Showing posts with label Sales Tax. Show all posts
Showing posts with label Sales Tax. Show all posts
Tuesday, May 13, 2008
Coyote Blog: Taking A Peak Inside the Sausage Factory
~another blogger's take on the Governor's suggested sales tax increase for Transportation and the deal she struck with the Home Builders Association of Central Arizona
Breakdown of TIME's Transportation Proposal for Sales Tax Increase
NOTE: I DO NOT SUPPORT THIS TAX INCREASE. I only desire to provide additional information so that all can see the numerous flaws in this proposal.
Breakdown of Additional Sales Tax Monies:
- 55% of the sales tax monies are to be dedicated to roads/highways as follows:
• 49% to projects in Maricopa County
• 12% to projects in Pima County
• 39% to projects in all other counties
- 18% of the sales tax monies are to be dedicated to rail/transit projects as follows:
• 8% to projects in Maricopa County
• 5% to projects in Pima County
• 87% to any project in the state
- 26% of the sales tax monies are to be dedicated to local transportation projects as follows (based on population):
• 60% to cities, towns and Indian Reservations in Maricopa County (the county itself is conspicuously absent from the list)
• 38% to all other counties, and the cities and towns within them
• 2% to Indian Tribes in any county other than Maricopa
• 4% for ‘transportation related enhancements’ (easements, environmental issues, landscaping)to cities, towns, counties and Indian tribes
• 3% to open space conservation and wildlife habitat fund, to be distributed through a grant
program with Arizona Department of Transportation and the Arizona Game and Fish
Department
Copies of the initiative are available from the Arizona Secretary of State’s office
Breakdown of Additional Sales Tax Monies:
- 55% of the sales tax monies are to be dedicated to roads/highways as follows:
• 49% to projects in Maricopa County
• 12% to projects in Pima County
• 39% to projects in all other counties
- 18% of the sales tax monies are to be dedicated to rail/transit projects as follows:
• 8% to projects in Maricopa County
• 5% to projects in Pima County
• 87% to any project in the state
- 26% of the sales tax monies are to be dedicated to local transportation projects as follows (based on population):
• 60% to cities, towns and Indian Reservations in Maricopa County (the county itself is conspicuously absent from the list)
• 38% to all other counties, and the cities and towns within them
• 2% to Indian Tribes in any county other than Maricopa
• 4% for ‘transportation related enhancements’ (easements, environmental issues, landscaping)to cities, towns, counties and Indian tribes
• 3% to open space conservation and wildlife habitat fund, to be distributed through a grant
program with Arizona Department of Transportation and the Arizona Game and Fish
Department
Copies of the initiative are available from the Arizona Secretary of State’s office
Monday, March 24, 2008
SB1331 and HB2723~Communities Facilities Districts
For the first time in state history, enactment of this bill would extend the privilege to levy a government-authorized sales tax to appointed officials of a Community Facilities District (CFD) who do not stand for election and who are not subject to recall.
The bill is narrowly drafted to apply primarily to one situation in the community of Tusayan near the Grand Canyon. It changes the property ownership standard for establishing a CFD tax from 100% of the property owners to only 51%, an amount which could be controlled by one landowner or special interest.
The property-ownership standard is in statute to authorize the imposition of a secondary property tax. Land ownership has nothing to do with instituting a sales tax.
The tax rate proposed in this bill is 5%, the highest local sales tax rate in the state. The small Town of Fredonia has a sales tax rate of 4%, but most other cities and towns have a rate of 2-3%.
Arizona’s sales tax system is already complex and taxpayer compliance can be challenging. Expanding sales tax authority to special districts will clearly increase compliance costs as both taxpayers and the Department of Revenue attempt to keep track of new jurisdictions.
There is a proper way to tax for infrastructure construction: a CFD can authorize a secondary property tax, or the community could incorporate as a town and adopt a sales tax by an elected town council. (There are already statutory provisions that allow this community to incorporate with as few as 500 people rather than the usual number of 1,500. A local group is actively working toward holding an incorporation vote.)
This bill is narrow, special interest legislation at its worst and sets a dangerous precedent. Soon other tiny communities of 350 people could establishing their own sales taxes without a vote of either an elected town council or the people.
The bill is narrowly drafted to apply primarily to one situation in the community of Tusayan near the Grand Canyon. It changes the property ownership standard for establishing a CFD tax from 100% of the property owners to only 51%, an amount which could be controlled by one landowner or special interest.
The property-ownership standard is in statute to authorize the imposition of a secondary property tax. Land ownership has nothing to do with instituting a sales tax.
The tax rate proposed in this bill is 5%, the highest local sales tax rate in the state. The small Town of Fredonia has a sales tax rate of 4%, but most other cities and towns have a rate of 2-3%.
Arizona’s sales tax system is already complex and taxpayer compliance can be challenging. Expanding sales tax authority to special districts will clearly increase compliance costs as both taxpayers and the Department of Revenue attempt to keep track of new jurisdictions.
There is a proper way to tax for infrastructure construction: a CFD can authorize a secondary property tax, or the community could incorporate as a town and adopt a sales tax by an elected town council. (There are already statutory provisions that allow this community to incorporate with as few as 500 people rather than the usual number of 1,500. A local group is actively working toward holding an incorporation vote.)
This bill is narrow, special interest legislation at its worst and sets a dangerous precedent. Soon other tiny communities of 350 people could establishing their own sales taxes without a vote of either an elected town council or the people.
Tuesday, February 7, 2006
Taxpayer Appreciation and Investment Act
Top 10 Reasons to Support the TAIA
by Tom Jenney
Executive Director, Arizona Federation of Taxpayers
Testimony to House Ways and Means, February 6, 2006
10) The surplus is a clear sign that taxes are too high. Arizona has collected between $850 million and $1 billion in extra revenue over projections. The Taxpayer Appreciation and Investment Act would reduce personal and corporate income tax burdens for all Arizona taxpayers by about ten percent, providing much-needed tax relief for the working people and retirees of Arizona. The current package, which would be phased in over two years, will use up between a quarter and a fifth of the surplus.
9) Arizona already spends far too much. Arizona’s FY 2006 budget is $1.3 billion, or almost 18 percent, over what it would have been had the state limited its budget growth to the rate of population plus inflation. The ten-year average for the rate of population growth plus inflation in Arizona has been 4.8 percent. But the average growth in general fund spending has been 6.7 percent. Anecdotally, the year of greatest infamy was FY 2005, when the Governor and her Big Spender friends teamed up to increase total expenditures by 17.4 percent, or $1.2 billion. That was an outrageous increase. Most taxpayers haven’t seen anything like 17-percent annual increases in their incomes. Even the relatively restrained FY 2006 budget grew faster (7.2 percent) than the 12-year average growth in personal income of 6.8 percent and more than twice as fast as the increase of wages.
8) There is plenty of room in the surplus if the Big Spenders don’t blow it on new spending. Without new spending, we could have the full TAIA as it was introduced, and the Martin-Huffman property tax cut package.
7) There is even more room in the surplus if the Big Borrowers don’t blow it on repaying the raided funds and the K-12 rollover. If there’s any conflict between tax cuts and repaying the funds, cut taxes. The raided funds should be reimbursed out of the general fund, through savings in current programs. Otherwise, we’re setting up what the insurers call “moral hazard.” If the taxpayers bail out the Big Borrowers every time there’s a surplus, the Big Borrowers will never learn to control themselves.
6) This is a tiny tax cut, in the big scheme of things. In Figure 2, which uses simple trendlines, we can see how the TAIA compares with trendline revenue growth (6.4 percent) and with a proposal to eliminate the income tax over 20 years. Notice the difference between the mythical static trendlines (labeled “Stat”) and the one-third dynamic-scoring feedback for both taxes (labeled “Dyn”). AFT supports the 20-year phase-out of the income tax, because it would reduce revenue to a level consistent with budgets that are limited in growth to the rate of population plus inflation. But that’s another matter for another committee. The point here is how modest the TAIA is.
5) Arizona’s “three-legged stool” is unbalanced. The average combined burden of personal and corporate income taxes as a portion of state tax revenue for the past twelve years has been over 40 percent. By cutting ten percent off that 40 percent, we would get closer to reducing income taxes to one-third of state tax revenues.
4) Arizona should rely more heavily on consumption taxes. Here are four reasons:
A) Sales taxes are highly visible, which makes it harder for the government to raise them. Sales taxes are visible in every purchase we make, especially the larger ones. But many folks do not keep a close eye on their income taxes because they are withheld by their employers.
B) Consumption taxes are among the least damaging of taxes to economic growth (their marginal excess burden is lower than that for other taxes).
C) Reducing Arizona’s income taxes would not increase the volatility of general fund revenue sources—and it might even decrease that volatility. Arizona’s sales tax revenue has been much more stable than Arizona’s income revenue.
D) Sales taxes are not necessarily regressive. First, lifetime income mobility means that only a tiny fraction of persons is poor for longer than a few years. Most people are poor when they’re 22 years old, but those same people are not poor when they’re 42 years old.
3) Americans vote with their feet, and they vote for low taxes and strong business climates. According to Arizona Republic columnist Robert Robb, there are 19 states with lower personal income tax rates than Arizona, and the Tax Foundation lists ten states with lower personal income taxes in per-capita terms. [This just in: a new Tax and Budget Bulletin from the Cato Institute shows that 14 states have lower state and local tax burdens than Arizona, measured as a percent of income.] The TAIA would reduce Arizona’s highest rate to 4.64 percent, even with Colorado’s flat income tax rate. That’s not as good as the zero-percent rates of Nevada and Texas, but it’s a good start.
2) Arizona needs to dramatically reduce—if not abolish—its corporate income tax. It is especially important to reduce corporate income taxes as part of the overall package. Corporate income taxes are far and away the most volatile of Arizona’s large taxes. And they are perhaps the most destructive taxes on a dollar for dollar basis when it comes to retarding employment growth. As any economist will tell you, corporations do not pay taxes. Workers pay part of those taxes through lower wages, customers pay part of them through higher prices, and shareholders—including retirees—pay part through lower dividends.
(Link to Slivinski report: http://www.goldwaterinstitute.org/pdf/materials/292.pdf)
And the number one reason (drum roll, please)…
1) Income taxes are especially destructive because they are taxes on capital and taxes on savings. In the jargon of economics, they have very high marginal excess burdens. A dollar of revenue raised through income taxes destroys more economic activity than a dollar of revenue raised through almost any other kind of tax. As economist Richard Vedder explained in a survey of various state taxes, “The income tax is the champion of bad taxes, in terms of its destructive effect on people, prosperity, and their economic well-being.” Arizona’s destructive, growth-harming income taxes have not been cut in ten years. We are asking you to give us relief from these taxes. Do it now. Please.
--Tom Jenney is executive director of the Arizona Federation of Taxpayers. To view AFT’s 2005 Legislative Scorecard, visit www.aztaxpayers.org.
by Tom Jenney
Executive Director, Arizona Federation of Taxpayers
Testimony to House Ways and Means, February 6, 2006
10) The surplus is a clear sign that taxes are too high. Arizona has collected between $850 million and $1 billion in extra revenue over projections. The Taxpayer Appreciation and Investment Act would reduce personal and corporate income tax burdens for all Arizona taxpayers by about ten percent, providing much-needed tax relief for the working people and retirees of Arizona. The current package, which would be phased in over two years, will use up between a quarter and a fifth of the surplus.
9) Arizona already spends far too much. Arizona’s FY 2006 budget is $1.3 billion, or almost 18 percent, over what it would have been had the state limited its budget growth to the rate of population plus inflation. The ten-year average for the rate of population growth plus inflation in Arizona has been 4.8 percent. But the average growth in general fund spending has been 6.7 percent. Anecdotally, the year of greatest infamy was FY 2005, when the Governor and her Big Spender friends teamed up to increase total expenditures by 17.4 percent, or $1.2 billion. That was an outrageous increase. Most taxpayers haven’t seen anything like 17-percent annual increases in their incomes. Even the relatively restrained FY 2006 budget grew faster (7.2 percent) than the 12-year average growth in personal income of 6.8 percent and more than twice as fast as the increase of wages.
8) There is plenty of room in the surplus if the Big Spenders don’t blow it on new spending. Without new spending, we could have the full TAIA as it was introduced, and the Martin-Huffman property tax cut package.
7) There is even more room in the surplus if the Big Borrowers don’t blow it on repaying the raided funds and the K-12 rollover. If there’s any conflict between tax cuts and repaying the funds, cut taxes. The raided funds should be reimbursed out of the general fund, through savings in current programs. Otherwise, we’re setting up what the insurers call “moral hazard.” If the taxpayers bail out the Big Borrowers every time there’s a surplus, the Big Borrowers will never learn to control themselves.
6) This is a tiny tax cut, in the big scheme of things. In Figure 2, which uses simple trendlines, we can see how the TAIA compares with trendline revenue growth (6.4 percent) and with a proposal to eliminate the income tax over 20 years. Notice the difference between the mythical static trendlines (labeled “Stat”) and the one-third dynamic-scoring feedback for both taxes (labeled “Dyn”). AFT supports the 20-year phase-out of the income tax, because it would reduce revenue to a level consistent with budgets that are limited in growth to the rate of population plus inflation. But that’s another matter for another committee. The point here is how modest the TAIA is.
5) Arizona’s “three-legged stool” is unbalanced. The average combined burden of personal and corporate income taxes as a portion of state tax revenue for the past twelve years has been over 40 percent. By cutting ten percent off that 40 percent, we would get closer to reducing income taxes to one-third of state tax revenues.
4) Arizona should rely more heavily on consumption taxes. Here are four reasons:
A) Sales taxes are highly visible, which makes it harder for the government to raise them. Sales taxes are visible in every purchase we make, especially the larger ones. But many folks do not keep a close eye on their income taxes because they are withheld by their employers.
B) Consumption taxes are among the least damaging of taxes to economic growth (their marginal excess burden is lower than that for other taxes).
C) Reducing Arizona’s income taxes would not increase the volatility of general fund revenue sources—and it might even decrease that volatility. Arizona’s sales tax revenue has been much more stable than Arizona’s income revenue.
D) Sales taxes are not necessarily regressive. First, lifetime income mobility means that only a tiny fraction of persons is poor for longer than a few years. Most people are poor when they’re 22 years old, but those same people are not poor when they’re 42 years old.
3) Americans vote with their feet, and they vote for low taxes and strong business climates. According to Arizona Republic columnist Robert Robb, there are 19 states with lower personal income tax rates than Arizona, and the Tax Foundation lists ten states with lower personal income taxes in per-capita terms. [This just in: a new Tax and Budget Bulletin from the Cato Institute shows that 14 states have lower state and local tax burdens than Arizona, measured as a percent of income.] The TAIA would reduce Arizona’s highest rate to 4.64 percent, even with Colorado’s flat income tax rate. That’s not as good as the zero-percent rates of Nevada and Texas, but it’s a good start.
2) Arizona needs to dramatically reduce—if not abolish—its corporate income tax. It is especially important to reduce corporate income taxes as part of the overall package. Corporate income taxes are far and away the most volatile of Arizona’s large taxes. And they are perhaps the most destructive taxes on a dollar for dollar basis when it comes to retarding employment growth. As any economist will tell you, corporations do not pay taxes. Workers pay part of those taxes through lower wages, customers pay part of them through higher prices, and shareholders—including retirees—pay part through lower dividends.
(Link to Slivinski report: http://www.goldwaterinstitute.org/pdf/materials/292.pdf)
And the number one reason (drum roll, please)…
1) Income taxes are especially destructive because they are taxes on capital and taxes on savings. In the jargon of economics, they have very high marginal excess burdens. A dollar of revenue raised through income taxes destroys more economic activity than a dollar of revenue raised through almost any other kind of tax. As economist Richard Vedder explained in a survey of various state taxes, “The income tax is the champion of bad taxes, in terms of its destructive effect on people, prosperity, and their economic well-being.” Arizona’s destructive, growth-harming income taxes have not been cut in ten years. We are asking you to give us relief from these taxes. Do it now. Please.
--Tom Jenney is executive director of the Arizona Federation of Taxpayers. To view AFT’s 2005 Legislative Scorecard, visit www.aztaxpayers.org.
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