Table of Contents
- 1 Opinion: Two years ago, I opposed Invest in Education. Here’s why I’ve changed my mind.
- 2 Arizona students have been the losers
- 3 Schools are still $1 billion short
- 4 Proposition 208 would generate it
- 5 Business leaders say it would nix jobs
- 6 Most small business owners are exempt
- 7 If not this, what? If not now, when?
Opinion: Two years ago, I opposed Invest in Education. Here’s why I’ve changed my mind.
Marisol Garcia, an eighth-grade social studies teacher in the Isaac School District and vice president of the Arizona Education Association, stands by boxes containing the 435,669 signatures for the InvestInEd ballot initiative that were turned in at the Arizona Secretary of State’s Office at the state Capitol in Phoenix on July 2, 2020. (Photo: David Wallace/The Republic)
Here, finally, is where the rubber meets the road for Arizona’s children.
Should we raise taxes to boost funding for public schools? Or is the state’s current investment in their (and our) future good enough?
Supporters of Proposition 208 will tell you that it’s time, finally, to Invest in Education.
As long as we can do it with someone else’s money.
Opponents of Proposition 208 will tell you that if voters raise taxes on the richest among us, Arizona’s economy will make like a tumbleweed and bounce off into the sunset.
So what to do?
Arizona students have been the losers
There’s no doubt that Arizona’s children have been the losers over the last decade.
A generation of kids has come and gone since our leaders slashed funding for schools. When the Great Recession eased, our governor and Legislature opted to cut corporate taxes rather than restore funding to public education.
The result has been schools that are falling apart, textbooks that are woefully outdated and overcrowded classes taught by under qualified teachers.
Gov. Doug Ducey’s 20by2020 plan to raise teacher pay — a plan brought forth only after tens of thousands of fed-up educators were taking to the streets — was a start. But it was only a start given the magnitude of damage done over the last decade.
Despite those raises, Arizona teacher pay remains low when compared with other states and teachers continue to bolt. Our schools offer one counselor for every 905 students — a ratio that is nearly twice the national average of 455:1.
Schools are still $1 billion short
Ducey has assured us he can grow us out of the hole in which our public schools live, ignoring the fact that corporate tax cuts have siphoned away hundreds of millions of dollars in just the last few years. Ignoring the fact that tax credits and vouchers for private schools are draining hundreds of millions from the schools each year.
Ignoring the fact that even the governor’s own business advisers have said a tax hike is needed to pull the schools out of the hole.
“From a business perspective, properly funding education is probably the greatest economic development thing we can do in our state,” Kitchell CEO Jim Swanson, chairman of Ducey’s Classrooms First Initiative, wrote in 2017. “We need to work on a plan, and the time is now.”
That was three years ago.
Since then, Ducey and the Legislature have added roughly $1 billion back into the schools — because the courts and the court of public opinion have demanded it. But that still leaves the schools more than $1 billion short of where they were a decade ago.
Proposition 208 would generate it
So now comes Proposition 208, the Invest in Education Act. The proposal, which is backed by the Arizona Education Association, would raise income taxes on Arizona’s wealthiest residents.
Specifically, it would impose a 3.5% “surcharge” on top of the 4.5% tax on an individual’s income above $250,000 a year ($500,000 for a married couple).
Put another way, it would soak rich people with a 78% tax hike on any taxable income above $250,000/$500,000.
The result: nearly $1 billion for Arizona’s public schools, according to the plan’s backers or an estimated $827 million, according to the Joint Legislative Budget Committee.
The business community has taken to breathing into a paper bag over the prospect of Proposition 208 passing.
Business leaders say it would nix jobs
Business leaders contend Arizona’s small businesses, many of which pay taxes through their owners’ individual returns, would be hammered into the ground by a tax hike in the midst of a pandemic. They contend that tens of thousands of jobs will disappear along with the billions in taxes over the next decade.
“If Proposition 208 passes, Arizona will move from being a low-tax state to having one of the top-ten-highest tax rates in the nation, alongside the likes of California and New York,” wrote Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry, and Suzanne P. Clark, president of the U.S. Chamber of Commerce. “Passing Proposition 208 would be the equivalent of rolling up the proverbial welcome mat and closing the door on small business owners.”
It’s worth noting that these are the same people who in 2016 warned that the economy of Arizona would crumble if we increased the state’s minimum wage. (We did. It didn’t.)
Most small business owners are exempt
Supporters of Proposition 208, meanwhile, point out that the vast majority of the state’s 500,000 small business owners don’t make enough in taxable income to be affected by the tax hike – the median income for self-employed individuals is about $50,000, according to the U.S. Small Business Administration – and that the wealthy still will pay less in overall taxes here than in a majority of states.
“Our effective tax rate for people in the top 1 percent will still be lower than the national average. As an example, a married couple with $650,000 in taxable income will still pay less state income taxes in Arizona with Prop. 208 than they will in 34 other states,” David Lujan, director of the Arizona Center for Economic Progress, told me.
“Arizona once had a top marginal tax rate of 8% up until 1990, which is when the state Legislature began cutting taxes every year. You can look at just about any report done by Dennis Hoffman and Tom Rex (ASU economists) and they will say that Arizona’s economy was stronger in those years when we had that higher top income tax rate – not because we had a high top income tax rate, but because we did a much better job of investing in our public education system back then.”
If not this, what? If not now, when?
So how big a hit would Proposition 208 be on the wealthiest among us?
According to the Goldwater Institute, 90,000 of the state’s 2.9 million Arizona tax filers would be affected. Of those affected, more than half would be small business owners.
According to Joint Legislative Budget Committee, the average tax increase for those making between $250,000 to $499,999 would be $120 a year. For those making $500,000 to $999,999, the average hit would be $5,549. And for those reporting taxable income of $1 million to $4 million: $40,287.
I opposed the 2018 version of Invest in Ed, before it was tossed off the ballot, on the general principle that it’s not right to gang up on rich people and soak them with a tax increase just because we can. On the general principle that if we think investing in education is important to our state, we ought to all have skin in the game.
But the state’s political and business leaders have had two years to come up with a better plan to get us back to where we were more than decade ago when it comes to educating 1.1 million Arizona children.
So if not this, then what?
If not now, then when?
How many more generations of Arizona children must suffer because our leaders decided a bargain-basement education was good enough?
Reach Roberts at [email protected]
Read or Share this story: https://www.azcentral.com/story/opinion/op-ed/laurieroberts/2020/10/13/proposition-208-makes-me-queasy-but-support-invest-ed/3641333001/