Thursday, February 25, 2016

An experimental flat tax: Ducey's Dodge?

Here's the report on a tax cut proposal that let's Gov. Ducey off the hook for his promise to reduce income taxes every year eventually to zero. It is HB2018 by Rep. David Stevens, R-Sierra Vista, reported by the Arizona Capitol Times (subscription required).

So here’s a simple way to figure your taxes: List what you make, deduct $10,000 and pay 1 percent of that to the state.

That’s the plan that the state House adopted Wednesday, at least for those at the bottom of the income scale. It would allow single Arizonans who earn less than $25,000 a year to choose an optional flat tax instead of having to go through all the computations.

But Rep. David Stevens, R-Sierra Vista, said he sees his legislation as just a starting point.

Stevens said SB2018 [it is HB 2018] is set up as a five-year pilot project to see how it works, who takes advantage of it, and how much the state might lose in revenues. He said there’s no reason the same system would not work for everyone.

Stevens acknowledged that, pretty much by definition, taxpayers will choose the method that costs them less.

He said legislative budget staffers have put the potential loss to the state at $39 million.

That’s based on an estimate that 660,000 people would be eligible to use the optional flat tax and that 312,000 would actually opt for that alternative. But Stevens said he’s not concerned about the price tag.

“The beauty is, that’s money back in their pockets,” he said. “That’s the goal, to have people keep more of what they earned and not to have the state take it.”

This is more of the "screw you, I've got mine" outlook.

Stevens may have something going for him politically that could help his measure become law.

Gov. Doug Ducey promised during his 2014 campaign to propose reducing taxes every year “with the goal of pushing income tax rates as close to zero as possible.” What Stevens is proposing could be a way for Ducey to meet that promise.

That would be Ducey's Dodge.

This report also appeared this morning in the AZ Daily Star.

P. S.

As of this morning (Thursday, 8:30 AM) the bill's status did not yet reflect passage by the House. Track it here.


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