Fighting Prop 208: Valley business owners plan lawsuit to stop tax hike from going into effect

Some Phoenix area business owners could soon be taking legal action to stop a voter approved ballot measure from going into effect. FOX 10's Nicole Garcia has the details on why they say the tax hike will make things tougher for companies already struggling to stay afloat.

PHOENIX - Earlier this month, voters passed Proposition 208, the measure that would raise taxes for the state's high-income earners. The funds would go to education, but opponents are ready to file a lawsuit, trying to squash the tax hike before it goes into effect.

Prop 208 passed with more than 50% of the vote and would take effect January 1, but Valley business owners and attorneys say the initiative violates Arizona's constitution and they've announced the start of a legal battle to prevent the tax increase from happening.

"We're trying to recover from COVID and now we're being kicked in the gut as we're trying to get up," said Ann Siner, CEO of My Sister's Closet.

Siner says she's been forced to let go of about 70 employees because of the pandemic and a 3.5% tax hike would wreak further havoc on small businesses.

"I pay over 50% in taxes. You add another 4% to that, quite frankly, I'd say I'm 61-years-old, maybe I've had enough. Maybe it's not worth the battle anymore."

She's among those planning to take legal action to stop Prop 208. Nearly 1.7 million voters approved the ballot measure, which would raise about $1 billion in tax revenue for education.

Attorneys say they're not against funding education, but ".. the question here was this the appropriate way to do so?" said Thomas Galvin of the Rose Law group. "Is it appropriate to have a proposition on the ballot that circumvents the constitution with a statutory change. And the answer is you can't. You can't have a statute supersede the constitution."

The author of Prop 208 says his team is prepared for a court battle, calling the lawsuit a desperate grab by his opponents.

"It's legally sound. It's already passed one legal review in the Arizona Supreme Court.. we have no doubt that it is constitutional, it's legally sound, it will go into effect on January 1, it's going to raise a lot of money for Arizona schools," said David Lujan.

The lawsuit cannot be officially filed until the results of the Nov. 3 election are certified by the secretary of state. That's expected to happen on Nov. 30.

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