Americans are a hard-working bunch and should keep what they earn. Our ideas for tax reform reduce the burden of taxes while ensuring governments have the resources to focus on core responsibilities.
With a $600 million general fund shortfall - almost 6 percent of the general fund budget - some Arizonans might be tempted with a tax increase. After all, the state recently enjoyed a tax cut. Arizona is a low-tax state, right?
Not exactly. It is true that Arizona's state and local tax burden is below the national average, ranking 31st highest among the states this year according to the Tax Foundation. Still, Arizona's governments take 10.3 percent of Arizonans' income.
Contact: Lucy Caldwell, (602) 633-8986
FOR IMMEDIATE RELEASE:
Phoenix, AZ—Every Arizona household’s debt is getting bigger—but most people don’t even know they owe. In Arizona, every man, woman and child owes state and local governments more than $7,500 for bills ranging from sports stadiums to parking garages.
When government revenues drop during economic downturns, there are only three choices government officials have at the state and local levels. They cannot print money so they are left with reducing spending, raising taxes, or borrowing. Raising taxes is the worst option, with borrowing a close second.
With all of the scrambling at the Capitol to finalize a budget before the clock ran out on the fiscal year last night, one particularly good idea bubbled up out of the morass--converting Arizona's income tax from a graduated system to a 2.8 percent flat tax by 2012.
The best possible tax code for Arizona is one that is neutral, broad based, transparent, and with rates that are as low as possible. Last year, the Speaker of the Arizona House Kirk Adams and Representative Rick Murphy led an effort to move in that direction by eliminating tax exemptions, exclusions, and credits in exchange for lower rates across-the-board. Under these principles, there would be fewer disruptions in the private economy, less corporate welfare, and a broader tax base.
Tax Freedom Day for Arizona this year was Easter Sunday. According to the Tax Foundation, that’s the day by which Arizonans have earned enough money to pay their total 2010 tax burden. After 94 days or 26 percent of the year has passed, the average Arizonan finally gets to work for himself! Well, sort of.
The House Natural Resources and Rural Affairs Committee recently modified Senate Bill 1154 with a “strike-everything” amendment that seeks to increase the state’s gasoline tax. Some years ago, a "temporary" tax of 1 cent per gallon was passed to help clean up leaky underground gasoline storage tanks. That tax is scheduled to end in 2013. SB 1154, as amended, would extend this tax for another five years.
Proposition 100 supporters are touting estimates from economists at the University of Arizona and Arizona State University. They claim an 18 percent increase in the state’s sales tax would cost fewer jobs than the number of jobs that otherwise may be lost due to reductions in the government spending.
State finances will be in worse shape in 2014 if the proposed 18 percent increase in the state sales tax passes on May 18, according to long-term projections by the Joint Legislative Budget Committee. With Proposition 100’s passage, the deficit in 2014 would be almost $1 billion. Without Prop. 100’s tax increase, the projected 2014 deficit would be $200 million.