Personal income tax adjustment appears headed to the Ninth Floor; it’s needed says Hugh Hallman, chairman Rose Law Group Litigation Department

inflation-metter-2-ss-300x219By Phil Riske | Managing Editor

(STATE CAPITOL) Arizona taxpayers will be keeping an eye on annual inflation rates beginning next year if a bill that only needs one more Senate vote is passed, which is expected this week.

The Senate on Monday approved the House bill (HB2001) for third reading with no debate, and the House has passed an identical Senate bill.

Governor Jan Brewer vetoed a similar bill two years ago, citing the state’s budget deficit, but agreed to a one-time adjustment, which was enacted last year.

This year, Gov. Ducey asked for a bill that makes the inflation indexing automatic each year.

As covered by Rose Law Group Reporter on Feb. 16, Democrats have opposed the tax adjustment, saying it would cut into revenue needed for education and infrastructure.

In 2013, Brewer said the tax change would have taken $11 million from the budget, and the Legislature’s analysts say next year’s budget would lose $14.5 million and more in years to follow.

Republicans say the bill ensures fairness for taxpayers who get small raises that cast them into a higher tax bracket.

The proposal will go to Ducey when the two chambers exchange bills.

Comments by Hugh Hallman, chairman Rose Law Group Litigation Department: 

“It has always been unfair to all taxpayers to be subject to hidden tax increases caused because tax brackets have not been indexed to inflation. Those in government who want to collect more money from taxpayers should do so honestly rather than through such phantom increases in ‘income’ caused only by inflation, itself typically caused by irresponsible government overspending.”

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