Measure would shelve state income tax - East Valley Tribune: News

Measure would shelve state income tax

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Posted: Monday, January 21, 2008 5:14 am | Updated: 11:27 pm, Fri Oct 7, 2011.

Arizona voters may get the chance to scrap the state income tax on what they earn in favor of expanded sales taxes on what they buy.

The proposal by Rep. Rick Murphy, R-Glendale, would establish a levy on every transaction in the state. That would include not just the products subject to the current state sales tax but also services that now are exempt.

HCR2053 even would extend to wholesale transactions — purchases made by those who are not the ultimate consumers but plan to either resell the item or use the materials to make something else. These sales, too, also are not subject to the tax.

And it even would tax the sale of homes and land.

Murphy said he figures voters are sufficiently unhappy with income taxes to be willing to try something radically different. But Murphy said he believes the simplicity of the system, coupled with the fairness of it, will make believers even out of the skeptics.

But, at least for the moment, the actual cost of the levy is unclear.

Variants of the idea have been around for years. But what may give the concept some “legs” is the fact that Republican presidential hopeful Mike Huckabee has made enacting the idea on a national level a key part of his platform.

And Murphy said it will be structured so that it does not unfairly hit those at the bottom of the income scale.

He added that taxing spending rather than income would provide an incentive for people to save rather than spend.

He acknowledged that sales taxes are seen as “regressive,” taking a bigger chunk of the income of those whose earnings are below the median than those who are above. That’s one reason Arizona lawmakers agreed decades ago to exempt food from the state sales tax, an exemption that does not exist in Murphy’s plan.

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