Governor Doug Ducey and Arizona Republicans are promoting a 2.5% flat tax on personal income and have included it in the budget package, currently under negotiation in the Arizona Legislature. They are also proposing that income over $250,000 for individuals and $500,000 for couples be taxed at 1%. Usually excess profits are taxed at a higher rate, not at a lower rate, but, hey, this is Arizona.
You’ll remember that in 2020 the voters approved Prop 208 Invest in Education. With this citizens initiative, the voters created a 3.5% fee on personal income over $250,000 for individuals and $500,000 for couples. The Republican tax plan will eliminate the Prop 208 “burden” on Arizona’s 1%. Who will pay the difference? You will.
Rather than requiring Arizona’s richest 30,000 residents pay their fair share of public education costs, the state is giving them a tax break, and the state is going to pay the bill for them. In the news, Rep. David Cook called the Flat Tax “unfair” because everyone will pay taxes, but the state will “backfill” the cost and help out “high-earners” (ie, Arizona’s richest residents).
Other states have tried flat taxes and they have broken the budget. It will not only hurt the states budget, but it will hurt the cities and towns also. The Republican budget is a nonstarter. Except for the 30,000 millionaires and billionaires who will benefit from Republican largesse, it is bad for Arizona.
The Flat Tax — along with all of the other tax breaks in the Republican budget — will fuel greater economic inequality in Arizona. Read the details of the Flat Tax plan here: Arizona budget plan would massively cut tax collections, create flat income tax rate.