At a time when Arizona needs to raise taxes to adequately fund its constitutional obligation to support public schools and the university system, our lawless Tea-Publican legislature is busy at work looking for ways to cut taxes and to keep digging the structural revenue deficit hole deeper.
The first effort is a “flat tax” proposal that has been hanging around for a number of years, but now Tea-Publicans are getting creative in the way they package it by calling it a “pilot program” to help low income taxpayers — with the long-term goal of expanding it to all taxpayers eventually.
This is the same con game that our lawless Tea-Publican legislature used with the “empowerment scholarship accounts” that were originally designed for special needs students, but now are being expanded to all students. It is how they get the nose of the camel under the tent, and soon enough the whole camel will follow inside the tent.
The estimated loss to the structural revenue deficit hole — another $39 million deeper.
Howard Fischer reports, House adopts flat-tax proposal for lower income Arizonans:
[T]he state House adopted [a”flat tax” option on] Wednesday, at least for those at the lower end of the income scale. It would allow single Arizonans who earn less than $25,000 a year to choose an optional flat tax instead of having to go through all the computations.
But Rep. David Stevens, R-Sierra Vista, said he sees his legislation as just a starting point.
Stevens said SB 2018 is set up as a five-year pilot project to see how it works, who takes advantage of it, and how much the state might lose in revenues. He said there’s no reason the same system would not work for everyone.
Under current law, tax rates range from 2.59 percent for individuals with an adjusted gross income of up to $10,000 — double that for married couples filing jointly — to 4.54 percent for individual income of more than $150,000. But taxpayers are permitted to either itemize deductions or take a standard deduction based on their income.
Those who opt for the 1 percent levy would get only a standard $10,000 deduction.
Stevens said this is a good place to start. He said those at the bottom of the pay scale generally have no deductions anyway.
This permits them to look at their individual circumstances.
“If you get more of your tax money back with that form, you’ll use that form,” Stevens said.
“Being optional is the key,” he said. “If you don’t want to use it, don’t use it.”
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Arizona is a “piggy-back” state: Each taxpayer’s state income is computed off of line 37 of the federal Form 1040, the federal adjusted gross income.
Under current law, that leads to all the additional computations and deductions.
But using what Stevens envisions, anyone whose income is $10,000 a year or less would owe nothing, though that person would still need to file a return.
Above that? Take earnings, subtract $10,000 and pay 1 percent. So the tax owed by someone at the top of what the law allows would be $150.
Stevens acknowledged that, pretty much by definition, taxpayers will choose the method that costs them less.
That’s based on an estimate that 660,000 people would be eligible to use the optional flat tax and that 312,000 would actually opt for that alternative. But Stevens said he’s not concerned about the price tag.
“The beauty is, that’s money back in their pockets,” he said. “That’s the goal, to have people keep more of what they earned and not to have the state take it.”
That’s not at all what happens. That $39 million in lost state revenue will have to be made up by local property and sales taxes to pay for schools, public safety, roads, etc. It still costs money to provide these services that the state is no longer paying for through revenue sharing. You will be paying more in local taxes, so it is not “money back in your pockets.”
Libertarian la-la land economics from the Goldwater Institute promoted by the Patrician Prevaricator for the Plutocracy, George Will’s mini-me at The Arizona Republican, Robert Robb, is all about shifting the tax burden to local taxpayers, where a sufficient tax base may not exist in poor communities. Robb: Stop threatening state-shared revenue – just kill it. Not everyone lives in the wealthy enclaves of the East Valley. This is Ayn Rand’s philosophy of the rich living comfortably, while the poor can go to hell.
Of course, “Gov. Doug Ducey promised during his 2014 campaign to propose reducing taxes every year ‘with the goal of pushing income tax rates as close to zero as possible.’ What Stevens is proposing could be a way for Ducey to meet that promise.”
The other tax measure is the annual effort by the Arizona Chamber of Commerce and the National Federation of Independent Business to shift the tax burden on the “personal property tax” on businesses onto the backs of residential property owners. Still looking for that “money back in your pockets”? House OKs larger exemption for businesses’ property tax on equipment:
The state House is asking Arizona voters to lower property taxes — but not for themselves.
In fact, HCR 2031, given preliminary approval Wednesday, actually could mean higher taxes for homeowners.
The measure relates to the fact that the Arizona Constitution requires all property owners to pay an annual levy based on the value of their land and buildings. But businesses also must pay what’s called a tax on their “personal property,” everything from desks and computers to printing presses and other manufacturing equipment.
That value is based on the purchase price of the equipment.
It does decrease, every year, along with the applicable tax. But the levy never goes away, under the presumption that any equipment being used has some residual value.
A previously approved ballot measure exempted the first $50,000 of value, a figure that has grown with inflation to about $160,000.
HCR 2031, if approved in November, would immediately boost that exemption to $2.4 million. Potentially more significant, it would let lawmakers increase that even more in the future without asking for future voter approval.
This is a trend this year, our lawless Tea-Publican
legislators overlords want to decide for us voters, and take away our say on any matters. Don’t let them get away with it.
More than money is at stake. Companies whose property is worth less than the exemption do not have to bother computing what their equipment is worth, factoring in depreciation, much less write out a check every year.
The change would mean little to the state, which does not depend on property taxes. But it could make a difference at the local level.
Generally speaking, cities, counties and school districts figure out how much money they need and set a property tax rate that will bring in that amount, based on the district’s total net assessed valuation. So if some property is taken off the tax rolls, that lowers the district’s net assessed valuation. And that would mean the overall tax rate, for everyone, has to go up to raise the same amount of money.
Mesnard has crafted the measure in a way to blunt opposition.
The new, higher exemption would apply only to equipment purchased starting next year. That means the current $160,000 exemption would still apply to equipment businesses already own.
But even with that, there would be at least some tax shift, largely to homeowners.
When a similar measure was on the 2012 ballot, legislative budget staffers figured that the difference on a home in Mesa with a primary assessed value of $114,000 would be just $3.25.
Farrell Quinlan, state director of the National Federation of Independent Business, conceded at the time that the added burden for homeowners would grow with time: Companies would replace old equipment with new equipment that does not wind up on the tax rolls. But he argued approval of the measure ultimately will create more revenues overall.
Ah, the magical unicorns of faith based supply-side “trickle down” GOP economics, an entirely disproved and discredited economic theory. The 80s called Quinlan, they want their B.S. economic theory back.
That 2012 effort was defeated, gathering just 44 percent of the vote. But Mesnard said he thinks the result would be different this time around.
A final roll-call vote is needed to send the measure to the Senate. If approved there, it would go to voters in November, as the governor does not get a say on ballot measures.
Just say no to this ballot measure again — corporations should be paying their fair share of taxes — and vote this tool J.D. Mesnard out of office. His name seems to be attached to every bad piece of legislation this session.