![]() ![]() The state of Arizona relies on two broad types of taxes: personal income and sales and excise. While it only takes a simple majority of legislators to pass a tax cut, it takes a supermajority to reverse tax cuts or raise revenue. Reducing revenues by an estimated $1.7 billion a year will make it virtually impossible to adequately fund public schools, universities, infrastructure, and other important needs in the future. The flat tax and rate cap will reduce the contributions from households with high incomes to the General Fund and continue Arizona’s increasing dependency on regressive sales taxes to fund state needs. Approximately 93 percent of the tax cuts would benefit the top 20 percent of income earners- residents earning $108,000 or more in taxable income. ![]() The tax cut is based on a 2.5 percent flat tax and a 4.5 percent cap on the top marginal tax rate. On June 22nd, 2021 the Senate passed a permanent $1.7 billion flat tax cut and 4.5 percent cap on the marginal tax rate and the House of Representative plans to follow suit on June 24th.Ī flat tax system is one in which everyone pays the same tax rate, regardless of income. Today Arizona has over a $1 billion ongoing surplus and has temporarily cut $625 million in income tax through federal conformity. Fortunately, billions of federal relief dollars have worked to stimulate the state’s economy, backfill state agency budgets, and double unemployment wages for hundreds of thousands of Arizonans. In other words, Arizona’s tax policies favor certain people based on their income and wealth, while shifting the responsibility to fund our schools, roads, and public safety to low- and middle-income ArizonansĪ year ago, Arizona budget experts were predicting a $1.1 billion deficit and possible cuts to key services due to the COVID pandemic. Those with low incomes pay a much higher share of their income in taxes compared to the wealthiest. Through decades of laws and policy decisions, Arizona’s elected leaders have created a tax code that is unfair and regressive. “For every $1 in new ’22 ongoing initiatives, the ’24 cash balance declines by $3”- JLBC staff, April 15th, 2021 This cut will make Arizona’s tax system more regressive than it is today with 93 percent of the tax cuts going to people in the top 20 percent of incomes. The Arizona legislature is poised to permanently cut over a billion dollars in state revenues, the largest tax cut in the last three decades. ![]()
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