PHOENIX β Key Arizona Republican lawmakers and Gov. Doug Ducey are moving to undermine the scheduled public vote on last yearβs $1.9 billion tax cut.
That is not officially the goal of a planned special legislative session. Instead, it is to replace that package with an even bigger tax cut and have whatever new tax plan is enacted take effect even sooner than previously expected.
The goal, however, is the same: a flat tax rate.
And that means the most wealthy, by virtue of paying the highest taxes, would get the biggest relief.
But in order to enact a new plan, legislators would first need to repeal the 2021 measure.
Thatβs the one that foes managed to collect more than 215,000 signatures last year to hold up enactment until this Novemberβs election, when voters would get to decide whether to ratify or reject the plan.
If lawmakers repeal that 2021 measure, however, there is nothing left to send to the ballot for voters to consider β even if it is replaced with a similar proposal.
David Lujan, a key player in referring last yearβs measure to voters, said the whole reason for the move to repeal the 2021 plan, kill the November vote and reenact a different one is βbecause lawmakers know these tax cuts are wildly unpopular with voters.β
Sen. Martin Quezada, D-Glendale, was more direct about the new GOP proposal and how it would undermine the referendum.
βThis is basically a governmental middle finger to the voters of Arizona from Gov. Doug Ducey and the Arizona Republican Party,β Quezada said.
Thereβs nothing sinister about the move, even if it would make the referendum drive go away, said C.J. Karamargin, a Ducey spokesman.
Itβs just making the 2021 plan better, he said.
βIf you have an opportunity to improve it, why not seize that opportunity?ββ he asked. And Karamargin said nothing precludes the same people who referred the prior plan to the ballot from once again going out and gathering the signatures to do so again.
βWhy not wait and see what the result is?ββ he said.
And Sen. J.D. Mesnard, R-Chandler, one of the architects of the plan being hammered out, said this isnβt thwarting the will of those who signed the referendum petition to get a public vote on the 2021 plan.
βThis isnβt the exact same plan,β he said.
βItβs a faster version of the plan,β Mesnard continued. βAnd I would like to make some changes as well.β
And Mesnard said thereβs a good reason to keep the original plan from going to voters.
The Arizona Constitution spells out that anything approved at the ballot cannot be repealed or altered by the legislature. Mesnard said that means that that even if voters were to side with the legislature and ratify the 2.5% flat tax, it would be βlocked in stoneβ and could not be changed except with a future ballot measure.
βSo at that point, you have to reevaluate whether this is the right approach, the right package, the right timing,β he said.
Lujan said, though, that lawmakers are wrong if they think they can keep the public from getting the final say on such a massive change in the stateβs tax system. He said if lawmakers approve a new plan that could then send foes back to the streets to once again gather the signatures to force it to the ballot.
It wouldnβt take much: Foes would have 90 days after the final enactment to gather 118,823 valid signatures on petitions.
Central to the debate are efforts by Republicans to enact a flat income tax plan.
Under current law, tax rates are based on income brackets starting out a 2.59% for individuals earning up to $26,500 a year and $53,000 for married couples filing jointly. There are several interim steps before it tops off at 4.5% for individual income of more than $159,000, double that for married couples.
The 2021 plan β the one on hold pending the November election β would reduce all rates, in two steps, to 2.5% by 2025.
Two things have changed since the original vote.
First, the original plan was built on the decision by GOP lawmakers to protect the wealthiest Arizonans from the full effects of Proposition 208. That measure would have provided a 3.5% tax surcharge on income above $250,000 for individuals and $500,000 for married couples filing jointly.
The legislature approved a plan to effectively have the state pay the excess above the current 4.5% cap to the tune of about $400 million.
Once the courts killed the initiative, there is no need for that maneuver, making that $400 million available to add to the proposed tax relief.
Second, state revenues are coming in faster than anticipated. And that means thereβs no need for that interim step.
House Majority Leader Ben Toma, R-Peoria, said the current spike in inflation convinces him of the need to move faster.
βPeople are starting to really feel it at the gas pump and other places,β he said. βItβs important that we accelerate this and give people real relief as quickly as possible.β
But itβs that pain at the pump that is causing some GOP lawmakers to question whether this is still the best plan.
It starts with the fact that the big winners of going to a flat tax rate, whether it ends up at 2.5% or something less, are those in the top tax brackets.
That was borne out by an analysis of last yearβs plan by legislative budget staffers who put the savings for someone making between $25,000 and $30,000 at just $11 a year. Individual in the $50,000 to $75,000 taxable income range would net $96.
But the break for taxpayers with income between $250,000 and $500,000 was pegged at an average of $3,071. And those making from $500,000 to $1 million wold pocket more than $7,300.
Rep. David Cook, R-Globe, said he wants to look at using some of the money to provide at least a temporary break from the stateβs 18-cent-a-gallon gasoline tax.
While that might not mean much when fuel is selling at $4.60 a gallon, he noted the Department of Transportation puts the annual savings for each motorist in excess of $100 a year. And thatβs more than the relief the flat tax plan would provide to those making less than $75,000.
More to the point, Cook said, it would be equal relief to all, regardless of income. Plus it also would provide particular help to businesses that rely on transportation, from Uber drivers to delivery vans.
And he said it wouldnβt hurt road construction and repair, as the surplus could be used to replace the missing gas tax dollars.
Sen. Michelle Ugenti-Rita, R-Scottsdale, also said sheβs not convinced that simply enacting a new flat tax plan makes sense.
βI am right now talking with the governorβs office and exploring other opportunities to provide relief to taxpayers,β she said. And one of them, Ugenti-Rita said, could be the gas tax.
βWhat Iβm not going to do is rush through this and miss an opportunity for taxpayers who I think we all can agree have been struggling with record high inflation, gas prices, prices at the grocery store or cost-of-living expenses,β she said.
Then thereβs the question of why thereβs a rush to approve a plan now, given that lawmakers are scheduled to be in session through late April β and likely beyond that, given recent experience.
βWe have plenty of time,β Ugenti-Rita said. βAnd there are lots of meaningful options to explore.β
If lawmakers try any additional maneuvers, like repealing the revised plan to quash a new referendum and replacing it yet again, foes of the flat tax still have the option of starting yet another petition drive, collecting signatures as often as necessary, Lujan said.
βWhack-A-Mole is definitely how to explain what we do these days,β he said of actions by the Republican-controlled legislature. βItβs just one thing after another.β