We can all agree that teachers deserve to be paid fairly. Unfortunately, Prop 208 does not include specific legislative oversight to ensure that the funds produced by this tax are going to teachers.
TEMPE, Ariz. (PRWEB) November 19, 2020
With the passage of Arizona Proposition 208, also known as The Invest in Education Act, Arizonans now face an additional 3.50% income tax on income above $250,000 for single filers or $500,000 for joint filers. This represents a nearly 80% tax increase on successful small business taxpayers. While the proposition claims to distribute the new tax revenue to teacher and classroom support staff salaries, teacher mentoring and retention programs, career and technical education programs and the Arizona Teachers Academy, the lack of oversight is cause for concern.
Tom Wheelwright, CPA and CEO of WealthAbility, believes that Prop 208 will deter businesses from moving to Arizona and encourage businesses to leave Arizona for nearby Nevada, Utah and Texas. What’s more, the money won’t necessarily reach the intended target. Wheelwright’s concerns include:
Where is the money going?
We can all agree that teachers deserve to be paid fairly. Unfortunately, Prop 208 does not include specific legislative oversight to ensure that the funds produced by this tax are going to teachers. Only 50% of the funds are actually directed to teachers and other classroom support personnel. Ballot propositions in Arizona can generally only be changed through another ballot proposition. Realistically, the only way to change this would be a court challenge. There’s nothing the legislature can do to prevent administrative bloat.
Effect on Business in Arizona
The passing of Prop 208 nearly doubled Arizona’s top tax rate, a change that makes Arizona a less attractive location for businesses considering relocation. The new 3.50% tax is on top of the existing income tax, which was 4.50% in 2020.
While taxes may not be the only determining factor for businesses looking to relocate, it would be naive to think that they don’t play a large role. Any savvy entrepreneur or CEO will always be looking for ways to reduce their taxes, so why would they choose to do business in what is now one of the top 10 highest taxing states in the U.S.? This, in turn, will cost Arizona jobs and the exponential growth that the state has seen over the recent years.
Passing a proposition without legislation sets a dangerous precedent for our state. Without legislative oversight, there’s no telling where this money is going and if it’s being used appropriately. It seems that the public has an easy time spending others’ hard-earned money even if they don’t know how it’s being spent.
Wheelwright believes that we will likely see Prop 208 go to court to be overturned. He hopes that with more education on the topic, Arizonans will find a better way to fund education in the state.
About Tom Wheelwright – Tax and Wealth Expert
Tom Wheelwright is a CPA, CEO of WealthAbility®, Best-Selling Author of Tax-Free Wealth (Rich Dad Advisors Series), Speaker, Entrepreneur and Host of 2 popular podcasts: The WealthAbility™ Show with Tom Wheelwright CPA and The WealthAbility® for CPAs Show. Wheelwright has spoken on stage on every continent to over 100k entrepreneurs, small business owners and investors. His goal is to help people achieve their financial dreams faster by permanently and legally reducing their taxes. Wheelwright is a Contributor to Entrepreneur magazine, and his work has been seen in Forbes, The Wall Street Journal, The Washington Post and on FOX and Friends, Marketplace / NPR, ABC News Radio and hundreds of media. For more information, visit https://tomwheelwright.com/ and https://wealthability.com/tom/.