Gov. Doug Ducey and legislative Republicans are on the verge of a massive tax cut for Arizona's wealthiest residents, with cities and towns set to pay for it for decades to come.
While COVID has been rough on many of us, it has been a boon for state revenues, especially thanks to all that stimulus money that has been flowing to the Grand Canyon State from Uncle Sam.
As a result, the state is sitting on a massive surplus—and Ducey plans to use the windfall to push through a flat income tax. While a flat tax might sound fair at first blush, it basically amounts to a tax cut of $826 million that's going to 30,000 of Arizona's highest earners, according to the analysts at the Grand Canyon Institute, a centrist think tank focused on economic issues.
Leaders of cities and towns would be hammered by this proposal, losing an estimated $225 million a year in state-shared revenues—money that pays for cops, firefighters, parks, roads and other local services. We have to admit that we're a bit shocked to hear GOP leaders pushing so hard to defund the police.
We know the last year has been hard on the 1% and they may need a massive tax break, but as a recent report from the Grand Canyon Institute points out, the state has plenty of outstanding needs—and attending to them could go a long way toward making the state more attractive to business.
For example, the state could stop rolling over education costs into future budgets, put an end to stiffing schools on repair bills, invest in the highway system, reverse cuts to the universities and community colleges and put some money toward affordable housing programs as property values skyrocket.
Team Ducey knows this tax cut is an unpopular idea, which is why they are trying to ram it through with few hearings as to the impact. Ducey Chief of Staff Daniel Scarpinato tried to sell it as a tax cut for all Arizonans, but there's no doubt that Arizona's top earners get most of the benefit, while folks on the bottom see their services and programs cut.
You know who understands what a bad idea this is? Jan Brewer, the former Republican governor who had to slash state spending after she inherited a big deficit in 2009.
"History has taught me that it would be imprudent to base a large, permanent tax cut, with $19 billion over the next decade, on a snapshot of revenue and expenditure forecasts artificially bolstered by the federal largesse," Brewer wrote in the Arizona Republic last week. Brewer suggested the state instead consider tax rebates.
There are a few Republican lawmakers who are holding out against the proposal. We can only hope they stand firm and block this heist of state revenues for the benefit of those who need it least.
The upcoming fight this week is pretty much it. If Ducey wins, the tax cut is permanent; it would require an impossible two-thirds majority of the Arizona Legislature to reverse it. Unless this lousy idea is stopped now, you can forget about better schools, better streets, better parks. The rich will get richer, the poor will get poorer and Doug Ducey will be off running for president with the support of all those wealthy folks he made wealthier while the next governor is left holding the bill.
Hear Jim Nintzel talk about fun things to do at 9:30 a.m. Wednesday mornings during the World Famous Frank Show on KLPX, 96.1 FM.