High on their own supply-side theories and stuffed with the cheddar that Uncle Sam has been shipping to the state to keep the economy healthy through the pandemic, Gov. Doug Ducey and GOP lawmakers at the Legislature last week delivered the mother of all income tax breaks, creating a flat tax that will shift the burden of supporting the state government from Arizona’s wealthiest residents to the middle class.
And they are telling some whoppers to hide the real impact. The governor’s office suggested the average tax cut will be $350 a year—a number that only climbs that high because the amount of money being handed away to the highest-earning Arizonans is so colossal that it balances out the peanuts most Arizonans will receive. It’s like living on a block where nine houses are worth $100,000 each and a 10th is worth $1.1 million. On average, every house is worth $200,000—but that’s still twice the value of nine out of 10 houses.
Ducey had the cold stones to justify this giveaway to Arizona’s top earners by saying he was looking out for the “little guy.”
Everyone has their own definition of the little guy, but this proposal does the exact opposite. According to the state’s bean counters at the Joint Legislative Budget Committee, little guys—the ones who earn, say, between $40,000 to $50,000 a year and pay, on average, $683 in income taxes annually—will get about an average of $39 a year in this tax break. Meanwhile, people who earn between $200,000 and $500,000 will see, on average, a tax cut of $3,202. Those who earn between $500,000 and a million bucks a year will see a tax cut, on average, of $12,000, which will decrease their taxes by nearly 40%. And if you earn more than a million dollars a year, you’ll see a taxes decline by about 43%.
Why can’t Republicans be honest about the real beneficiaries of this taxpayer ripoff? Because they know good and well that Arizonans would rather see taxes invested in schools, highways, health care and other programs to improve their lives rather than given away to people who don’t need it—namely, people earning more than a million bucks a year.
Republicans rammed this budget through in a matter of days, with the Senate passing it literally in the middle of the night. The public didn’t have a chance to weigh in and even the Democratic caucus was shut down in the House of Representatives, with Speaker Rusty Bowers complaining that because Democrats hadn’t come to work earlier in the week and slowed the process down, they forfeited the right to speak out against this theft of the state’s treasury.
The few GOP holdouts against the budget—and most of them couldn’t wait to vote for this giveaway—came on board once Ducey agreed to increase the percentage of the income tax that goes to cities and towns from 15% to 18%. While that may hold cities and towns harmless, how long will it be before Republicans decide to cut that percentage or find other ways to shift costs to the local jurisdictions?
There’s a lot of good that money could have done for the state. Lawmakers could have funded schools, many of which are in disrepair. They could have invested in higher learning to reduce the ever-increasing cost of tuition. They could have funded special ed for kids who need extra help. They could have increased funding for our decaying highways. They could have put more money into affordable housing programs, making it easier for first-time homebuyers to get a house and begin building generational wealth.
But when your priorities are taking care of the rich, those sorts of projects are just going to have to be funded through bake sales.
This entire tax cut was Ducey’s revenge on the education community for having the temerity to ask voters to raise income taxes on the 1% to better fund schools. Voters, who want better schools, approved the measure last year, but Ducey would never let the will of the people stand in the way of making the rich richer.
While it’s highly unlikely that the flat tax could be reversed in the Arizona Legislature (as raising taxes requires a two-thirds majority vote), there’s a chance, however slim, that this could be reversed by voters. A coalition of groups are considering whether to hit the streets with petitions to force a referendum on the measure. The Legislature has set up a bunch of minefields in recent years to make it harder to get a referendum or initiative on the ballot, so we’ll see if organizers can sidestep those challenges and persuade voters to give up $3 a month in exchange for investments in the state’s people and infrastructure.