![]() "The cities that I have talked to in Arizona are competing to try to get these tech jobs,'' he said, the kind of jobs he believes a lower corporate tax rate would attract. Justin Heap, R-Mesa, however, said he was "skeptical'' that cities actually will end up losing revenues. ![]() And legislative budget staffers figure that by 2029 the combined loss to local communities will exceed $120 million. He pointed out that cities and towns receive 18 percent of individual and corporate income tax collections, computed from what was paid two years prior. Seth Blattman, D-Mesa, said this is about more than just lost revenue for the state. "But the incidence of the tax, the person actually bearing the burden of it, are consumers and employees.''īut Rep. "The payor, the person remitting the receipt, is a corporation,'' he said. Neal Carter, R-Queen Creek, had a similar argument. "If we cut taxes, there's an ability - not a guarantee, but an ability - to pay people more or cut (the cost of) products,'' Livingston said. And Livingston said strong state revenues also allowed the state to pay down much of its debt, meaning more dollars are available for not just education but other needs like transportation.Īnd he said there's another reason to approve his bill. "We invested record amount of dollars into K-12 last year and in the previous year,'' he said. "It'll make it more difficult to invest in higher education and job training and K-12 education.'' ![]() "This bill we believe will make it even more difficult to invest in strengthening our workforce,'' Lujan said. And he said one of the biggest factors is not the tax rate but the ability to find qualified workers. Lujan said many factors go into why companies move choose to locate or expand. "We think a better economic strategy would be to focus on investing in our workforce,'' he told lawmakers. In fact, Lujan said, those corporations currently have more than $1 billion in "banked'' credits that they will be able to use in future years if they ever do have taxable income. That's because many are able to reduce their reported profits because of various tax credits the state makes available, credits these companies can bank for up to 12 years if they had no tax liability. He cited figures from the state Department of Revenue that 79 percent of corporations pay only the $50 a year minimum state tax. citizens or residents.ĭavid Lujan, CEO of the Children's Action Alliance, questioned the need for further corporate tax relief. And the individual tax rate in Arizona is 2.5 percent.īut not every company can organize that way, with federal law limiting them to companies with 100 or fewer shareholders, all of whom have to be U.S. The profits of these corporations are directly taxed, as are the distributions to shareholders.īy contrast, "S-corps'' pay no corporate taxes, with the profits or losses passed on to individual shareholders who report them on their personal returns. The 4.9 percent rate applies to what are known as "C-corps,'' called that because that's how they're organized under that chapter of the Internal Revenue Code. ![]() What the measure also is, Livingston said, is a matter of equity. They hit $368 million when the rate reached 4.9 percent but rose to $847 million by 2021, even at the lower rate. In 2013, when the corporate rate was close to 7 percent, collections were $662 million. That had led to a volatility over the years. Some of that is because corporations have great flexibility in how and when they compute and pay their taxes. David Livingston, R-Peoria, the author of HB 2003, pointed out that even legislative budget staffers concede the estimates of lost revenues are "highly speculative.'' "We could send relief to Arizona renters and homeowners by quadrupling the state's current investment in the Housing Trust Fund.''īut Rep. "We could give our teachers a $10,000 raise, taking them from 44th in the nation to 19th,'' the Tucson Democrat said. "There are better places we can invest more than half a billion dollars than on corporate welfare,'' said House Minority Leader Andres Cano. And that follows a series of cuts a decade ago that dropped the rate from nearly 7 percent. The party-line votes Wednesday by both the House Ways and Means Committee and the House Appropriations Committee came over objections from all the Democrats on the panel who questioned both the wisdom and the need to take the tax rate from its current 4.9 percent to 2.5 percent by 2026. PHOENIX - Republican lawmakers are moving to cut income tax rates for Arizona corporations by nearly half, a move legislative budget analysts say eventually could cut state revenues by nearly $670 million a year.
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