The new tax burden Gov. Jan Brewer wants to impose on Arizonans is more likely to hit individuals than businesses.
Brewer, who announced last month she wants $1 billion a year in new taxes for the next three or four years, has been holding her cards close to her vest as she weighs exactly who should bear the burden. Paul Senseman, her press aide, said it takes time to figure out the best - and simplest - way to raise that kind of money quickly.
But Brewer said she is not interested in any change in tax policy that would hamper business development.
More to the point, the governor specifically wants permanent repeal of the currently suspended statewide property tax - a tax that hits businesses harder than homeowners - even though that would forego a quarter of what she said the state needs to raise. Brewer said the only caveat is that the property tax repeal would have to be part of a balanced budget, including the large increase in tax revenues the governor wants which then would have to come from other levies.
One reason Brewer wants to kill the property tax is because it hits businesses harder than homeowners.
Residential property is assessed for tax purposes at 10 percent of its "full cash value," a figure that is supposed to come close to, but not exceed, its actual market value. So a $200,000 home is on the tax rolls at $20,000, the figure against which the tax rate is assessed.
Businesses are currently assessed at 22 percent of their full cash value. Put another way, on a dollar-for-dollar basis, identically valued businesses pay 2.2 times as much in property taxes as homes.
But the disparity doesn't end there. Businesses also must pay property taxes on all of their equipment, ranging from large generators and stamping machines down to each desk and file cabinet.
The Republican-controlled Legislature suspended the state property tax in 2006, when Arizona had a surplus, as part of a deal with Democrat Janet Napolitano. The levy, which would raise $250 million annually, will return automatically later this year unless lawmakers vote otherwise.
That repeal has become the centerpiece of the current crop of GOP legislative leaders, even with Arizona facing a $3 billion gap this coming fiscal year between revenues and expenses. Brewer has pronounced herself a fan.
"I, like the Legislature, and certainly like the business community, would like to probably see the permanent repeal," Brewer said. But the governor cautioned it can't happen by itself.
"Bring me a balanced budget," she said. "And if that is included in it, good."
But that balanced budget, by Brewer's own demands, has to include $1 billion a year in new taxes, at least temporarily.
Senseman said one of the ideas being strongly considered is a temporary hike in the state sales tax. That's because it's simple: Just hike the current 5.6 percent rate by the amount necessary.
One percent could generate close to $1 billion. But the net proceeds to the state shrink to less than $900 million after cities get their share.
He also said the governor believes sales taxes are a fair way to spread the burden, as they are paid by all individuals on items they buy at retail.
"It spread the impact of what she inherited to the broadest audience," Senseman said, echoing Brewer's oft-repeated quote that the state has a deficit because of the budgeting practices of her Democratic predecessor.
But sales taxes are considered regressive because people at the bottom end of the wealth scale spend a greater portion of their money on taxable items than those at the top.
Simplicity is only one of the things the governor wants. Senseman said Brewer wants a tax that is "least impactful to our economy and the most impactful to our state budget."
He said that means bringing in a lot of money, quickly, in a way that does not deter businesses from relocating or expanding here. And that goal makes hiking takes on business unlikely.
"On all of the issues, we've got to consider what the impact would be to jobs, including long-term prospects for those jobs," Senseman said.
Brewer's hope to make Arizona tax structure more friendly to business is not limited to her desire to permanently repeal the property tax. The same day she called on lawmakers last month to impose a temporary $1-billion-a-year tax she asked them to start working now on lowering business taxes permanently beginning in 2012.