PHOENIX — Business interests trying to quash a vote on higher taxes on the rich sought to convince a judge Wednesday that extent and breadth of the proposed new levy is being purposely understated and misleading.
Attorneys for both the Invest in Education initiative and the Arizona Chamber of Commerce and Industry all agree that the measure, if approved by voters, would create an effective income tax rate on earnings above $250,000 of 8.04 percent, up from 4.54 percent now.
Taxes on earnings below that would remain unchanged. And estimates are that only about 4 percent of all Arizona taxpayers would be affected.
Only thing is, the description provided to those signing the initiative — and in the initiative text itself -- says the measure will impose “a surcharge at the rate of 3.5 percent.’’ That, the business group contends, misleads the public about the extent of the change which is designed to raise $940 million a year for K-12 education.
They contends what’s really at issue is a 77.7 percent increase in the top tax rate. And now they want Maricopa County Superior Court Judge Christopher Coury to declare that the failure to sufficiently explain the extent of what is being proposed means the petitions and the initiative wording are fatally flawed and cannot be put before voters.
At least part of the objection from the business foes goes to the use of the word “surcharge.’’
“What the initiative refers to as a ‘surcharge’ is a tax,’’ according to attorney Brett Johnson who is representing the business interests trying to keep the measure off the ballot.
And it’s not just the word “surcharge’’ that he is arguing to Coury is misleading.
“When the petition’s 100-word description refers to ‘establishing a 3.5 percent surcharge’ on this income, it gives voters the misimpression that the income in questions is currently untaxed,’’ Johnson said. “After all, ‘establish’ refers to starting something that does not currently exist.’’
All that, he said, is designed by proponents of the initiative to convince people to sign the petition and support the measure.