State Capitol News
Wed March 30, 2011
Proposal for Flat Income Tax Fails
Phoenix, AZ – The proposal by Rep. Steve Court would have imposed a single tax rate of 2.13 percent. That's less than the current range of about 2 1/2 to 4 1/2 percent. But it also would eliminate the exemptions taxpayers get for members of the household, and all the deductions, ranging from those for home mortgage interest and charitable contributions, to the ability to subtract medical expenses. The result was that six out of every seven Arizonans would have paid more -- and most folks earning above $100,000 a year would pay less.
(It was a big policy shift. And I don't think we have enough time to educate members and the public as to pros and cons of the bill. And some accountants have come forward and said, well, what about this issue, this issue, this issue. So we have a lot of things, the fine print, we still have to work out.)
But Court said he does not intend to alter the basic nature of the bill which is one tax rate and no deductions. And he said nothing he has heard from constituents convinces him otherwise.
(I get e-mails that I have eight kids and you're taking away my deductions. I have this and that. And I think you need to be able to educate people that yes, we're getting rid of these deductions. But we're also slashing the rate way down.)
Those figures from the Department of Revenue, however, paint a different picture for most Arizonans. For example, the state figures that the average person with a taxable income of $20,000 to $25,000 would see what they owe more than double, from $165 a year to $358. Even someone in the $50,000 to $75,000 category would see a $178 increase, to $1,072. But those making more than $500,000 a year would, again, on average, see a decline in tax liability of more than 40 percent. For Arizona Public Radio this is Howard Fischer.