You can read the entire report HERE, but there are some highlights:
SIMPLIFYING THE TAX CODE
“Arizona substantially cut personal income taxes by reducing the number of tax brackets from five to four and cut tax rates for nearly every bracket.”
“Arizona and Virginia deserve special mention for enacting exemplary pro-growth tax reforms… Their conformity legislation successfully clarified their respective state tax codes following the landmark federal Tax Cuts and Jobs Act reforms and also returned effective state-level revenue increases back to taxpayers through significant personal income tax reforms."
BROAD-BASED REFORM
“By increasing the state standard deduction to $12,200 and $24,400 for single and joint filers, respectively, removing the second-lowest personal income tax bracket, reducing rates for nearly every remaining personal income tax bracket, and creating a new dependent exemption, Arizona saved income earners an expected $680 million in Fiscal Year (FY) 2020 tax liability compared to the federal tax conformity baseline if Arizona conformed without cutting taxes. Including revenue generating provisions inherent to federal tax conformity, such as effectively eliminating the personal and dependent exemptions, Arizona taxpayers can expect an estimated net $52 million in tax savings for FY 2020 compared to FY 2019.”
A COMPREHENSIVE PLAN
“Arizona went one step further than merely making federal tax conformity revenue neutral. During the 2019 legislative session, Arizona used federal tax conformity as an opportunity to deliver a net tax cut to income earners. First, Arizona matched federal policy by raising the standard deduction to $12,200 and $24,400 for individual and joint tax filers, respectively. Second, Arizona eliminated the second lowest of its five total tax brackets, allowing more income to fall into the bracket with the lowest rate. Third, Arizona lowered personal income tax rates for three of the four remaining tax brackets. Finally, Arizona also established a tax credit of $100 for every dependent under 17 years of age and $25 for every dependent older than 17. Altogether, Arizona’s tax cuts removed an estimated $680 million in FY 2020 personal income tax liability. Factoring in the base-broadening provisions inherent to federal tax conformity and post-Wayfair sales tax increases, Arizona’s conformity legislation is expected to cut $52 million on net from income earners’ FY 2020 tax liability."
ARIZONA OUTPACING OTHER STATES
"This is the Grand Canyon State’s fifth appearance in State Tax Cut Roundup. Only Florida and North Carolina have been featured more often. This demonstrates Arizona’s commitment to pro-growth tax reforms in recent years. A competitive tax code has made Arizona one of the fastest growing states in the country at the expense of neighboring high-tax California and New Mexico. According to How Money Walks, Arizona has gained nearly $12 billion in annual adjusted gross income (AGI) from California and over $850 million in AGI from New Mexico since 1992. As California and New Mexico continue to pass net tax increases while Arizona makes its tax code more competitive, Arizona can expect to see additional economic growth and an increasingly vibrant state economy at the expense of its high-tax neighbors."
Arizona continues to lead the way with smart policies. Please share this report with your friends and get the word out!
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