An Arizona taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. bill is reportedly dead for now:
Several GOP senators joined Burns in voicing concern about the potential impact on the state budget deficit.
“I could not support what we have right here, digging a deeper hole,” said Sen. Linda Gray, R-Glendale.
Arizona is expected to face budget shortfalls for years to come because of the recessionA recession is a significant and sustained decline in the economy. Typically, a recession lasts longer than six months, but recovery from a recession can take a few years. ’s hit on state revenue.
…The latest version of the bill would cost the state $647.8 million in lost revenue in the 2017-18 fiscal year, the final year of its phase-in, according to an analysis by the legislative budget staff. It would delay and stretch out implementation from an earlier, costlier version that also included an individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. cut.
Introduced by Republicans, the bill had some tax cuts: reducing individual income tax rates by 10 percent, reducing the corporate income rate to 4.5 percent from 6.97 percent, eliminating the state equalization rate (property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. rate). Unfortunately, it also offered some tax gimmicks: job creation provisions and a “deal-closing fund” offered to out-of-state companies. Bad ideas. With a projected deficit of over $5 billion over two years, Arizona legislators have shown they cannot run a government. Why expect them to run an economy using selective tax incentives?
Arizona’s deficit is going to have to be solved by relying heavily on spending cuts. For long-term growth a good strategy is to move to lower rates and broader bases using the least distortionary taxes.
Arizona is also getting ready for a vote on a 1 percent sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. increase. More on Arizona here.
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