By Howard Fischer | Capitol Media Services
Saying it will stimulate job growth, Republican lawmakers voted Tuesday to cut by nearly half the taxes owed by corporations doing business in Arizona.
Under current law, the corporate income tax rate is 4.9%. HB 2003 would drop that in four steps to just 2.5% in 2026.
Legislative budget staffers say the change, when fully implemented, will reduce state revenues by nearly $670 million a year.
House Minority Leader Andrés Cano, D-Tucson, called the change, approved on a 31-29 party-line vote, “corporate welfare.”
“Nobody is asking for incentives that would benefit folks other than regular Arizonans,” he said, pointing out that no corporate lobbyists turned out to testify in favor of the measure when it was heard in the Ways and Means Committee just two days into the new session.
But Rep. David Livingston, R-Peoria, who crafted the measure, said that it will promote economic development.
“If we look at our region, there’s states right around Arizona that have a lower tax than ours,” he said. Livingston said the Tax Foundation ranks Arizona No. 23 in “overall tax competitiveness.”
But even the Tax Foundation shows that California and New Mexico have higher rates, with Utah barely below Arizona at 4.85% and Colorado at 4.4%.