Republican trio want to alter tax law so Arizonans don’t end up paying more
PHOENIX — Defying their own governor, three Republican lawmakers want to alter tax law to ensure that Arizonans don’t end up paying more state income taxes because of changes in federal law.
One proposal set for hearing Monday by the Senate Finance Committee would decrease tax rates across the board by 0.11 points. So the top rate, currently 4.54 percent for individual income of more than $150,000, would go down to 4.43 percent, with commensurate decreases in other tax rates for lower incomes.
Sen. J.D. Mesnard of Chandler said SB 1143 provides the simplest solution to preventing a windfall to the state on the backs of residents. It’s also the quickest, something that’s important as the changes are for the 2018 tax year — and on the tax forms now being prepared that Arizonans are supposed to file by April 15.
His alternative is SB 1166 to restore some of the deductions that would otherwise disappear because Arizona’s income tax code automatically conforms to changes in the Internal Revenue Code.
But the budget prepared by Gov. Doug Ducey proposes full conformity with federal law. And unless lawmakers intercede, Arizonans will pay at least $133 million more — and potentially as much as $300 million.
Mesnard said it’s unacceptable for Arizona taxpayers to shell out more simply because Congress approved a major tax cut.
Sen. Vince Leach, R-Tucson, who also signed on as sponsor with Rep. Ben Toma, R-Peoria, agreed.
“The Trump Tax Cut and Jobs Act, it’s a tax cut,” he said. And Leach said it was never meant to be a way for the state to collect more.
The move is running into opposition from Ducey.
“The governor has been clear,” said press aide Patrick Ptak, saying Ducey wants to conform Arizona tax laws to the changes made in Washington.
That, however, is not the issue. Instead it is whether the state should be able to keep the extra taxes Arizonans would pay. “Any additional revenue should be put into the ‘rainy day’ fund,’’ Ptak said of Ducey’s position.
Ptak would not say whether Ducey would veto the measure.
Arizona is a “piggy-back” state: Taxpayers here use the federal definition of income as a starting point for state tax forms. And, in most cases, the deductions mirror what are allowed under federal tax law.