Despite Halloween being long over, Katie Hobbs has decided to spend the Christmas season playing dress-up as a Trump-loving, tax-cutting, leader of the middle and working class.
On November 20th Governor Hobbs released her so-called “Tax Cuts for Middle-Class Arizonans” plan. If some of these concepts sound familiar, that’s because every single provision in her plan was word-for-word copied straight out of the One Big Beautiful Bill (OBBB) tax package signed into law by President Trump on July 4th:
Increase the standard deduction from $15,000 to $15,750 for single filers, $31,500 for joint filers – straight from the One Big Beautiful Bill (OBBB)
Adding an additional $6,000 deduction for seniors over 65 – straight from the OBBB
Deducting tipped income from taxable income – straight from the OBBB
Deducting overtime income – straight from the OBBB
Deducting car-loan interest on new American-made vehicles – again, right out of the OBBB
So, after spending months opposing the OBBB, trashing Congressional Republicans and urging its defeat, Hobbs has now decided to pretend that it was her idea all along. It’s like she decided to wear a Dollar Store knockoff mask of President Trump, hoping no one would notice it said Made in MAGAland on the tag.
The social media reaction to her clumsy and desperate attempt to steal President Trump’s tax plan went about as one would expect. Hobbs was brutally ratioed by comments pointing out the obvious – Trump did this first, and better.
The traditional corporate media didn’t do her any favors either, grilling her about her plan’s lack of authenticity and how she now appears to be a flip-flopper on the OBBB. Suffice to say, if Hobbs was hoping for a glowing PR reception, her Trump tax plan heist landed with a thud.
School Choice Becomes Hostage of Plagiarized Tax Plan
Perhaps there are a handful of voters out there that do believe Hobbs had a change of heart and decided to jump on the Trump train for tax cuts. Could this be the start of a sincere effort to make Arizona more affordable for the middle class?
Unlikely.
Hobbs eliminated any perception of authenticity a couple weeks after her announcement when she undermined her own proposal by recasting it as a bargaining chip in her crusade against school choice funding. This proved that either she was never serious to begin with about providing tax relief to Arizonans, or she got so much backlash from her base that she “missed” an opportunity to use the tax conformity issue as political leverage that she felt it necessary to backpedal.
Either way, the tactic is doomed for several reasons. First, Republicans at the legislature won’t go for it. Second, there are no “savings” possible with ESA cuts without kicking thousands of children out of the program, which is both cruel and unnecessary. Any points Katie Hobbs scored via her plagiarized “middle-class family” tax relief plan has been undone by self-sabotage, now proposing hurting those same middle-class families by defunding their school choices.
Lastly, tax conformity is necessary (which is why she is responding to it) and has nothing practically or politically to do with school choice funding. Trying to tie the two together simply doesn’t work.
Not Conforming Will Lead to a Large Tax Increase
Unsurprisingly, Hobbs speaks “tax cuts” like it was a 3rd language. Complicating matters further is that her “plan” is actually part of a larger discussion about the need for the state to conform to the tax changes in the OBBB. Without a full conformity package, it is our position that Arizonans will be stuck with a tax increase north of $400 million dollars.
For those unfamiliar with tax conformity, Arizona’s tax code is “coupled” with the federal one. That means the state bases its definitions on things like adjusted gross income, deductions, and exemptions, on the federal tax code.
So, when Trump’s One Big Beautiful Bill delivered big tax cuts, Arizona lawmakers must pass conformity legislation to match those changes. If they don’t, Arizona taxpayers don’t get those same breaks – meaning their taxable income goes up, and they pay more in state income taxes – offsetting the benefit on the federal side.
To use Hobbs’ example of a server named “Sally”:
Sally earns $55,000 plus $5,000 in tips. Under Trump’s new law, those tips aren’t taxed, and the standard deduction increases to $15,750. But if Arizona doesn’t conform to the federal changes, Sally loses both benefits. Her taxable income jumps by $6,500 – and her state tax bill rises by about $150, even though she didn’t make a penny more.
But the reality of Hobbs’ plan is far, far worse. The break-even amount is a $420M reduction in state revenues; her plan will lead to a massive tax hike as it only adds up to $215M. Maybe Hobbs’ tax hike parading around as a tax cut is just that Orwellian thing Democrats do when they use language to describe the opposite of what they are really doing.
Leader? Not in the Governor’s Tower.
The most absurd part of this whole stunt is Hobbs trying to frame herself as a leader on tax relief. On the policy she is nothing but an imitator. And politically, she would be a leader, if only anyone was following her.
When Hobbs rolled out her plan, the silence from the Left was deafening.
No press conferences flanked by Democratic legislators. No love from “local” progressive bastions like Progress Arizona, the AEA or other Arabella Advisers-connected AZ groups. Not even a blip in one of the lefty-controlled narrative-spinning outlets like Copper Courier or AZ Mirror.
The traditional business community had nothing to say about her announcement either. Not even liberal leaning business groups like Greater Phoenix Leadership threw a bone to Hobbs. That’s because she is entirely out on a limb, too weak to muscle her way with Republicans, and too unpopular with even her own side to build a coalition around her.
And now she’s “calling on the Republican Legislature to follow her lead”? Please.
Who’s Really Leading on Tax Cuts & Affordability?
Our organization has long been preparing a real conformity package, one that actually delivers relief to working families and small businesses.
Here’s what a serious plan looks like:
Fully covers the conformity “box” (roughly $420 million), so Arizona taxpayers see the full federal benefit.
Includes all the accounting provisions in the OBBB that help small businesses such as full expensing for business property, increasing small business expensing from $1.25M to $2.5M, and 100% depreciation for business property.
Is broad-based relief, not narrow carveouts.
Prioritizes workers, families, and small businesses.
Avoids bad policy gimmicks like the SALT deduction.
Republicans will likely fast track a more robust tax package on Hobbs’ desk in January, meanwhile (if she can even find a sponsor) her proposal will be lucky to get a committee assignment.
Republicans Will Ultimately Deliver – What Will Katie Do?
Just as Trump has been leading nationally on tax cuts and affordability, Arizona State Republican lawmakers will too. Because that’s what they have been doing the last three years – Hobbs has just been too busy either vetoing tax cuts or illegally trying to take credit for them.
Meanwhile Katie Hobbs’ “tax cut” plan is like her leadership, strictly performative. She isn’t fighting for taxpayers; she’s desperately trying to run in front of the Trump Tax Cut Train to avoid getting run over by it. But given how unconvincing even her tax cut theater is, her lack of original thought, and her inability to amass an iota of support, she’s better off surrendering to legislative Republicans and moving on.
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Around the country, the “war on cars” has become apparent. From New York’s congestion pricing scheme to the onslaught of road diets and protected bike lanes to “reallocate” the public space away from cars, there is hardly anywhere you can travel without experiencing the increased hassle and cost of driving your personal vehicle.
Despite the Trump administration’s efforts to reverse the woke transportation trends at the U.S. Department of Transportation under former Secretary Pete Buttigieg, many state and city governments remain committed to punishing drivers.
One specific tool being used to implement the anti-car, woke transportation agenda is vehicle mileage limits and taxes. For example, in Washington State, they passed a law that sets a target of reducing vehicle miles traveled per capita by 50% by 2050. Their department of transportation is empowered to create policies and strategies that would effectively force people to give up their cars. And of course, for our neighbors to the West, California lawmakers have proposed a mileage tax or “road charge” determined by how many miles a person drives in an effort to reduce carbon emissions and endlessly subsidize their failed transit system. Implementing this would require invasive measures such as reporting odometer readings or installing “special plug-in devices.” This kind of Orwellian intrusion on our freedom to travel privately has no place in any American city, even in California.
This week, Arizona legislative Republicans took a huge step to protect our state from these insane California-style, anti-car policies. With the passage of SCR1004 (the Freedom to Move Act), sponsored by Senator Jake Hoffman (Queen Creek), Arizona voters will decide in November 2026 whether to enshrine a first-in-the-nation constitutional protection against taxing, tracking, and limiting our vehicle miles traveled.
“The Arizona Free Enterprise Club has been fighting for the Freedom to Move Act since 2023,” said Scot Mussi, the Club’s President. “We are thrilled that our Republican-majority legislature chose to give voters the ability to protect their way of life by preserving our freedom to travel by personal vehicle in our state.”
President Trump and Secretary Duffy are doing critical work at the federal level to reverse the wokeness that has infected transportation policies and funding at the department and across the country. Now Arizona is leading the way on showing other states how they can pass their own protections for drivers and keep their states free too.
Help Protect Freedom in Arizona by Joining Our Grassroots Network
Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!
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Every time the Republican-controlled legislature considers cutting taxes, the biggest obstacle is the taxpayer-funded lobbyists representing cities, towns, and counties. They come down to the legislature year after year accusing lawmakers of “defunding” local government. And, of course, it is always police, fire, and public safety on the chopping block and never DEI programs, art projects, or other unessential and unnecessary spending projects.
The problem with this narrative is that it is completely false. Cities and towns are flush with cash and have actually received enormous windfalls, not cuts, from the legislature. The result has been hundreds of millions in new revenue for the cities in just the last 6 years. Most of it from two sources—online sales and enhanced state shared revenue.
Online Sales Tax Windfall
In 2019, the legislature passed legislation responding to the Wayfair decision, allowing the state and local governments to tax online sales from sellers outside of this state. At the time, it was sold as a “meager” $85-million-a-year tax increase. But now, five years since the legislation was enshrined into law, taxpayers are doling out over one billion dollars in total collections each year to state and local government.
The most recent full fiscal year shows that cities alone collected $250 million directly from taxing online sales in FY24. They pocketed an additional $70 million in shared revenues from the state’s collections, resulting in a net increase of $320 million in revenue that they did not have five years ago.
Income Tax Windfall
If that wasn’t enough, in 2022 the legislature passed landmark tax cuts benefiting every tax-paying Arizonan, consolidating our previous four bracket income tax rates into one, single bracket of 2.5%. At the time, the cities claimed it would bankrupt them. Why? Because cities and towns receive 15% of state income tax collections, known as Urban Revenue Sharing (URS). So, the legislature increased that to 18% to hold cities “harmless.”
The cities like to claim that the 18% has barely held them harmless, going as far as claiming that they think they still lost a little revenue in the deal. But, five years ago, URS totaled $750 million. Last year? $1.5 billion. In other words, the share of income tax cities receive has doubled in the course of just five years. How many Arizona residents have seen their income double in just five years?
This increase was not anticipated. The Arizona budget five years ago projected that cities and towns would be receiving roughly $900 million by now, not nearly a billion and a half. This means they are reaping a windfall compared to what was anticipated in the amount of $600 million. Not only were they completely held “harmless,” they have far outpaced expected revenue growth.
That’s $320 million from taxing online sales and a $600 million windfall from income tax collections, for a total windfall of $920 million.
Municipal Budgets Are Out of Control
As city revenues from the state have exploded, so has the size of their budgets. If the state had defunded the cities, we would expect to see budget cuts. Yet year after year, municipalities have seen their budgets grow bigger and bigger.
Just take a look at the city of Phoenix. In 2019, Phoenix had a General Fund budget of $1.39 billion. Five years later, their budget has nearly doubled to a whopping $2.13 billion! It’s obvious that no amount of revenue can satiate their appetite to spend, evident by their current attempt to impose another tax increase on their already overtaxed residents to avoid any sort of fiscal sanity.
And yet, they continue the same talking point and continue to send their lobbyists down to the capitol to block commonsense taxpayer protections, all on the taxpayers’ dime.
This year they are opposing Senate President Peterson’s bill (SB1013) that would require cities, towns, and counties to obtain a 2/3 majority before raising taxes and fees, a policy that applies to the legislature, and now to the people, who must get to a 60% vote threshold on the ballot to raise taxes after the passage of Prop 132 in 2022. Though the cities might bank on a veto from Katie Hobbs, President Petersen has also introduced his bill as a referral to the ballot, SCR1008.
The cities should be careful in their opposition. If Hobbs vetoes the bill, the voters will likely support it on the ballot, putting the protection behind the Voter Protection Act, which means they won’t be able to change it in the future without going back to the ballot.
Instead of spreading misinformation about being “defunded,” the cities should tackle their own bloated budgets.
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Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!
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PHOENIX, ARIZONA – Tonight, voters in the City of Tucson rejected the Safe & Vibrant City ballot measure. This proposition would have increased sales taxes by a half-cent, accumulating approximately $80 million in revenue over each of the next ten years. Scot Mussi, President of the Arizona Free Enterprise Club, released the following statement:
“Voters from all sides of the political aisle made the correct decision in Tucson today. This tax increase was another failed attempt by Tucson’s radical leaders to take more tax dollars from hard-working men and women to fund an insatiable leftist agenda. We have seen over the years how Tucson officials have embraced globalist environmental, energy, and social justice propaganda and policies to steer their municipality – and even our state – into that camp. Tonight, Tucson voters rejected these efforts, rightly deciding to keep their tax dollars for themselves.”
Help Protect Freedom in Arizona by Joining Our Grassroots Network
Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!
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PHOENIX, ARIZONA – Yesterday, the Arizona House of Representatives Committee on Ways and Means approved HCR 2035 – the freedom to move ballot referral. The measure passed along party lines. If given the green light by both the Arizona House and Senate and a majority of voters in November 2026, the proposal would amend the constitution to prohibit the state government from tracking, taxing, or limiting miles of travel.
“As we have seen in other states, governments left to their own devices will succumb to radical attempts to track, tax, or limit their citizens’ transportation miles,” said Scot Mussi, President of the Arizona Free Enterprise Club. “These environmental schemes have no place in a free and prosperous society. In this divided state government, it is critical for our Republican-led Legislature to proactively send this constitutional amendment to the voters to protect our state from these authoritarian policies. I’m thankful to the lawmakers who have supported this bill, and I look forward to seeing it pass the full House in the near future.”
HCR 2035 is the first of its kind in the nation. As a constitutional amendment, it would prohibit the state, cities, towns, and counties from imposing a Vehicle Miles Traveled tax and limiting or monitoring vehicle miles traveled by an individual – whether they are using a gas-powered car or an electric vehicle. If approved by the Arizona House and Senate, the measure would then be transmitted to the Secretary of State to be included on the November 2026 General Election ballot to be considered by voters, bypassing the Governor’s Office.
Last month, the Senate Government Committee approved the mirror version of the legislation, SCR1004.
Help Protect Freedom in Arizona by Joining Our Grassroots Network
Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!
Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.
PHOENIX, ARIZONA – Yesterday, the Arizona Senate passed SB 1013, which protects hardworking taxpayers in counties, cities, and towns from those jurisdictions raising taxes and fees that a supermajority of the relevant local officials did not approve. The proposal was sponsored by Senate President Warren Petersen.
“For over three decades, Arizona voters and their elected officials in the state legislature have expressed their strong preference to keep taxes and fees as low as possible,” said Greg Blackie, the Director of Policy for the Arizona Free Enterprise Club. “With Proposition 108 and Proposition 132, voters have time and again voted to prevent the state and themselves from raising taxes or fees without a supermajority in support. Despite this, many counties, cities, and towns continue to extract taxes and fees from citizens through edicts by faceless bureaucrats. Thankfully, legislators realize the importance of protecting the financial interests of the men, women, and children they represent by applying to the same standard to all jurisdictions.”
Despite counties, cities and towns protesting these proposals, complaining that the legislature is cutting local funding, these jurisdictions are flush with increasing financial revenues. Just this past year, cities alone have benefited from $315 million of new revenue from the collection of online sales tax.
In 1992, Arizona voters passed Proposition 108 to prevent the legislature from increasing taxes without a two-thirds majority.
In 2022, Arizona voters passed Proposition 132 to require a sixty percent threshold on voter initiatives to approve any tax increase on the ballot.
There is also a referral – SCR 1008 – moving through the Arizona Legislature at this time. SCR 1008 sends the policy of SB 1013 to Arizona voters for an up-or-down vote in the November 2026 General Election in the event that Governor Hobbs vetoes a bill sent to her Office. This ballot measure will be considered by the Senate Government Committee this week.
Help Protect Freedom in Arizona by Joining Our Grassroots Network
Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!
Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.
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