Arizona’s tax system is structurally unbalanced as the demand for government spending continues to far exceed tax revenue collected. Prior to this Covid recession, there was a bipartisan agreement that additional funds were needed for education, housing, infrastructure, health care, public safety and state government. However, the budget has never been big enough to meet these demands while maintaining a $ 1 billion rainy day fund. Arizona total
budget is too small for a growing state with a population of 14e the largest in the country. Higher taxes are needed – economic growth alone does not help when tax rates are set too low.
Special interest groups want a dedicated tax to micromanage new education funding for specific programs. Instead, let the state legislature and governor determine education spending through the appropriation process, as it provides flexibility and accountability over budget and policies – a Bipartite support already exists for higher teacher salaries, smaller classes, etc. Increased funding for education must mean an increase in the size of the state budget and state government.
I propose to increase the income tax for all by moving from a marginal tax system to a flat tax of 4.5%. This simplifies and modernizes Arizona’s income tax structure by adopting the highest marginal tax rate of 2020 as the new flat tax rate for Arizona in order to increase its budget. Taxpayers in 2020 earning more than $ 171,200 have a flat tax increase to $ 1,163.46 since the 4.5% rate applies to all of their taxable income. Minimum wage workers who earn $ 25,000 have a tax increase of $ 244.48. Salaries at $ 40,000, $ 50,000 and $ 75,000 have tax increases to $ 521.26, $ 637.26 and $ 845.96, respectively. Each calculation assumed a standard deduction of $ 12,200.
My tax plan generates over $ 1 billion in new tax revenue in a reliable and sustainable manner.
The amount of the income tax increase for a full-time employee on a weekly paycheck is between $ 4.70 and $ 22.37. The automatic payroll deduction allows this income tax increase to be more affordable unlike a flat property tax bill. The Conservatives will like my flat tax because it has a single tax bracket and maintains a good business environment. Progressives will like my plan because it brings in more total tax revenue than a Proposition 208 income tax or a 1% sales tax increase.
A flat income tax in Arizona (4.5%) is competitive with many flat tax states, including Colorado (4.55%), Illinois (4.95%), Utah (4, 95%), Kentucky (5%), Massachusetts (5%), and North Carolina (5.25%). It is also competitive with many near-flat income tax states with regard to
full-time employees, including New Mexico (4.9%), Alabama (5%), Oklahoma (5%), Missouri (5.4%), Georgia (5.75%) ), and Idaho (6.925%). States without income tax apply a higher tax rate on property or companies or earn significant revenues from oil, gambling, or tourism.
Alabama, Georgia, Idaho, Kentucky, North Carolina, Oklahoma, and Utah each have minimum wages of $ 7.25 despite having an income tax rate of 4.95% or more for full-time minimum wage work. So employees at Arizona’s minimum wage of $ 12.15 can afford to pay an income tax rate of 4.5%. Arizona’s tightly divided electorate wants practical solutions, not strict ideology. They will support my tax plan because they are willing to pay fairly for more government services. I’m asking the Arizona legislature to put my 4.5% fixed income tax plan on a ballot for voters to decide.
Sanjeev Ramchandra lives in Phoenix and previously worked as a math teacher at a community college. He can be contacted at [email protected]