Due to past legislative action, raising taxes of any kind in Arizona requires supermajority votes of both legislative houses. If these changes are made, they’ll be exceedingly difficult to undo. And the plan’s proposed rate cuts appear to be permanent, with each additional rate cut taking more away until the income tax is gone - regardless of the state’s needs. How these tax measures work is seemingly contradictory: the state’s income tax rate would fall when revenues grow more quickly than expected but stay at the same, lower level during times when states need more revenue, not less - such as during a recession or other state emergency. The legislation’s formulas would force especially sharp tax cuts in periods after a recession, for example, when a recovering economy typically causes revenues to grow faster than spending. If the state sharply cuts or eliminates the income tax, though, that major revenue source for localities would wither, forcing cities and towns to raise existing taxes, introduce new taxes on their residents, or slash funds for schools, emergency response, libraries, community health clinics, and more.Įxactly how fast the income tax - and the funds it provides to cities and towns - would decline would depend on the economy over the next few years. Under state law, cities and towns have received 15 percent of state income tax collections annually for about the past half-century, and that share is slated to be 18 percent next year. This legislation would also deeply harm Arizona’s local communities. To make up the difference, the state would have to sharply raise other taxes like sales taxes or property taxes - both of which fall hardest on those with the least ability to pay. For context, that’s nearly as much as the state gave K-12 schools in its 2023 spending plan.Īrizona can’t lose revenue of that magnitude without doing great harm to children’s education and other vital services, such as medical care that people in the state receive and funding for roads, clean water, and other essential infrastructure. The state’s individual income tax will generate about $6 billion this year. The measures have already cleared initial legislative hurdles in Arizona’s House and Senate and could come up for decisive votes any day. Obscured by terminology like “structural surplus” and a complicated set of formulas based on state revenue and spending data, each proposal would produce a series of costly tax cuts - and could eventually eliminate the state’s income tax altogether - that would provide an outsized gain to wealthy taxpayers who need it least, at the ultimate expense of everyone else. Though they’d take different paths to becoming law - the resolution is a ballot question that legislators would put to voters without the governor’s approval and the bill is moving through the standard legislative process - they’d arrive at the same goal. The proposal takes two forms, Senate Concurrent Resolution 1035 and Senate Bill 1577. It’s dressed up differently, but it’s ultimately the same kind of irresponsible, triggered income tax cuts being pushed in states across the country. The plan is a wolf in sheep’s clothing: proponents claim it’s harmless, but its complex formulas hide a predatory, harmful outcome. The Arizona legislature is considering a proposal that would wreak enormous harm on rural areas, local governments, schools, and other vital services Arizona’s people and economy depend on, while delivering an unnecessary payout to already wealthy people through a series of new income tax cuts.
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