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3:22 AM Wed, Oct. 17th

State: Sponsor says Ariz. flat tax bill dead

PHOENIX - The sponsor of a "flat tax" bill that would dramatically simplify Arizona's state income tax and force many Arizonans to pay more while others save on their taxes said Tuesday that the controversial measure is dead for the current session.

However, Republican Rep. Steve Court of Mesa told The Associated Press that he plans to propose a similar measure next year. House Majority Leader Andy Tobin of Paulden and Rep. Karen Fann, R-Prescott, both were co-sponsors of the bill.

The bill would eliminate the standard deduction, dependent exemptions and most other state deductions while flattening the current five tax rates into one rate.

Court said he needs to deal with questions and unanticipated consequences recently raised by accountants and others. Those concern such matters as taxation of military members in Arizona and contract employees' ability to deduct their business expenses, he said.

"I just felt like we were running out of time to properly fix and make it a clean bill. It's a major policy change and I want to be sure we cover everything properly and have time for the members to understand the changes that we're making," Court said.

Court said it was not a surprise that a March 23 legislative budget staff analysis found that average taxpayers in brackets for incomes less than $100,000 would pay more taxes and that average taxpayers in brackets for incomes above that amount would pay less.

The bill was previously approved by the House on a party line vote and cleared a Senate committee last week. It was poised to be considered by the full Senate, but Court asks that it be withdrawn from calendars for Senate caucuses Tuesday.

Critics have said the change would benefit wealthier Arizonans at the expense of middle-class taxpayers.

Court said he proposed the legislation to make the tax system fairer. It's now possible under the current system to have people with the same income paying vastly different amounts of taxes, he said.

Groups that registered in support of the bill included the business-supported Arizona Tax Research Association, the libertarian-oriented Goldwater Institute and the Arizona Free Enterprise Club.

Organizations that registered in opposition included the state AFL-CIO, AARP Arizona and advocacy groups for children's programs, teachers, real estate agents and food banks.