PHOENIX (3TV/CBS 5) - Gov. Doug Ducey and Republican leaders at the state Capitol are pushing a $1.5 billion tax cut they said will benefit all Arizona taxpayers. But it won't benefit everyone equally. Less than 10% of the cuts will go the bottom 80% of Arizona taxpayers, according to an analysis conducted by the Arizona Center for Economic Progress. The same study also shows 91% of the cuts will go to the wealthiest 20% of Arizona taxpayers, or those making more than $108,000 a year.
A 2.5% flat tax rate is the basis of the proposed tax reduction that, if passed, will essentially become permanent. While lawmakers can slash taxes with a simple majority vote in the House and Senate, it takes a two-thirds majority in both chambers to hike taxes because of a voter-approved initiative that passed in 1992.
The agreement would cap the maximum any taxpayer will owe with a new voter-approved tax surcharge for education at 4.5%
Despite the year-long pandemic, the state currently has a record surplus of cash because of an infusion of federal money that helped backfill state budgets. David Lujan, the president and CEO of Children's Action Alliance, said the governor and state leaders are missing the opportunity to help people still struggling to rebound from the public health crisis.
"We should be taking this opportunity to invest in our public schools, to expand health coverage for low-income children, to make housing more affordable, things people are needing now as they struggle to come out of this pandemic," Lujan said.
However, Rep. Ben Toma, who is leading the fight for the flat tax, said now is the time to make the cuts. The Republican from District 22 said a lower tax rate will help position Arizona for the future by attracting companies who are leaving states with higher tax rates. "We don't want them to fly over. We want them to seriously consider Arizona," he said.