Thursday, July 30, 2009

Arizona Republicans’ tax increase comes up short

Bad deal: Sen. Pres. Bob Burns (sitting) and Gov. Jan Brewer

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

2 comments:

Eli Blake said...

Here's a bit of irony-- even Ron Gould, the most reactionary, anti-government wingnut in the Senate, was quoted on NPR this morning as saying that the GOP package would only shift taxes from businesses onto the middle class. Now if even he is giving this as the reason he won't support the sales tax referral then it proves that Republicans know good and well that is what their overall tax plan does, not raise revenue to pay for anything.

The only good thing about this is that Democrats have stuck together-- no defectors from sanity there.

The Republicans may have the votes to ram something through that decimates schools, colleges, state services and local governments while trading massive tax cuts for the rich for the possibility of raising them back on the backs of the poor and middle class, but if they do then I am glad that Democrats won't be part of the charade.

If they do ram this through then make them own it, make them have to defend it and force them to run on it.

Eli Blake said...

You also forgot about the other part of the Harper 'amendment' to the budget.

He wants to cut 50% out of the auditor general's office, ensuring that not only will schools, colleges and government agencies see their budgets slashed, but what they do get will be more susceptible to waste, fraud, mismanagement and embezzlement.

Aren't GOPpers wonderful?