PHOENIX, AZ – A bill that provides tax relief to small business owners, sponsored by Rep. Joseph Chaplik, which passed with bipartisan support, was signed by Gov. Doug Ducey on Friday. The bill revises state tax structure for taxpayers and protects small business from over taxation by the federal government.
“As promised, I’m glad to help give small businesses the ability to keep more of their hard earned dollars in their pockets by deducting their state income taxes on their federal returns,” Rep. Chaplik told AZ Free News. “This offers them much needed tax relief after a difficult couple of years.”
HB 2838 will not impact the state general fund, but according to Chaplik, will “provide Arizona’s small businesses with more working capital and tax relief without having a negative fiscal impact to the state.”
Since 2017, 15 states, both red and blue alike, have adopted SALT-parity legislation, including Connecticut, Wisconsin, Oklahoma, Louisiana, Rhode Island, New Jersey, and Maryland. Under HB2838, Arizona would join those other states, providing small businesses significant potential tax savings.
The federal government is also on board. In November 2020, the Internal Revenue Service issued guidance (Notice 2020-75) that pass-through entity businesses may claim deductions above the $10,000 State and Local Tax (SALT) cap.
HB 2838 is revenue neutral, as the deduction reduces federal taxes owed. It has no negative fiscal impact on the General Fund revenues, and Arizona cities and towns.
Gov. Doug Ducey described bipartisan legislation which sought to strengthen the State Emergency Council “well intentioned,” but he vetoed the bill anyway on Friday.
Senate Bill 1719 was one of 24 bills transmitted to the governor’s desk June 30, the last day of the legislative session. It was the only one vetoed by Ducey, who believed changing the law related to the State Emergency Council “would add unneeded bureaucracy to the management of emergencies, especially wildfires.”
There are 12 voting members of the State Emergency Council which recommends rules, orders, policies, and procedures to the governor during a declared state of emergency. State law requires the Council to “monitor each emergency declared by the governor” as well as the activities and responses to the emergency.
The Council is also required to recommend to the governor or the legislature when it believes emergency conditions have stabilized and the emergency “is substantially contained.”
Currently, the Council can be convened by the director of the Arizona Division of Emergency Management if the governor “is inaccessible.” It can then issue a state of emergency proclamation if approved at by at least three members of the Council, at least one of whom must be an elected official.
However, the law makes no mention of what happens if an accessible governor fails to convene the Council.
SB1719 was introduced in January by Senate President Karen Fann and Senate Minority Leader Rebecca Rios to bipartisan support. It would have required a governor to convene the Council “on or before the fourteenth day after proclaiming a statewide state of emergency…and shall continue to convene the council at least once every fourteen days for the duration of the statewide state of emergency.”
Under the bill, a statewide state of emergency would terminate if the governor failed to convene the Council according to the ongoing 14-day timeline.
The House passed SB1719 on a 44 to 14 vote margin and the Senate unanimously passed it on a 29 to 0 vote. But Ducey vetoed the bill.
In a July 9 letter explaining his action, the governor wrote such a law was “unnecessary given the good and thoughtful reformed developed this session between my office and the legislature to ensure guard rails during future health emergencies, preventing the potential for the kind of extreme and job destroying measures that we saw in other placed around the country last year.”
The members of the State Emergency Council are: the governor, the secretary of state, the state attorney general, the Arizona Adjutant General, the director of the division of emergency management, the director of the department of transportation, the director of the department of health services, the director of environmental quality, the director of the Arizona Department of Public Safety, the director of the state’s department of agriculture, the director of the department of administration, and the director of water resources.
There are also two advisory members -the Senate President and the Speaker of the House- who may give advice to the other members of the State Emergency Council but who is not eligible to vote. SB1719 included a provision to add several other legislative leaders as advisory members.
Senate Bill 1783, legislation that further reduces and streamlines taxes, was signed by Governor Doug Ducey on Friday. Sen. JD Mesnard and Rep. Ben Toma led the fight for the bill in order to protect small businesses from the threat of a 77 percent tax increase.
“This tax cut will keep Arizona competitive for small businesses already operating here and new businesses flocking here every day,” Ducey said in a press release. “After a year as tough as the last, we should not be raising taxes on our small businesses — we should be cutting their taxes. That’s exactly what Senate Bill 1783 does. Arizona has now passed the largest tax cut in state history and will have the lowest flat tax in the country. My thanks go out to Senator J.D. Mesnard and Representative Ben Toma for their leadership on this issue.”
Senate Bill 1783 establishes a new and lower alternative small business income tax structure. Under the plan, “small business income” is defined as interest, dividends, profits and certain capital gains.
“Small businesses are the backbone of our economy and integral to the future success of our state,” Mesnard said. “Small businesses should be able to grow and reinvest in themselves without being forced to pay astronomical taxes. Rather, government should get out of the way so that they can thrive. That’s why I’m so grateful for the support of Governor Ducey and my colleagues in the Legislature.”
This tax relief will ensure small businesses continue to choose Arizona to start, expand or relocate operations. Small businesses are a core component of our state’s economy, making up more than 99 percent of Arizona’s businesses and employing more than one million people. Because of the structure of the 3.5 percent surcharge on individual income tax under Proposition 208, small businesses will not be subject to this crippling tax hike.
“It’s a no-brainer to have a separate tax structure for small businesses,” said Toma. “It should be our goal as public servants to make filing taxes easier for Arizonans. This session has been a massive win for Arizona taxpayers. Thank you to the governor and the many who supported this bill.”
The bill allows taxpayers to exclude small business income from their total individual income. Instead, small business income will be subject to an alternate small business income tax. A flat tax on small business income will phase in over time:
3.5 percent in 2021
3.0 percent in 2022
2.8 percent in 2023 and 2024
2.5 percent in and after 2025
Governor Ducey signed this year’s budget on June 30, which fulfills his commitment to ensuring working families, small businesses, veterans and all Arizona taxpayers get to keep more of their hard-earned money.
The budget implements the largest tax cut in state history. Arizona taxpayers will see a 2.5 percent flat tax phased in over three years and subject to certain revenue thresholds being met beginning on January 1, 2022. The tax plan saves money for every Arizona taxpayer no matter their income, eliminates income taxes on veterans’ military pensions, and increases the optional charitable contribution deduction over time to 100 percent.
The Washington Post and the Wall Street Journal’s editorial board published columns about the tax plan and the positive effects it will have on Arizona. Additionally, Governor Ducey, Senate President Karen Fann and House Speaker Rusty Bowers authored a joint op-ed about the historic tax reform in the Phoenix Business Journal.
PHOENIX — On Friday, Governor Doug Ducey signed legislation sponsored by Rep. Jake Hoffman, HB2906, which prohibits the state and any local governments from requiring their employees to engage in orientation, training or therapy that suggest an employee is inherently racist, sexist or oppressive, whether consciously or unconsciously.
“Critical Race Theory and it’s divisive, bigoted ideas have become a growing problem within Arizona governments,” said Rep Hoffman. “Often times disguised by innocuous sounding terms like “equity,” this Marxism-based movement has crept up in cities and school districts throughout our state including the cities of Phoenix, Tucson, and Flagstaff, among many others. Arizonans rightfully refuse to support racism and this legislation ensures that remains the commitment of our state.”
“I applaud Jake Hoffman and our legislature for taking strong action to stop the insidious, racist ideology packaged under CRT from infecting our government any more than it already has,” said Phoenix City Councilman Sal DiCiccio.
“Phoenix currently has multiple CRT-based programs employees are being subjected to – they won’t call them CRT, they’re smart enough to use generic “equity” language – but that’s exactly what they are,” explained DiCiccio. “Worse, it’s not just employees being indoctrinated with this garbage, multiple programs like our recently passed Climate Action Plan and the Office of Arts and Culture’s Racial Equity Learning Cohort are actively pushing CRT on the public.”
“As educators and citizens concerned with the future of our state, our goal should be to achieve unity and diversity,” said Kathleen Winn Maricopa Community College Governing Board member. “Unity as people with shared dignity, but diversity of thought and beliefs. When you create conflict and try to transform society through bias and hatred you only perpetuate hatred. I am grateful for this legislation crafted and passed in response to the public outcry to end Critical Race Theory.”
Governor Ducey’s signing of HB 2906 follows the signing of HB 2898 last week. That law ensures that students cannot be taught that one race, ethnic group or sex is in any way superior to another, or that anyone should be discriminated against on the basis of these characteristics. The law allows a fine of up to $5,000 for schools that violate the law.
“As a school board member,” said EVIT School Board Member Shelli Boggs. “I have seen firsthand taxpayer funds being spent to train hundreds of board members and staff from across the state on the disgusting racist ideology called Critical Race Theory. I’m glad the legislature put an end to this pervasive abuse of taxpayer money.”
Articles published by some media outlets this week that top Arizona officials knew of a cyberattack of Maricopa County’s voter registration files last fall but have kept it hidden are incorrect, as shown by the level of news coverage the hack received in December and January.
Part of the problem, however, is Maricopa County officials did not respond to the cyberattack in a proactive manner when it was discovered during the 2020 General Election. There was no press conference nor even a press release advising the community that voter registration data had been hacked.
The dearth of updates has not helped instill voter confidence in the months since then if social media comments are representative of community mood. And a letter Maricopa County Recorder Stephen Richer has sent to some voters is not helping, as it contains an inaccurate claim about how county officials responded to the cyberattack.
News of the cyberattack was first announced in early December in a Forbes article which revealed FBI agents armed with a federal search warrant raided a Fountain Hills condominium on Nov. 5, 2020, two days after the General Election. The agents went to the residence of Ellen and Elliot Kerwin looking for evidence of the cyberattack, according to court records.
The search resulted in the seizure of several computers from the Kerwin home, along with eight hard drives, and a bunch of electronic accessories.
Megan Gilbertson, a Maricopa County spokeswoman, confirmed the cyberattack to Forbes for its Dec. 4 article and she has insisted that the only voter data the hacker or hackers accessed from Oct. 21 to Nov. 4 was information about voters which is already public by law.
“Analysis by the Maricopa County Recorder’s Office IT Security indicates an unauthorized individual gathered publicly accessible voter information from our website,” Gilbertson said. “Additional security controls were put in place to mitigate against this activity occurring in the future.”
But what Gilbertson failed to say is how someone was able to access the county’s voter registration files and whether the hacker tried to get into other county databases. Other Maricopa County officials have appeared to try to divert attention away from the cyber incursion or to minimize the impact, often stating there were “no problems” with the election.
Steve Chucri of the Maricopa County Board of Supervisors announced just hours before the Forbes article was published that he was considering asking for a third-party audit of the county’s Dominion Voting System machines, even as the canvas was still pending in the nation’s fourth populous county.
Then after Stephen Richer was sworn in as the county’s new recorder in January he sent a notice to some voters addressing the hack. The notice tells “Dear Voter” that the county’s IT Security Department “immediately identified the attack and successfully took steps to stop the activity.”
However, it is apparent from FBI documents that the IT department did not “immediately” stop the breach, as the attack occurred over 15 days.
A spokeswoman for the U.S. Department of Justice told AZ Free News in May the agency cannot comment about the cyberattack as it is part of an ongoing investigation. But voters seem to be growing impatient with the lack of accurate and timely information more than eight months after the hack.
Among the questions left unanswered is whether the cyberattack was undertaken simply to see if it could be done, or was it intended to cast doubt about the election? Also, was the hack possible due to lax county protocols or possibly even by the unintentional actions of a county employee?
More importantly, is Maricopa County’s reticence connected in any way to the board of supervisors’ refusal to comply with a Senate subpoena for access to the election department’s internet routers?
The most critical question, however, is when will county officials come clean with a complete explanation of how someone hacked the voter records of a major government body.
