. Siding with the Goldwater Institute’s friend-of-the-court brief, the justices concluded that tax legislation is “for the support and maintenance of the departments of the state government,” and therefore is constitutionally immune from repeal by voters.

The case began when lawmakers approved, and the governor signed, a tax relief law for Arizona—which the Goldwater Institute helped write and pass—that simplified the state’s tax laws and established the lowest flat tax rate in the nation. Pro-tax forces who only two years before had spent millions of dollars in out-of-state money to pass the unconstitutional Proposition 208—drastically increasing taxes on small business owners—filed paperwork to undo the tax cut by referendum. But the state Constitution is quite clear that there are limits to the referendum power: it says voters “may order the submission to the people at the polls of any measure…except laws…for the support and maintenance of the departments of the state government.” Tax laws, of course, are for the support and maintenance of state agencies, and therefore are off-limits for the referendum power.

The tax-raisers argued that this prohibition shouldn’t apply because the law reduced taxes instead of increasing them. But as we pointed out in our brief, many tax laws are so complicated—and the economy is subject to so many unpredictable fluctuations—that it’s impossible for judges to tell whether most tax laws will increase or decrease revenue. Instead, the simpler and clearer rule is what the court endorsed today: “revenue laws ‘for the support and maintenance’ of state departments and institutions are exempt from the referendum power,” regardless of whether it is believed that they will end up increasing or decreasing the amount of income the state gets.

That doesn’t mean voters are unable to limit what the legislature does. “Our constitution affords myriad avenues to affect political and policy change, including on the subject of taxes,” the court declared. “Citizens may change such laws indirectly through the ballot box by selecting their elected representatives to implement their policy preferences or directly through the initiative process…. But we have a duty to ensure that the mechanisms through which they exercise such choices comport with our constitution.”

Today’s decision isn’t just a victory for Arizona taxpayers—it’s also win for the Constitution, which carefully limits the power of both elected officials and voters, to ensure a rational legal system and an economy in which Arizonans are able to pursue happiness in freedom.

You can read the decision here, and read our brief here.

Timothy Sandefur is the Vice President for Legal Affairs at the Goldwater Institute.



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