Opinion: Now that the feds have simplified the tax system, Arizona must figure out how to comply with the law. There's only one way.
On Dec. 22, 2017, President Donald Trump signed into law the Tax Cuts and Jobs Act – one of the most sweeping tax-reform bills in our nation’s history.
Congressional conservatives such as Arizona Reps. Andy Biggs, Paul Gosar and David Schweikert, among others, were instrumental in advocating for the reform package both at home and in Washington.
Their decision to cut taxes and streamline our outdated and overburdensome federal tax code spurred economic growth and allowed the GOP to fulfill one of its key promises to voters: to simplify the tax system and start anew.
Now it is incumbent on states across the country, including Arizona, to comply with the new federal tax law – a process called “conformity” – while also making necessary reforms at the state level to ensure people don’t get hit with an unexpected tax hike as a result of the broadened tax base.
It's later, and we have no consensus
Tax conformity was left unaddressed during the 2018 legislative session, prompting calls for a special session. Unfortunately, it was not made a priority, despite urging from then-House Speaker J.D. Mesnard who petitioned Gov. Doug Ducey to call a special session to tackle the issue head-on. Surprisingly, the governor shot down Mesnard’s request, claiming conformity could be dealt with later.
So here we are, entering the 2019 legislative session without a clear consensus on how to proceed. In his State of the State speech on Monday, Gov. Ducey spoke passionately about several hot-button issues, but stayed silent on tax conformity.
What we do know is that conformity by itself will lead to a dramatic tax increase. Unless we concurrently reform Arizona’s tax code, several estimates project Arizona taxpayers will pay somewhere between $175 million and $250 million more in taxes.
The governor has acknowledged as much, saying he wants to put the excess money collected from the tax increase into the state’s rainy day fund.
We have come to a crossroad; a time of decision.
We can spend cash better than they can
As a candidate for governor in 2014, Ducey presented a bold 10-point pledge to the people of Arizona. The first point on his list was to “reduce taxes every year, with the goal of eliminating personal and corporate income taxes in Arizona, and ... oppose and veto any and all efforts to increase taxes.”
I don’t believe in painless taxes and consider it unfair to the millions of Arizonans who voted for Republicans on the promise we made to cut their taxes, to now renege on that promise and raise them.
Instead, the Arizona Legislature should pass a bill that reduces the state’s income tax rate on individuals and corporations to make our state more competitive with other tax-friendly states, in turn boosting Arizona’s attractiveness in the region and eliminating voters’ concern of a Republican-led Congress increasing their taxes.
Republicans believe people know how to spend their money better than the government does – we always have – and we prove that by promoting principles of smaller government, lower taxes and fewer regulations. Likewise, we can continue to ensure prosperity for all Arizonans by pursuing pro-growth measures that help our state maintain its competitive edge, boost entrepreneurial spirit, and incentivize job creation and capital investment.
Let us never lose sight of the bedrock principles that have made our party great and let us follow through on the promises we made to the people of Arizona.