Two of the 11 bills that make up the Republican budget for Arizona — HB2899 and HB2900 — were defeated 30-30 in the Arizona House on Monday, June 7.
These bills include the disastrous Flat Tax proposal and the income tax cap at 4.5%. Together, they are an attack on the will of the voters because they reduce the impact of Prop 208 (Invest in Ed) on Arizona’s wealthiest residents. Arizona’s 1% (about 30,000 people) would have been the biggest beneficiaries of the Republican’s $1.5 billion in tax cuts in their budget. This state has over 7 million people. Why are the Republicans working for 30,000 people? These bills — and the other nine that make up their budget deal — deserve to die.
I am so thankful for Rep. David Cook who voted “no” on both bills along with all 29 Democrats.￼ The flat tax would have really hurt cities and towns across Arizona. They would have lost more than $200 million in shared revenue if the Flat Tax had passed. It would have forced them to cut services or raise sales taxes dramatically.￼ Rep. Steve Kaiser stood up and gave a short but impassioned speech about how glorious it would be to live in a state like Texas or Nevada with no income tax. He failed to add how high the sales taxes and miscellaneous fees are in states that have low personal and/or corporate income taxes. (Somebody pays. Roads and schools are not free.)
Majority Leader and primary flat tax booster Ben Toma and Ways and Means Chair Shawnna Bolick got some tough questions from Ways and Means Ranking Democrat Mitzi Epstein. Epstein pointed out that flat tax model generally includes eliminating the income tax loopholes at the same time. That is why the flat tax is sold as an “elegant, simplified tax model” (that favors the rich). Toma’s tax plan has the flat tax and adds more loopholes, instead of swapping the complex system of deductions, tax credits and loopholes for one low flat tax (which is the model). Other Ways and Means Democrats — Reps. Andres Cano, Lorenzo Sierra and me — joined in the debate fun. I tried to ask a follow-up question about the Arizona tax loopholes that remain and asked Epstein for examples. She got as far as, “Well … there are at least 30-40 tax credits …” before the majority party stopped her and said my question was off topic. I politely argued that discussing the other tax breaks and the classic flat tax “model” was relevant, but they said, “No.” In her vote explanation, Epstein quipped that the flat tax is a “big cannonball into the deep end of the pool.” The person doing the cannonball makes a “big splash and gets a lot of attention, and the rest of us just get wet.”
The Trump Tax Cut and Jobs Act (TTCJA) “streamlined the tax code” by doubling the standard deduction, eliminating many itemized deductions and dramatically reducing corporate taxes to an unsustainable level. Since then, one business or industry after another has come to the Legislature to get their pet deductions back — even though the TTCJA cut the corporate tax rate by several percentage points. The flat tax is a scam. It is “Welfare for the Wealthy.”
A few people, including Cook, brought up the Kansas Legislature’s disastrous dalliance with the flat tax a few years ago. Toma said Kansas went wrong because they passed the flat tax and “didn’t have the guts” to make the dramatic spending cuts that were necessary when the revenue was cut by the flat tax. I got an idea: how about we save time, money and anguish by just NOT making Kansas’ flat tax mistake? The Republicans who are saying that the “state government has so much money that we have to give it back to the people” are ignoring that the Arizona economy is percolating along because of the federal stimulus money and the resulting sales tax. They are also ignoring the advice of the Financial Review Committee and all of the local governments.
Cook’s “no” vote shows that he is listening to his rural mayors. His vote explanation basically said he’s all for cutting taxes, but he doesn’t like the Flat Tax. He also took issue with the rushed process. (You’ll remember the TTCJA was the biggest overhaul to the US tax code in history, and it rammed through the Congress by Republicans with almost no discussion or debate.) Some Republicans got the Arizona budget amendments on Sunday, June 6, via email, according to Rep. Regina Cobb, who proposed the 11-page amendment to HB2899. She skirted Cook’s question about when the public saw the amendments, so I asked that question of Toma, sponsor of the underlying bill, HB2899. I asked specifically about public availability of the “substantial” amendments to a “major overhaul of the Arizona tax code”. Toma answered but dodged my question. I finally said, “I have many constituents who are concerned about this budget — particularly the flat tax. They have the right to view and comment on this legislation. Does anyone on the Republican side know when these amendments were made available on Request to Speak (RTS) for the public to view and comment?” Finally, Toma had to say the amendments were on RTS after 9 a.m. on June 7, although some were written as early as June 2.
The Democrats and the public were not able to see the budget amendments, which were substantial, until the debate started at 9 AM on Monday.￼ This obviously isn’t fair to Arizonans. The public and the 48% of Legislators who are Democrats should be able to read the bills in advance of debate.
The amendments we looked at on Monday morning actually made the budget significantly worse. For example, Republicans inserted SB1532 (the attack on freedom of speech in schools) into the budget. Senator and school teacher Paul Boyer had the bravery to vote “no” and killed this bill when the Senate was last in session. Why is the Republican leadership inserting this racist bill into the budget? (Fun fact: some conservative Republicans are complaining on Twitter that the Republican budget is unconstitutional and violates the single subject bill because their Republican colleagues threw these unrelated failed bills into the budget.)
Rep. Jake Hoffman’s amendment to HB2900 would made an inequitable bill far less equitable by eliminating the modest increase to unemployment benefits. Spouting the Republican line, he said that unemployment benefits during the pandemic discouraged people from working, and the best thing we can do for workers is to get them off welfare. (I agree. Let’s pay living wages in Arizona, and they can get off “welfare.”) Hoffman was soooooo concerned about workers getting lazy because of too much welfare, that I just had to explain my vote on HB2900. I said, “We’re heard many comments on the floor today about workers getting lazy when they are receive too much welfare. The flat tax is ‘Welfare For The Wealthy.’ I’m concerned that the rich will get lazy if we give them too much welfare, which is why I am voting ‘no’ on HB2900.” Hoffman interrupted me and tried to shut me down, but I finished my two sentences, as he talked over me. His amendment was defeated because the House Republican leadership didn’t include it in their previously agreed upon list of deals with the Senate Republican leadership.
After hours of exciting debate and multiple votes, the 30-30 votes on both measures stood. The House is now adjourned until Thursday, June 10, which is when the Senate is scheduled to come back.
What will the Republicans do now? If we go back to work on June 10, we have 20 days to pass a budget, or the government shuts down. There is talk of another skinny budget being passed in order to keep the government going. The skinny budget wouldn’t include the grandiose tax giveaways. Apparently, the majority party would rather wrangle with each other than work with the other 48% of Legislators who are Democrats. Stay tuned.