A tax surcharge of 3.5% on the state’s wealthiest residents Arizona voters approved in a November 2020 ballot referendum is legal and may be assessed pending a court review of state spending laws, the Arizona Supreme Court ruled Thursday, the Associated Press reports.
The tax surcharge, enacted with the passage of Proposition 208, would apply on income above $250,000 for individuals or above $500,000 for couples. The surcharge would reap an estimated $836 million per year that would be used for K-12 schools in the state.
A different question could torpedo the referendum: the court referred the case back to a lower court to determine if the amount raised by the surcharge would be in violation of spending limits set by the state constitution. While the language of the referendum specifically notes that the revenue raised would be distributed in the form of grants, the state constitution limits the amount of spending available to the legislature.