Tax the rich more? A flat rate for all would be better

Reducing and eventually eliminating the state income tax would be a huge win for all Arizonans.

Individual taxpayers and families would be able to keep more of their hard-earned paychecks. Small businesses would be able to invest more in their employees. And Arizona would be much more attractive to businesses and investment, bringing new jobs and opportunities to the state.

Over the last decade, millions of people and jobs have been fleeing from high-tax states to states that do not impose income taxes. The ability to work remotely will only amplify this trend.

Unfortunately, Arizona’s current income tax puts it on the wrong side of this equation.

Under the status quo, Arizona’s income tax — with a top rate of 8% — is not competitive. Eight states — including Arizona’s neighbor Nevada and nearby Texas — do not impose individual income taxes of any kind. Thirtytwo more states have top rates that are lower than Arizona’s.

Even worse for Arizona, the list of states that do not impose income taxes will continue to grow.

Unless Arizona begins reducing and phasing out its income tax, it will continue to fall behind.

The good news is Arizona’s leaders refuse to sit back and allow it to fail. Gov. Doug Ducey, Sen. J.D. Mesnard, President Pro Tem Vince Leach, Majority Leader Ben Toma and many others are eager to provide pro-growth income tax relief.

They are working on a tax plan that would streamline Arizona’s current four-bracket system (five brackets when accounting for the Proposition 208 “surcharge” of 3.5% that will be imposed on certain income, resulting in top rate of 8%) down to a flat tax of 2.5%.

That would be lower than its current bottom rate of 2.59%. (Adjustments would be made to the two brackets impacted by Proposition 208 “surcharge” to ensure the top rate is not higher than 4.5%.)

Flat taxes protect all taxpayers from tax increases. Under a progressive income tax, taxpayers are divided into small groups, allowing politicians to rob them one by one. Raising a flat tax, on the other hand, is much more difficult because politicians are forced to answer to every single income tax filer.

Making this news even better, there is a serious effort to include a full phaseout of the income tax (excluding the Proposition 208 “surcharge”) over time through the use of revenue triggers, a responsible way for states to cut taxes without getting ahead of their ski tips.

If such a provision were included, Arizona would be a model for other states to copy.

In addition to reducing income tax rates, the Republican tax plan would provide even more income tax relief by quadrupling the child tax credit and by coupling the standard deduction to inflation.

The Republican tax plan would be a huge victory for every single Arizonan. Reducing and, ideally, eliminating the income tax would attract businesses looking to expand, investors looking for growing economies with hospitable tax climates and families looking for greater prosperity.

This would bring new jobs and opportunities to current Arizona residents.

Arizona’s future will be brighter if it begins reducing and eliminating the state income tax.