State House approves tax cuts - East Valley Tribune: Arizona

State House approves tax cuts

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Posted: Thursday, January 28, 2010 5:30 pm | Updated: 3:56 am, Sat Oct 8, 2011.

Without a single Democrat in support, the state House on Thursday approved a package of tax cuts that its proponents say will stimulate the economy.

HB2250 would cut corporate income tax rates by nearly 30 percent, from close to 7 percent to just 5 percent. Individual income taxes, which are computed on a sliding scale, would drop by 10 percent across the board.

The measure also would phase out the state property tax. And it would shift some of the burden of local property taxes from businesses to homeowners.

None of the Republicans who back the proposal denied the shift. But Rep. John Kavanagh, R-Fountain Hills, who chairs the House Appropriations Committee, said that change - along with the others - is necessary to get Arizona's economy back on its feet.

During debate on the measure he compared it to the idea of giving someone a fish and feeding him for a day versus teaching him how to fish and feeding him for a lifetime.

"Unlike the tax-and-spend liberals who confront economic adversity by increasing welfare programs, I believe that the solution is to create more jobs by not overburdening the job-producing private sector with more taxes, but lowering their taxes so they can create more jobs," Kavanagh said. "So people don't have to go on AHCCCS (the state's Medicaid program) but instead get health insurance through their employers, so that we don't have to vote for extensions of unemployment benefits because these people are now productively employed."

Several Democrats said they agree with the ultimate goal of stimulating the economy to produce the kind of tax dollars necessary to fund government services. But they said this package is not the way to go.

Rep. Tom Chabin, D-Flagstaff, was particularly upset at the idea of reducing the tax burden on businesses by transferring some of it to homeowners.

"We have 50,000 homes in foreclosure in Maricopa County," he said. "And it's pretty clear they don't have the capacity to pay the tax."

House Minority Whip Chad Campbell, D-Phoenix, said there are better ways to stimulate economic growth than across-the-board tax cuts for every business in the state. He cited the move last year to provide targeted tax breaks for companies that manufacture solar energy devices.

"This corporate bailout bill will not create a single job," argued House Minority Leader David Lujan, D-Phoenix. His suggestion was to instead restore funding for the Department of Revenue to rehire the tax collectors who were laid off.

"If we just gave the Department of Revenue their money back, $1.4 million, they could then go out and collect the over $300 million in taxes that are delinquent, that are owed to the state of Arizona," he said.

But House Speaker Kirk Adams, R-Mesa, said what's in the package is culled from what has worked in other states.

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