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.
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.
The Arizona Attorney General’s Office has filed the final brief in Arizona’s lawsuit against the U.S. Department of Treasury and federal officials challenging the Tax Mandate of the American Rescue Plan Act (Act) because it threatens to penalize states by withholding federal COVID-19 relief funding if they lower taxes in any fashion.
Arizona is asking that the Court declare the condition unenforceable and enjoin enforcement of the Tax Mandate. It does not seek to prevent Arizona from receiving the COVID-19 funds.
The Attorney General’s brief argues that the Tax Mandate is unconstitutionally ambiguous in that Congress failed to give Arizona and other states fair notice of the conditions upon which federal funds were being offered. Binding U.S. Supreme Court precedent has held that such ambiguity is fatal. In addition, Arizona’s brief argues that prohibiting any and all tax cuts is not properly related to federal spending.
After hearing oral argument on June 22, U.S. District Judge Diane Humetewa agreed to consolidate trial on the merits and issue a final judgment in this case. She also permitted both sides to file a final brief, which Arizona filed late Wednesday night.
The Court is expected to rule on the case and issue a final judgment in due course.
Foodservice, retail, health-care and logistics jobs are now coming with an extra perk—signing bonuses, some as much as $1,000, the Wall Street Journal reports. Once the domain of professional athletes or some white-collar professions, hiring bonuses have exploded across all sectors this summer.
So far, 10 states, including Michigan, Connecticut, Arizona, Colorado and Kentucky, have gotten into the work bonus game to move people off unemployment.
Last month, close to 20% of all jobs listed on ZipRecruiter had a signing bonus, up from 2% of all jobs advertised on the online employment database in March. Such diverse industries as convenience stores, hotels, restaurants, warehouses, trucking, health-care and retail have jumped on the signing bonus bandwagon, with bonuses starting at $500 and ballooning up from there..
Now, $1,000 has fast become the benchmark for hourly worker recruitment.
Employers like cash signing bonuses because they don’t impact the hourly wage long term, according to Brad Hershbein, senior economist at the W.E. Upjohn Institute for Employment Research. “Businesses are jockeying for workers,” he said. “They are basically gambling they can hire workers for a one-time payment. They are going to try that first, and if it’s not enough, then they will have to do persistent wage increases.”
This week, the Department of the Air Force announced much anticipated plans to move Close Air Support (CAS) and rescue missions, including A-10 Thunderbolt II and HH-60 Pave Hawk weapons schools and test squadrons, to Davis-Monthan Air Force Base beginning in fiscal year 2022.
The proposed plan would transfer rescue and attack missions, aircraft and personnel to Davis-Monthan AFB as part of the Air Force’s vision of making the base the Center of Excellence for CAS and rescue missions.
Moving the A-10 and HH-60 aircraft squadrons, one maintenance squadron and all the supporting personnel from Nellis AFB, Nevada will result in a small personnel increase at Davis-Monthan AFB.
The first phase of the proposed plan, released as part of the Department of the Air Force’s fiscal year 2022 budget request , is contingent on congressional approval of the retirement of 42 A-10 aircraft, 35 of which are at Davis-Monthan AFB. Retiring these aircraft will create the fiscal and manpower flexibility required to design and field the future force needed to meet combatant commander requirements. Retiring the older A-10s in 2022 would allow Davis-Monthan AFB to receive the new missions.
The A-10 Weapons Instructor Course and Test and Evaluation operations will transition in 2022. The HH-60 WIC, Test and combat-coded units to include the 88th Test and Evaluation Squadron, 66th Rescue Squadron, 58th Rescue Squadron, the 34th Weapons Squadron, and the 855th Aircraft Maintenance Squadron will move beginning in 2024.
The Air Force will complete the required environmental analysis before the moves.
The A-10 Thunderbolt Advanced Continuation Kitting wing replacement contract, which was awarded in August 2019, included the purchase of wings for 218 aircraft. The Air Force has invested $880 million in A-10 re-winging and avionics modernization efforts, enabling the fleet to fly well into the 2030s.
