Let’s Zero Out Arizona’s Income Tax—And End Tax Day Forever

Let’s Zero Out Arizona’s Income Tax—And End Tax Day Forever

By Matt Salmon |

If Tax Day were held in early November instead of April 15th, I doubt Republicans would lose a close election again.

The financial squeeze of the Internal Revenue Service’s (IRS) filing deadline always feels personal. But it especially hurts this year. On top of President Joe Biden’s proposal to hike taxes on everything from capital gains to married couples, families across the country are suffering from another hidden tax: historic inflation.

The nationwide Consumer Price Index (CPI) increased by 7.9 percent as of last month. In Arizona, where the average price of gas now exceeds $4.60 per gallon, the Phoenix area is suffering from a CPI increase closer to 11 percent. Wherever you look, workers’ paychecks just aren’t going as far as they used to.

It’s wrong.

Florida and Texas have it right. People deserve to keep the money they earn. That’s why, if I’m elected as Arizona’s next governor, I plan to eliminate our state’s income tax once and for all.

Republicans need to stay on offense. Democrats in the Grand Canyon State dream of turning us into California. They have been aggressive in their efforts to do so, from pushing a 78 percent hike on small businesses at the state level to ramping up tax and fee increases at the local level.

Conservatives cannot allow ourselves to be pacified by simply stopping these bad ideas. We should feel equally comfortable moving in the opposite direction. And so far, thanks to smart policymaking by Governor Doug Ducey and our state legislators, we have been successful in doing so.

Over the past few years, Arizona has indexed the state income tax rates to inflation; conformed the state income tax to the Internal Revenue Code after passage of the Tax Cuts and Jobs Act; exempted military retirement from the state income tax; and passed into law a 2.5 percent flat tax representing the single largest tax cut in our state’s 110-year history.

Along the way, Democrats repeatedly warned that further reductions in the income tax would plunge us into turmoil and bankrupt government services. In reality, our state budget is in better shape than ever, with $5.27 billion in projected surplus revenue this year and plenty of room to return money to taxpayers.

Our economy is booming, too. We experienced the third-fastest economic recovery in the United States coming out of the pandemic, and we are expected to add more than 720,000 jobs over the next ten years.

These are the fruits of freedom. It is well past time to go further.

By eliminating the state income tax, we will create a business environment so welcoming to new investment that we’ll be beating businesses and entrepreneurs off with a stick. These job creators won’t pay any income tax. But they will pay property taxes, sales taxes, and more—and our tax revenues, along with our economy, will continue to grow hand-in-hand.

The bottom line is that hardworking families deserve to keep the money they earn, especially in inflationary times like these when the American Dream feels so far out of reach.

Zeroing out this tax—and ringing in Arizona’s final Tax Day—is not just the smart thing to do. It’s the right thing to do. I am the only candidate for governor who has endorsed it. And, as our next governor, it’s exactly what we will do.

Matt Salmon, a former U.S. representative and co-founder of the Freedom Caucus, is a Republican candidate for governor of Arizona.

Arizona Is Only Hurting Itself With High Income Taxes. Why A Flat Rate Is Smarter

Arizona Is Only Hurting Itself With High Income Taxes. Why A Flat Rate Is Smarter

By Grover Norquist |

Arizona’s income tax – with a top rate of 8% – is not competitive. Reducing and eventually eliminating the state income tax would be a huge win for all Arizonans.

Individual taxpayers and families would be able to keep more of their hard-earned paychecks. Small businesses would be able to invest more in their employees. And Arizona would be much more attractive to businesses and investment, bringing new jobs and opportunities to the state.

Over the last decade, millions of people and jobs have been fleeing from high-tax states to states that do not impose income taxes. The ability to work remotely will only amplify this trend.

Unfortunately, Arizona’s current income tax puts it on the wrong side of this equation.

Arizona is a high tax state and slipping further

Under the status quo, Arizona’s income tax – with a top rate of 8% – is not competitive. Eight states – including Arizona’s neighbor Nevada and nearby Texas – do not impose individual income taxes of any kind. Thirty-two more states – count Arizona’s neighbors Colorado, New Mexico and Utah, among them – have top rates that are lower than Arizona’s.

Even worse for Arizona, the list of states that do not impose income taxes will continue to grow. Mississippi Gov. Tate Reeves, New Hampshire Gov. Chris Sununu, West Virginia Gov. Jim Justice, and Arkansas Lt. Gov. Tim Griffin are among several key lawmakers that are working to eliminate income taxes in their states.

Unless Arizona begins reducing and phasing out its income tax, it will continue to fall behind.

The good news is Arizona’s leaders refuse to sit back and allow it to fail. Gov. Doug Ducey, Sen. J.D. Mesnard, President Pro Tem Vince Leach, Majority Leader Ben Toma and many others are eager to provide pro-growth income tax relief.

A flat tax is a much better way to go

They are working on a tax plan that would streamline Arizona’s current four-bracket system (five brackets when accounting for the Proposition 208 “surcharge” of 3.5% that will be imposed on certain income, resulting in top rate of 8%) down to a flat tax of 2.5%.

That would be lower than its current bottom rate of 2.59% (with adjustments being made to ensure that even with the Proposition 208 “surcharge,” which would effectively create two brackets, the top rate would not be higher than 4.5%).

Flat taxes protect all taxpayers from tax increases. Under a progressive income tax, taxpayers are divided into small groups, allowing politicians to rob them one by one. Raising a flat tax, on the other hand, is much more difficult because politicians are forced to answer to every single income tax filer.

Making this news even better, there is a serious effort to include a full phase-out of the income tax (excluding the Proposition 208 “surcharge”) over time through the use of revenue triggers, a responsible way for states to cut taxes without getting ahead of their ski tips.

It could bring new jobs, higher wages

If such a provision were included, Arizona would be a model for other states to copy.

In addition to reducing income tax rates, the Republican tax plan would provide even more income tax relief by quadrupling the child tax credit and by coupling the standard deduction to inflation.

The Republican tax plan would be a huge victory for every single Arizonan. Reducing and, ideally, eliminating the income tax would attract businesses looking to expand, investors looking for growing economies with hospitable tax climates and families looking for greater prosperity.

This would bring new jobs and opportunities to current Arizona residents.

Income tax relief would also allow small businesses, which overwhelmingly pay their income taxes on the personal side of the code, to invest in higher wages, and would allow the hardworking people of Arizona to keep more of their paychecks.

Arizona’s future will be brighter if it begins reducing and eliminating the state income tax.

Grover Norquist is president of Americans for Tax Reform, a nonprofit taxpayer advocacy organization that was founded at the request of President Ronald Reagan. Reach him at gnorquist@atr.org.