The First Rule of Holes: When you’re in one, stop digging!

This is something of a theme today.

Arizona has a structural revenue deficit due to annual tax cuts since 1992. As I explained the other day:

HoleThis is how the anti-government, anti-public education, anti-tax GOP game is played: in each legislature since Prop. 108 was enacted in 1992, the legislature has enacted tax rate cuts and/or special interest tax exemptions and tax credits. This has had the intended effect of reducing tax revenues, creating a structural revenue deficit which results in a budget deficit. Because raising tax revenues is always off the table in the ideological GOP, the legislature takes out its meat axe and cuts the budget to essential state services like public education, health care and infrastructure (primarily roads).

Budget crises are not a bug but a feature for the Arizona GOP. They are in no way serious about resolving Arizona’s structural revenue deficit.

There is more evidence of this today with the “zero sum game” being played by Rep. J.D. Mesnard (R-Chandler) and his idiotic tax proposal designed to maintain the structural revenue deficit. Lawmakers reject possible Internet sales tax windfall:

State lawmakers voted Thursday to give up potentially hundreds of millions of dollars of sales taxes owed Arizona — taxes the federal government may finally help them collect.

HB 2061, given preliminary House approval, says if and when Internet companies are forced to collect taxes on sales to Arizona residents, the Department of Revenue will figure out how much new money is flowing into state coffers.

It then requires the state agency to reduce income tax rates by an amount equal to those extra dollars.

Rep. J.D. Mesnard, R-Chandler, acknowledged the taxes already are owed to the state. Arizona law requires those who buy items online to pay the equivalent tax to the state if it is not collected by the seller.

But Mesnard said the record shows few Arizonans actually obey the law. So he figures if they finally are forced to pay the tax, the state should not get a financial windfall.

* * *

Mesnard said the decision to trade higher sales tax collections for lower income taxes reflects his beliefs.

Let’s review class: Arizona has approximately a $500 million budget shortfall in the current budget year. It is looking at approximately a $1.5 billion budget shortfall next year, which could be much more than that if our lawless Arizona legislature loses several lawsuits that are currently pending in court. Arizona is failing to collect taxes it is owed — not just from online sales, the subject of this report — but sales taxes that have not been collected from businesses within the state. These are taxes that are owed to the state which could go a long way towards closing that budget shortfall.

But boy genius J.D. Mesnard wants to reward tax evasion with an interesting twist: rather than reduce the state sales tax by an amount commensurate to the newly recovered online sales tax revenue in his “zero sum game,” he proposes to reduce income tax rates instead. This does nothing to benefit low income people who do not earn enough to owe state income tax, but who pay a disproportionate share of their income in state sales tax. Lowering income tax rates will only benefit those with enough income to owe state income tax. Lowering income tax rates will also have the intended effect of  lowering state tax revenues, which will keep the structural revenue deficit intact. Voila! Mesnard is either stupid, or he is hoping that you all are.

Then there is the bill by Rep. Justin Olson (R-Mesa) to index taxes adjusted for inflation, admittedly something Arizona used to do, but no longer does. Ariz. House moves to pass new tax-cutting bills:

Arizona’s House appears ready to pass a bill to permanently shift the state’s income-tax brackets with inflation every year, a move that would hold down tax collections over time.

[Olson estimated the revenue loss to the state at $6 million a year.]

House Bill 2001 moved Thursday toward a final vote that would send the measure to the Senate. Gov. Doug Ducey urged passage of such legislation in his State of the State speech last month.

The bill was one of several tax-related measures that advanced in the House on Thursday. HB 2128, which would exempt property rented to churches from property taxes, perhaps at the expense of other property owners, was also formally approved.

[No estimate on the potential tax revenue lost from strip mall store front churches, or an estimate of how much other tenants would be forced to pay by their landlord to make up for the loss of this tax assessment.]

There are, of course, several bills moving through the legislature for tax credits for public, private and parochial schools which will further reduce tax revenues to the state if approved.

Finally, Gov. Jan Brewer’s corporate welfare tax giveaways, approved in 2011 and 2012, are being phased in and will reduce state revenues this coming year by $68 million, with another $61 million reduction the following year and $60 million more lost the year after that.

Remember, budget crises are not a bug but a feature for the Arizona GOP. They are in no way serious about resolving Arizona’s structural revenue deficit.

3 responses to “The First Rule of Holes: When you’re in one, stop digging!

  1. Lay the budget deficit directly at the feet of the Republicans. The Arizona Senate has been controlled by Republicans for the past 14 years. Democrats shared a bipartisan 15-15 split with the election of 2000 that lasted only two years (because of GOP domination of the newly created Independent Redistricting Commission in 2002) There has been new re-districting. Democrats last won control of the Senate chamber outright in the election of 1990.

  2. Welcome to the bathtub, Arizona…y’all voted the murderers into office, you can’t complain when they drown you in it.

  3. Frances Perkins

    Of course the boy genius who never worked, wanted to be Speaker in the worst way, and lobbied House members like heck. Even they couldn’t abide him. This proposal is about as stupid as things get with the GOP geniuses in charge. But they list is so long.