The last thing the people of Arizona need right now is a sales tax increase. But leave it to state lawmakers to try to push one through by proposing a referral to put a tax hike on the ballot to fund fire districts.
The bill is SCR1049. And if it makes it onto the ballot—and gets approved by voters—it would create a 20-year statewide 0.1% sales tax to fund Arizona’s 144 fire districts. It would also distribute the funds proportionally to the fire district’s equalized property valuation, but not to exceed 3% to any one fire district.
To the average voter, this may not sound like a big deal. After all, firefighters provide an important service that keep people and their property safe.
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.
“Punish the rich” tax proposals never seem to go out of style—at least for the Democrats. In the 2020 Democratic presidential primaries, it was all the rage for Senators Elizabeth Warren and Bernie Sanders. But after they both failed in their White House bids, they decided to double down on their wealth tax with an ill-conceived proposal on Capitol Hill in early 2021.
So far nothing has come of that. But enter President Biden.
At the end of March, Biden unveiled his Billionaire Minimum Income Tax proposal, and it’s every bit the disaster that you would imagine it to be.
Public outcry as well as pushback from banks and financial institutions of all sizes could force the Biden Administration to reconsider its proposal which would grant the Internal Revenue Service access to millions of daily transactions into or out of personal and business financial accounts.
The proposal would mandate the reporting of every deposit and withdrawal above $600, which is drastically lower than the current “above $10,000” threshold for mandated reporting under the Bank Secrecy Act of 1970. Banks and other financial institutions are also already required to report any cash deposits and withdrawals which seem “suspicious.”
But according to President Joe Biden, a much lower threshold is necessary to ensure “the super-wealthy” cannot hide income from the IRS.
Most of the criticism of Biden’s “anything above $600” proposal centers around the right of privacy expected by law-abiding Americans. That concern was expressed in a letter to Speaker of the House Nancy Pelosi and Treasury Secretary Janet Yellen from more than 140 Republicans in Congress, who also highlighted the burdensome compliance costs such a regulation would place on banks and financial institutions.
Among those signing the Sept. 13 letter were Arizona Reps. Andy Biggs, Debbie Lesko, and David Schweikert. The letter notes no evidence has been put forth by the White House or the IRS that the proposed threshold change “would substantially aid the IRS’s efforts to close the tax gap beyond the information already at the IRS’s disposal.”
In recent years, various IRS Commissioners have complained about understaffing and understaffing at the agency. The letter from the members of Congress also noted concerns that known issues with the IRS’ beleaguered IT system would make the personal, financial data of millions of Americans vulnerable to attack.
“Considering the IRS experiences 1.4 billion cyberattacks annually and has experienced multiple data breaches, we should not give this agency additional sensitive data to manage,” according to the members’ letter.
That letter was bolstered by one sent to Pelosi Sept. 17 by a coalition of banking, financial, and other impacted companies including the American Bankers Association, the Credit Union National Association, the Mortgage Bankers Association, and the National Association of REALTORS.
“This proposal would create significant operational and reputational challenges for financial institutions, increase tax preparation costs for individuals and small businesses, and create serious financial privacy concerns,” the letter stated. “While the stated goal of this vast data collection is to uncover tax dodging by the wealthy, this proposal is not remotely targeted to that purpose or that population.”
Last week the Democrat who chairs the U.S. House Ways and Means Committee admitted there is no longer support among his party for cutting the reporting threshold to $600.
Rep. Richard Neal (D-Mass) said the threshold should probably be lowered from $10,000, but the $600 proposal does not have the needed votes. Neal has not said what new threshold amount is still being considered by the White House.
According to the banking and financial industry, a fight is expected for any change that directly impacts the average citizen without a valid reason.
“The American people feel strongly about their right to privacy and it is not reasonable to undermine their financial privacy without a clearly articulated purpose,” the Sept. 17 industry letter states.
Democratic Senators Mark Kelly and Kyrsten Sinema will likely support the Biden Administration and Democrats’ $3.5 trillion tax plan, causing Americans to pay more in corporate taxes in Arizona than in China. The bill was derived from President Joe Biden’s Build Back Better Plan, and it would be the largest spending bill in American history.
If the bill passes, the federal-state corporate tax rate in Arizona would jump to over 30 percent, while China’s tax rate would be around 25 percent. That’s not including those enterprises in certain industries supported heavily by the Chinese Communist Party (CCP), which could receive a tax rate as low as 10 to 15 percent. Additionally, the bill would cause capital gains tax in Arizona to rise up over 35 percent, while China’s would ring in around 20 percent. This data was compiled by Americans for Tax Reform.
Back in July, Sinema expressed lack of support for the bill in July over its price tag, but not its content. At that point, Kelly hadn’t made a commitment to the bill either.
“I have also made clear that while I will support beginning this process, I do not support a bill that costs $3.5 trillion,” said Sinema. “And in the coming months, I will work in good faith to develop this legislation with my colleagues and the administration to strengthen Arizona’s economy and help Arizona’s everyday families get ahead.”
However, both Sinema and Kelly voted in favor of the framework for the $3.5 trillion plan last month.
The Biden Administration and Democratic Party’s proposed tax increases would cause the U.S. to have one of the highest capital gains taxes in the world.
Analysts with the Tax Foundation estimated that the impact of this policy would reduce the GDP by about one percent: more than $2 for every $1 in new tax revenue, or about $332 billion of lost output annually. Over the course of a decade, the cumulative GDP would reduce by nearly $1.2 to $1.8 trillion, which they stated would far exceed the amount of revenue the plan would raise in the same amount of time.
All while eliminating an estimated 303,000 full-time jobs. The primary cause for these projected negative changes comes from the proposed corporate tax rate. They estimate that this alone would reduce the GDP by .6 percent and eliminate 107,000 jobs.
As for after-tax incomes, they estimated that individual taxpayers would see an average reduction of $800 each year.
The Tax Foundation’s Senior Policy Analyst, Garrett Watson, assessed that ultimately, low- and middle-income families would feel these repercussions the most.
“The economic harm caused by the tax increases would claw back some of the plan’s expanded tax credits aimed at low- and middle-income families. For those in the bottom 30 percent, it would reduce the average net benefit of the plan per filer from $341 to $233, a 30 percent reduction,” wrote Watson. “Before accounting for economic effects, filers in the middle quintile would see a decrease in average after-tax income of about $38 – mostly due to the corporate tax increases – but that would rise to a $493 drop in average after-tax income every year when including the negative economic effects. The top quintile would see a $1,287 drop in average after-tax income, rising to a $3,861 drop in average after-tax income on a dynamic basis.”
They also noted that these proposed changes would raise a net federal revenue of around $1.1 trillion from next year to 2031, without accounting for dynamic factors like the estimated reduction in economy size. However, that revenue would be reduced by $1 trillion in tax credits. If dynamic factors weren’t excluded, federal revenue would ring in around $804 billion in revenue net of tax credits.
Per a poll released by Navigator Research earlier this week, House Speaker Nancy Pelosi claimed that an overwhelming majority of Americans supported the Build Back Better Act. The results meted out to 66 percent of Americans, 61 percent of independents, and 39 percent of Republicans.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
