Posted by AzBlueMeanie:
Last week Senator Paula Aboud (D-LD 28) took her Ax The Flat Tax forum to Sierra Vista. Flat tax would wipe out deductions aimed at low-income families | The Sierra Vista Herald:
House BIll 2636 seeks to amend the income tax code and install a new procedure for figuring income taxes, explained Sen. Aboud.
Though the sponsors of the bill led by State Majority Leader Rep. Steve Court, R-Mesa, say they are initiating a flat tax of 2.08 percent for every income earner in the state, they also intend to eliminate many deductions and exemptions that target low income families, seniors, the blind and everybody making under $100,000 a year.
As it stands, people making less than $100,000 a year, around 88 percent of tax payers, will be paying more state income tax than people making over $100,000, around 12 percent of taxpayers.
But, that’s not all the legislators are up to. Also in discussion are eliminating a number of deductions and exemptions: mortgage interest, donations made to charities, unreimbursable medical expenses, the exemption for people 65 and over, exemptions for dependents, small business interest expenses, casualty loss, IRA losses and income tax refunds.
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A retired Republican senator and former certified public accountant, Jeff Hill, came to the meeting to testify. He went down the list of all the things that were now going to be taxed like pensions, retirements and military pay and she said it took her colleagues collective breath away, yet they voted to approve it.
“It’s a hit on middle-class families,” said Aboud. “The proposed flat tax will result in families with income below $20,000 per year paying a total of $153.5 million more in taxes. This is a subject that crosses all party lines and hits everyone in the pocketbook.”
In a chart provided by the Ax the Flat Tax Committee with figures from the Arizona Department of Revenue, it was determined that under this flat tax, eight Arizonans will pay more so that one pays less in taxes. For instance, the average tax currently for a person making between $25,000 to $30,000 is $262; that will go up to $463 under the new flat tax formula. Those making $10,000 to $20,000 can expect an increase on average, from $67 to $303.
Those tax payers at the upper end of income, from $1.5 million to $5 million will get a 45 percent reduction in the tax they pay cutting their tax bills nearly in half, from an average of $60,372 to $32,965.
And, the important thing to note is that this new bill is tax neutral, emphasized Aboud. That means no new tax money will be generated from it, added Aboud. A tax increase would have to go before the voters, but this shift can just pass through both the House of Representatives, which it has, and the Senate, which decided the flat tax rate needed to be higher – 2.13 percent of taxable income.
A memorandum of the Joint Legislative Budget Committee from March 23, states: “This bill phases in a single, flat tax rate over three years. In 2013, the bill broadens the tax base by eliminating itemized deductions, along with most additions and subtractions and sets tax rates of 2.13 percent to 3.95 percent of taxable income. In 2014, HB 2636 eliminates the standard deduction and dependent exemptions while simultaneously lowering the graduated rate system from 2.13 percent to 3.10 percent. Beginning in 2015, when the bill is fully phased in, HB2636 eliminates the personal exemption and the low income tax credit and establishes a single, flat tax of 2.13 percent.”
“It makes no sense. It just shifts the burden from high income earners to low and middle income earners,” said Aboud. “It brings in no new money.”
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And though the Supreme Court regards businesses and corporations as people, the state legislators do not. So the flat tax does not apply to companies, she said. They will still get the deductions and exemptions they now have.
“It is wrong to raise taxes on the middle class in these hard times,” continued Aboud. And it is even more wrong for the Legislature to do so without receiving the public’s input. This reverse-Robin Hood scheme represents an illogical agenda.
Reverse-Robin Hood indeed.