There is more than one way to get to a flat tax rate, with different winners and losers and variable consequences for state programs.
By Mary Jo Pitzl || Arizona Republic
The pitch was enticing: Shrink Arizona’s tax code from five rates to two. Cut taxes for nearly everyone. And make it so simple an Arizona tax return could fit on one page.
While streamlining the state’s income tax is an effort championed today by Gov. Doug Ducey, it almost happened 35 years ago.
The Income Tax Act of 1987 had many features similar to the major tax policy that lawmakers approved last year, which will give the state one lower, flat rate for income taxes. Ducey announced last week the single 2.5% rate will take effect in January, a year earlier than anticipated.
But there are also striking differences between the two proposals, separated by more than three decades.
The contrast illustrates how an issue as wonky as tax rates can reveal shifts in who state leaders think should benefit most from a booming economy. It also shows there is more than one way to get to a flat tax rate, with different winners and losers and variable consequences for state programs.
