Thursday, July 30, 2009
Arizona Republicans’ tax increase comes up short
UPDATE, 7/31 AM: Check RepPatterson on twitter for latest.
PHOENIX -- Read below an honest analysis of the bad budget GOP Gov. Jan Brewer and legislative leadership seem to be rushing to try to pass. There may be some action soon at the capitol on this, or there may not. Seems GOP leadership may still be having a tough sell to get enough votes on this junker of a budget deal.
Republicans’ tax increase comes up short
After signing a no-tax pledge, Republicans are proposing a one-cent sales tax increase that they say will yield $2.2 billion in three years. It allows for a one-cent increase in 2010 and 2011 and a $0.50 cent increase in 2012. But they also propose to decrease income tax by $400 million a year and permanently repeal $250 million a year of the state education equalization tax.
A more likely scenario is that a one-cent increase will raise as little as $750 million a year. (Source: Republican lawmakers in The Arizona Republic, ‘As sales-tax plan gathers support, questions linger,’ July 28) and a total of only just over $1.4 B in the next 3 years.
What does that mean for the state? Simple math tells us.
Republicans’ tax increase:
• 2010 - $312.5 million (assumes a one-cent increase generating $750 million a year divided by 12, multiplied by five months since collections would start in February)
• 2011 - $750 million (assumes a one-cent cent increase at 12 months of collections)
• 2012 - $593.75 million (assumes collections for 7 months at 1 cent increase and 5 months at a half cent increase)
• 2013 - $218.75 million (assumes collections for 7 months at half cent increase)
TOTAL: $1.875 billion in revenue over 4 years
Republicans’ tax cuts:
• State equalization tax cuts given away over four years: $1 billion ($250 million a year in 2010, 2011, 2012 and 2013)
• Income tax cuts given away over next four years: $800 million ($400 million a year beginning in 2012 and into 2013)
TOTAL: $1.8 billion in tax cuts
Note: These tax cuts are permanent and guaranteed over the next 4 years, even if the sales tax increase does not pass
RESULT: Republicans’ plan gives nearly as much in guaranteed tax cuts as it would raise in increased revenue over the next four years, which fails to solve the deficit.
What the Republicans’ plan means for overall revenue for the state:
• Total sales tax generated over four years (if it passes on the ballot): $1.875 billion
• Total tax cuts given away over four years: $1.8 billion
• TOTAL NEW revenue to the state over four years: $75 million
The future, according to Republicans:
Beginning in 2014, $650 million given away annually ($250 million for state equalization tax plus $400 million in income tax cuts), primarily to the wealthy and large corporations.
Figures reflect impact of the provisions of HB 2015 over 4 years