Beware the flat-tax scheme, which rewards the rich and punishes the middle class

2011-09-10T00:00:00Z Beware the flat-tax scheme, which rewards the rich and punishes the middle classPaula Aboud Special To The Arizona Daily Star Arizona Daily Star
September 10, 2011 12:00 am  • 

Mark my words, Arizonans, another dangerous bill is coming your way this January, courtesy of the Arizona Legislature.

The bill nearly passed this year except it drew opposition from the military and the Arizona Association of Realtors.

Supporters wanted to pass a flat income tax bill for Arizona - a bill that would raise taxes on 88 percent of middle-class families. This means that Republicans, Independents, Greens, Democrats and Libertarians will be paying more taxes.

Neither the sponsor, state Rep. Steve Court, R-Mesa, nor any of the legislators who voted for it would go on TV to debate the bill.

According to the Arizona Department of Revenue, if the flat income tax bill introduced last session passes, 8 out of 9 Arizonans will see their taxes raised while the wealthiest 12 percent will get yet another tax cut.

The rich get richer while tax exemptions are eliminated for veterans, dependents, the blind and people older than 65. Under current law, the first $2,500 of federal and Arizona government pensions is not taxable, as is all active-duty military pay.

The legislation repeals those exemptions. Many seniors pay no state income tax because their medical expenses, including Medicare premiums and supplement insurance, long-term care insurance, dentist bills and hearing-aid costs reduce their taxable income to zero. This proposed flat tax eliminates medical deductions.

While it's wrong to raise taxes on the middle class in these hard economic times, it's even more wrong to do it without receiving the public's input. They've circumvented the public's input because it's revenue neutral. You don't get to vote on it when there's zero benefit to the state. The tax cut for 12 percent of the richest Arizonans is equal to the tax increase on the 88 percent of the rest of us, meaning it's revenue neutral - no gain for Arizona, just a gain for Arizona's millionaires.

Proponents say a flat tax is a fair tax. Their flat-tax scheme creates a 45 percent tax break for Arizonans earning more than $5 million while increasing the tax burden on middle-class working families in our communities.

Fair? Economics 101: a flat tax is a regressive tax. It helps the rich while hurting the poor and middle class.

It also hurts the economy. 70 percent of an economy is generally consumer-based, driven by consumer spending of middle class families who will most likely turn around and spend it on food, gas, rent, medicine, et cetera. This is no way to improve Arizona's weak economy nor to help our struggling neighbors.

Also troubling is the rush by lawmakers to change the tax code with little thought put into long-term effects of this systematic change and the unintended consequences coming from it.

Their flat tax eliminates church donations and mortgage-interest deductions. We live in a state that is experiencing a housing crisis. This is no time to reduce incentives for people to purchase a home or further impact the housing industry.

Also gone are exemptions for donations to nonprofits like community food banks. During the last three budget years, the ruling Republican Party drastically cut funding to safety-net organizations and said to the public, "Go to your churches and nonprofits for help."

Now, if the flat tax passes, churches and nonprofits will suffer the brunt of the elimination of tax deductions.

There aren't enough legislators to stop this bill in 2012 without the public's help. That is why I am sponsoring a forum on the flat tax for the public on 6:30 p.m. Monday at the Temple Emanu-El, 225 N. Country Club Road. You will hear from University of Arizona economist Alberta Charney and other community professionals.

For more information visit www.axtheflattax.com

Paula Aboud is a state senator in District 28. Contact her at 520-323-7264 or by email at paboud@azleg.gov

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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