Part 2 – Why Ducey’s Promise to Cut Taxes is a Lie

In my previous post, I showed why Governor Ducey’s focus on tax reduction is a disastrous recipe for our state. Now let’s look at how those tax reductions we’ve been seeing aren’t really helping the average Arizonan. Instead, we continue to see the tax burden transferred from those who have, to those who can least afford.

Governor Ducey is intent on eliminating income tax in Arizona. Why might you ask? Because, for this Governor and others like him, it is ALL about business. And although corporate tax breaks are good for large business, 97% of the employers in Arizona are small businesses like S-corporations, LLCs and partnerships. These businesses amount to over 40% of the private workforce and are currently taxed by the state via income tax. I’m not sure whether ASU’s Center for the Study of Economic Liberty 2015 policy report by Stephen Slivinski is the “policy roadmap to elimination of the Arizona income tax” as it claims, or, if it was written to support Governor Ducey’s tax reduction plan. At any rate, Slivinski concludes in the report that: “The best hope Arizona policymakers have to eliminate the income tax is to phase it out over a number of years while maintaining budget balance.” He also makes the point that now that the state is on “surer fiscal footing”; it is time for Arizona policymakers “to look at important and necessary reforms over the next couple of years.” Waiting longer he claims, “may result in losing a golden opportunity.” Sounds like a Ducey talking point commercial to me.

Arizona already has though, the 13th-lowest individual income tax and the 10th-lowest combined state and local income tax in the Nation. Additionally, according to an article in Business Insider in August 2014, Arizona’s economy was ranked the 4th fastest growing in the US after Colorado, California and Texas. Of course, we also have the 4th highest poverty rate in the US with one in five Arizonans living in poverty. Obviously, there are winners and losers in Arizona’s current economy and Governor Ducey’s insistence on eliminating the state income tax and shifting state revenue collection to increased sales tax will do nothing to help those who most need it. Although sales tax is said to be a less volatile form of revenue than income tax, it also is the most regressive, hitting the poorest the hardest.

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Why Ducey’s Promise to Lower Taxes is a Lie

During Governor Ducey’s inaugural address in 2015, he indicated that he would not support higher taxes with: “prosperity moves, and as taxes go up, it moves away. Gone as well are jobs, people and companies that found a better welcome someplace else.” Likewise, during his 2016 State of the State address, he bragged about lowering … Read more

Open Letter to Governor Ducey

It was fitting that your propaganda piece, “Arizona schools win big in my budget” was published in AZCentral.com’s “AZ I See It” column. After all, I understand this is your view of reality. But, the fact that it is your view, doesn’t make it factual.

You open your piece speaking of last year: “we protected priorities, like K-12 education…” Not sure how you can claim you protected K-12 education when in 2015, you cut $113.5 million from K-12 district schools and reduced charter additional assistance funding by $10.3 million. This year, you claim credit for “an historic $3.5 billion funding package for schools.” Yeah Governor, you are just a regular education philanthropist, digging deep into the schools own coffers (state trust lands revenues set aside for education funding) to give our schools the money they’ve been owed since 2009. You offered this deal to take additional monies from state trust lands, despite Arizona ending last fiscal year with an extra $312 million in the bank and being on-track to end FY2017 with $621 million. To add insult to injury, you now plan to pad the states’ rainy day fund with an additional $10 million to bring the balance to $470 million. I have to wonder how many corporate tax breaks will that fund?

 Despite your largely unearned grandstanding, I’m going to hold my nose and vote for Prop. 123, because I think it is the only way we will get any significant additional funding for our schools anytime soon. Rest assured though that education advocates throughout the state are going into this eyes wide open. We know there are caps and triggers in the deal that could allow the legislature to cheat our kids yet again. Just know that we will be more vigilant than ever and that “Hell hath no fury” like advocates scorned after negotiating in good faith.

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$82,996 is low income…REALLY?

Kudos to Arizona Representative Doug Coleman, R-Apache Junction, who has introduced HB 2063 to cap the limit for corporate donations to School Tuition Organizations.  His bill looks to cap the “year-over-year limit at 2 percent or inflation for the Phoenix metropolitan area” for corporate donations.  501(c)(3) tax-exempt organizations, these STOs allocate at least 90% of … Read more

Ducey on Education…What’s he really saying?

Governor Ducey’ State of the State address today at the AZ Legislature’s opening day was a fairly typical “state of” address. He talked about what he’s accomplished thus far and provided sound bites about what else he’ll do. He promised he’ll lower taxes each year and still invest in education. He claimed it doesn’t have to be either/or, it can be both. He did not of course, dilineate any specific plan to do this, but that isn’t really what a “state of the state” address is for. He provided examples of good things happening in public education, and stated that Prop 123 will give us opportunity to make substantial progress.” Have to inject here that although I am supporting Prop 123, it won’t really help us “make substantial progress.” Even if with the passage of Prop 123, Arizona won’t move up from 49th in per pupil funding. After all, it is only going to provide about $300 per student, still less than has been cut since the recession began. Not nothing, but not a game changer either.

Governor Ducey then made the prediction that: “In the years ahead, Arizona will be among the states investing the most new dollars in public education – all without raising taxes.” Just to be clear here, the Prop 123 monies aren’t “new monies”, they are monies that were already owed to our schools. Not sure the Governor sees it that way, but that is the truth. More funding, much more funding is needed and every bit will be welcome, but I just don’t see how we can make a dent in the need without raising taxes. I am positive we can’t do it by cutting taxes and giving our surplus away as corporate handouts. We just need to look at what Governor Brownback did to Kansas with his tax cuts.   When he took the reins in Kansas, he dropped the top income-tax rate by 25%, lowered sales taxes and created a huge exemption for business owners filing taxes as individuals. He claimed it would spur investment, create jobs and bolster the state’s coffers through faster growth, sound familiar? Now, five years after doubling downhis state lags in job creation, tax revenue is far short of expectations and bond and credit ratings have been downgraded. Rating agencies claimed the tax breaks were unsustainable and that the promised economic growth would be elusive. It is with great hubris this lesson would be ignored.

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