by Scot Mussi | Aug 4, 2009 | News and Updates, Uncategorized
Because you can’t separate politics from policy making, some votes are just downright tough. You can’t be in a position to cast a vote unless you survive the political process by getting elected in the first place, so all votes are considered through a political lens, no matter your ideology. It’s not wrong to consider the political consequences, and it would be crazy not to, but I believe that an overwhelming majority of sound policy votes also are sound political votes. I also believe that members of both Parties routinely miss-calculate and miss-judge opportunities to make good politics out of good policies. Arizona House Bill 2015 offers one such opportunity.
Included in HB 2015 is a provision to refer a one cent sales tax increase for each of the next two years. In 2012, that tax would drop to a half-cent for a year. After that, the tax sunsets and the rate is back to where it is today. This is a big deal for fiscal conservatives who oppose higher taxes. We at the AZFEC opposed a call for a tax increase to help balance the budget. We did this in December of 2008 as the chorus started warming up their vocal chords (editorial boards, college professors, etc.). We became more forceful in our arguments when Gov. Brewer announced her support of higher taxes on March 4. We kept up our opposition during the budget session when supporters of the tax hike opposed spending reductions to go along with it. The tax hike was only to sustain high levels of spending. Budgets were passed – without the tax referral – and vetoes ensued.
Then things got weird. Fiscal conservatives learned how to negotiate. In exchange for the tax increase referral as requested by the governor, conservatives put together one of the largest tax cuts in Arizona history. And the governor agreed. So now the trade is a possible and temporary sales tax increase for a guaranteed and permanent reduction in corporate and personal income tax rates and the permanent repeal of the state equalization tax. This is good policy, and it’s not bad politics, either.
These tax cuts don’t come along every day. So although this is a tough political vote for some, we think the sound policies behind it can also make for good politics. Lawmakers should support this deal. Click here to read more of our arguments in support of HB 2015.
by Scot Mussi | Jul 30, 2009 | News and Updates, Uncategorized
There were some concerns last night that HB2015, the tax package included in the budget deal, would in fact violate Americans for Tax Reform’s Taxpayer Protection Pledge. Following a flurry of late-night emails and phone calls, ATR confirmed this afternoon that HB2015 does not violate the pledge. ATR advises that there are a number of moving parts that could change the Pledge implications of any potential budget agreement.
The tax package includes:
The repeal of the state equalization tax ($250 million annually)
Personal income tax cuts (6.6% across-the-board) that begin in calendar year 2011 ($200 million annually)
Corporate income tax cuts (30% reduction) that begin in calendar year 2011 ($200 million annually)
Refers to the ballot a temporary suspension of the limitation of the legislature’s power to appropriate or divert funds from voter-approved initiative. This section is repealed on July 1, 2013.
Refers to the ballot a temporary sales tax increase and a spending cap of $10.2 billion for 3 years. In the first 24 months the tax goes from 5.6 to 6.6%. In the last 12 months it goes from 6.6 to 6.1%. It is repealed July 1, 2013.
Again, the Club opposes the sales tax, but the trade-off for the above tax cuts is worth the risk of referring it to the ballot. These significant tax cuts will not only help Arizona rebound from the current recession, they will benefit our economy for years to come.
by Scot Mussi | Jul 29, 2009 | News and Updates, Uncategorized
The Arizona Republic’s Political Insider blog cites Americans for Tax Reform’s Taxpayer Protection Pledge as a stumbling block to closing a budget deal. While it’s true that ATR considers a tax hike referral to the voters the same as a vote to raise taxes, and therefore a violation of the pledge, if the referral is part of a deal that results in a net tax cut it does not violate the pledge.
Of course that’s not ATR’s only stipulation. They strongly recommend writing the ballot language so that the tax cuts are not contingent on the passage of the sales tax hike. Additionally, they’d like safeguards against any extension of the “temporary” tax, or repeal of the permanent tax cuts. These points are key. To read Grover Norquist’s letter to lawmakers, click here.
The proposed budget deal includes $400 million in personal and corporate income tax cuts, as well as the permanent repeal of the state equalization rate (a $250 million a year property tax scheduled to come back this year) and a state spending cap for three years. We support this deal. The reforms and tax cuts outweigh the potential sales tax increase, which will be left for the voters to decide.
We still believe that raising taxes in this economy is not the answer. However, the state needs a budget that both the legislature and governor support. Let’s take the deal, and let the voters tell us what they think of the tax hike.
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