The Republic Editorial Board--AWOL when Napolitano, every legislative Democrat and a few Republican enablers took over the budget process and passed last year's budget fiasco without any hearings--is predictably piling on the Republican budget proposal.
Hear's a howler for you...
The most troubling is the proposed shift to a flat-rate income tax of 2.8 percent starting in 2012. Popping out of nowhere, it was in neither the Legislature's nor the governor's plan.
The last refuge for those who can't argue against the merits of a policy is to claim that it hasn't been studied enough.
However, the flat tax proposal was studied extensively by Governor Napolitano's Blue Ribbon tax panel otherwise known as the Citizens’ Finance Review Commission. You will recall that in January of 2003, Governor Napolitano assembled a who's who of the Arizona business, government and non-profit communities and instructed them to spend a full year traveling the state to get public input an make recommendations about Arizona's tax code.
In October of 2003, after hundreds of meetings, thousands of pages and months of research, the panel issued its recommendations.
Here's what they said about the flat tax.
The commissioners considered applying a flat tax rate, rather than a graduated progressive income tax rate, on personal income tax, but retaining all other standard deductions and exemptions. The appeal of a flat tax is its simplicity and greater incentive to earn more income than exists under a progressive tax system.
However, the Commission had a constraint that the current legislature doesn't have.
Ultimately, the commission rejected the flat tax because figures from the Department of Revenue showed that to remain revenue neutral, the flat tax rate would have to be near 3.54 percent, raising the tax rate on all individuals who earn adjusted gross income of less than $100,000 per year and lowering the tax rate on all individuals who earned $100,000 or more per year.
The Blue Ribbon Panel was forced to consider a revenue neutral flat tax which would have raised rates for the lowest income brackets. However, the legislature's plan is to DROP all the rates to the lowest rate--flat and low.
If the Republic doesn't like the plan, that's fine. But don't try to claim that it hasn't been studied, or is somehow "Popping out of nowhere."
Such a huge policy shift in a deep recession is foolhardy. And I completely disagree with Greg about it being studied enough. It has not been subject TO A SINGLE hearing in the current Legislature. Talk about government done under cover. If this were a Democratic proposal Greg would be shouting in protest at the top of his lungs!
Posted by: Patrick | June 28, 2009 at 12:56 PM
Greg, thank you for pointing this out-I am a supporter of a flat tax and was pleasantly surprised when it was included in the budget package.
It is strange that everyone ignores that fact about last year's budget coup. last year's budget was the final nail in our budget coffin.
Posted by: silver surfer | June 28, 2009 at 01:08 PM
Flat taxes certainly have been studied, but perhaps they are referring to this specific proposal. In the summary for the flat-tax bill it states that this would reduce state revenue by $450 million a year. Others are questioning that number and so would be nice to know what the actual affect on the state finances will be if this is passed.
Posted by: todd | June 28, 2009 at 01:42 PM
In such a study, be sure to include where the $450 million now in the hands of the people will actually end up. If you listen to the AEA, it will be burned up in the furnace (private sector), never to be seen again.
Posted by: Name: | June 28, 2009 at 02:18 PM
MUST...(cough,cough)....CUT....(cough)...TAXES...aahhhhh!
Posted by: RsMantra | June 28, 2009 at 03:54 PM
Greg,
I allways find it strange when there is more knowlage of a legislative plan outside the legislature than inside. On Saturday I could find no Senator who had the actual details of this so called "flat tax plan". This plan is a poor swap for putting the largest tax increase in Az history on the ballot.
Posted by: Sen. Ron Gould | June 29, 2009 at 08:48 AM
Sen. Gould, forget about any swap. Putting such a huge issue as a flat tax out there in the bottom of the ninth is a reckless disregard for the office people have been sworn into.
Posted by: RsMantra | June 29, 2009 at 10:14 AM
The amendment and summary were posted for everyone to see on Saturday-that is where the outsiders got their info.
Posted by: silver surfer | June 29, 2009 at 11:30 AM
Senators Gould and Harper have out ideologued Russell Pearce...I am impressed by the strength of your right handed tactics. You have managed to grab the neocon brass ring...well done Grasshoppas!
Posted by: RsMantra | June 29, 2009 at 03:03 PM
OK, Greg, so the flat-tax was studied six years ago by a committee that most people have forgotten about. And that committee said it was a bad idea because it would raise taxes on most Arizonans while providing a tax break for the most wealthy.
C'mon, that hardly qualifies as studying this proposal, which emerged in the final week of negotiations on the budget. This kind of radical change deserves an honest review as to its impact.
Posted by: Steve Rogers | June 29, 2009 at 04:45 PM
Sen. Gould
Read your own reports from JLBC-
http://www.azleg.gov/jlbc/mfh-may-09.pdf
Read page 10.
See the drop in tax collected?
See the fact it fell by 49.4%
Now, you need to contemplate a tax increase to keep this state barely operating.
As a matter of fact the feds will bail us out- but first the J-No crowd is going to break the far right through forcing a tax increase.
Brewer knows this, and has figured the ballot is the least offensive and fastest method to satisfy the Dems in DC.
If you can't figure it out fast, then you will be awfully lonely in January 2011.
Pay attention- if the state doesn't fund any of it's functions- then DC will- but they will call the tune and you WILL dance.
Posted by: Gould still doesn't get it. | June 29, 2009 at 10:24 PM
Marc Spitzer proposed a flat tax in the early '90s when he was in the Senate. It was studied to his satisfaction. He dropped it, after deciding it wouldn't work.
That was a long time ago. (Greg was still wet behind the ears.) Maybe something changed. Maybe somebody could call Marc and ask him about the problems.
I probably wrote about it. But I can hardly remember the Capitol's location, much less what happened there.
Where are my pills?
Posted by: EdFoster | June 30, 2009 at 01:29 PM
I have always believed--and history has confirmed--that when you cut taxes, the economy grows and revenue to the state increases. (Remember the Reagan Revolution?)When taxes are raised, there MAY be an immediate (but short-lived) increase in revenue, then nature returns to its natural course. I submit that a properly structured fair flat tax WILL expand our economy and increase revenue. Then we will have to cut taxes again. Government does not need to grow beyond the points of population and inflation. Obviously, somewhere there will be a point of equilibrium--revenue (based on tax rates) matching needed government services. We're not there yet.
Posted by: RonB | June 30, 2009 at 01:32 PM
RonB,
Almost any tax increase would be minimal in terms of impact on business or consumers.
Federal tax changes are much more important, when the entire amount of state income taxes is easily encompassed with just the jump from 28% to 33%.
Talking about the costs of taxation from such a low base is kinda ridiculous.
Anybody who likens Arizona to California for taxation is lying, flat out.
Posted by: Gould still doesn't get it. | June 30, 2009 at 09:44 PM
The flat tax would be something for nothing. A huge economic boost for Arizona in exchange for ballot access for a losing proposition.
Posted by: Falcon 9 | July 06, 2009 at 12:53 PM