Goldwater Institute takes on Pinal County sales tax

Click on the video above to hear Goldwater Institute Vice President for Litigation Timothy Sandefur talk about stopping unfair taxation in Pinal County.

The first page of the complaint, from

Arizona voters in Pinal County are challenging an unconstitutional sales tax that was enacted through a misleading ballot proposal, and the Goldwater Institute is asking the Arizona Tax Court to strike it down. The tax unfairly and illegally targets everyday residents while exempting politically connected businesses, unfairly hurting taxpayers while also hindering economic development.

In November, Pinal County voters narrowly approved Proposition 417 to enact a transportation excise tax, which will finance road improvements and other developments to make the County more business-friendly. Arizona law allows counties to adopt such taxes, but requires them to tax specific things in specific amounts—including utilities, prime contracting, job printing, and pipelines. But inconsistencies between the ballot pamphlet explaining Proposition 417 and the actual language of that proposition created confusion over who and what would be affected by the proposed tax. In September, the Goldwater Institute sent a letter to Pinal County expressing concern over the discrepancies, but the county did not answer, and Proposition 417 remained on the ballot.

“This tax is confusing and poorly written, and it was passed under questionable circumstances,” said Timothy Sandefur, vice president for litigation at the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation. “Voter information pamphlets led Pinal County voters to believe that the tax would comply with state law. But the actual proposition said that the tax would only apply to retail sales of items below $10,000. That is both unfair and illegal; Arizona law specifies what must be taxed when a county creates a transportation excise tax, and it doesn’t allow counties to create their own rules.”

Furthermore, the new tax disproportionally hurts people who aren’t rich and business that aren’t well-connected by creating a new set of tax brackets, further complicating Arizona’s already-labyrinthine tax system. According to Pinal County, the tax will be 0.5 percent on sales of retail items up to $10,000—but then nothing beyond that dollar amount. “Under Pinal County’s new law, big-ticket items—namely cars—are taxed at a lower rate than inexpensive purchases,” said Matt Miller, senior attorney at the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation. “It’s unjust and unconstitutional for a county to design a tax to give a break to politically influential businesses by exempting them just to get their support for the tax. But that’s exactly what happened in Pinal County.”

Attracting businesses and improving the overall economy are laudable goals, but Pinal County has a track record of tax-and-spend double talk—telling taxpayers that their taxes are being collected for one purpose but then spending the money on another. For example, the County adopted a 0.5 percent tax to fund transportation projects 15 years ago, but the money was used for other purposes instead—some of them improper.

Worse, Mr. Sandefur noted, Arizona law already creates one of the most complicated system of tax classifications in the country. “If counties are allowed to create new classifications on top of those, Arizona will become a patchwork of politically motivated tax laws that stifles free enterprise and makes it hard to run businesses—especially small businesses, whose owners don’t have the political pull to write themselves exceptions to new laws.”

“In filing this lawsuit, the Goldwater Institute wants to help ensure that Arizona’s tax laws remain within rational limits and don’t end up destroying investment and economic growth in the Grand Canyon State,” Mr. Sandefur said.

Read about Vangilder v. Arizona Department of Revenue here.

The Goldwater Institute drives results by working daily in courts, legislatures and communities to defend and strengthen the freedom guaranteed to all Americans in the constitutions of the United States and all 50 states. With the blessing of its namesake, the Goldwater Institute opened in 1988. Its early years focused on defending liberty in Barry Goldwater’s home state of Arizona.  Today, the Goldwater Institute is a national leader for constitutionally limited government respected by the left and right for its adherence to principle and real world impact.

Editor’s note: Jennifer Tiedemann is with the Goldwater Institute.


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