New economic model shows proposed tax hike has hefty price tag for Arizona families
My #1 job is to the Constitutional rights of our citizens and to protect taxpayers; Our Constitutional rights that includes Life, Liberty and Property (that means your money and your God given freedoms) above all else.
Calculations prepared for me: I have received several inquiries from members regarding the tax increases that would be required to generate enough revenue to eliminate the FY 2010 shortfall. Our revenue projections and Federal bailout prospects may need to be revised as our revenues continue to slide, it is best to estimate that the FY 2010 shortfall is still $3 billion. Remember the real problem is not a lack of revenue. The past six years government grew by twice the rate of inflation PLUS population growth in this state. New programs were added by our former Governor, new spending when no money was available. We have simply over spent. Now with 50% of the budget off limits (voter initiatives and federal mandates) the task of resolving the deficit is made extra tough. We are dealing with the worse deficit in state history with one arm tied behind our backs. You want to know how to hurt families and businesses, over tax and over regulate them.
Property Tax:
• To generate $1 billion dollars through a statewide property tax increase, the tax on a $300,000 home would cost the taxpayer an additional $348 per year . To generate $3 billion, the impact on the same home would be $1,045.
• The impact on a business property would be more than double that amount, dollar for dollar in value. To generate $1 billion statewide, the tax on a million dollar business property would increase about $2,555. To address the entire $3 billion shortfall, the impact on a million dollar business property would be $7,666.
• These calculations assume the current statewide net assessed values. If assessed values drop, the tax rate impacts would be higher.
• This estimate is in lieu of the restoration of the state equalization tax rate -- not over and above the $250 million in revenue associated with that rate.
Sales Tax:
• Based on JLBC's FY 10 estimate, an increase in the sales tax rate from 5.6% to 6.6% would generate about $1.1 billion (assuming the state did not share the revenue with local governments).
• Obviously, the sales tax is very sensitive to market conditions and consumer behavior. This estimate, like others, is subject to revision as we move through this recession.
Income Tax:
• This is even more difficult to estimate, but for discussion purposes, tax rates on current taxable income levels would have to approximately double to generate $3 billion (from a static model perspective).
Assumptions:
• There are always a lot of assumptions in any taxation analysis. Any tax increase option could have a mixed or even negative impact by reducing some economic activity subject to the new tax.
• In addition, the impact of options to increase property, sales, or income taxes would have to be considered against the economic backdrop of increasing numbers of job losses, income reductions, business closings, and home foreclosures.
What we need to do to secure the future to stop this run-a-way spending:
Measure to Protect Taxpayers; TABOR:
– I am renewing the fight to stand up for the Taxpayer. I am renewing the fight against profligate overspending that has caused huge budget deficits. The Taxpayer Bill of Rights (TABOR), protects taxpayers and ensures fiscal responsibility at the Capitol by prohibiting the state from spending more than the previous year’s revenues, plus the rate of inflation and population growth (a reasonable growth that protects the taxpayer).
"State spending is out of control, State government has shown it is incapable of restraining its spending. We must take action to protect taxpayers from pork-barrel politicians. I urge my fellow lawmakers to join Arizona taxpayers in support of this measure. Taxpayers should have first claim on their money, not government. Excess revenues should be refunded, not used to grow government."
"State government must be held accountable for its spending binge; Taxpayers should not have to pay the price for reckless policies."
The Principles of Limited Government is Central to Freedom and Our Political System
We are in the worst economic times this state has been in for decades. NO one has done more to try and hold down increases and reducing spending than I have.
The portion of each family's income going to government has risen and threatens to rise even more, as previous restrictions of government Federal and Local activity has eroded and spending has exploded. The stealth tax of regulation has also crept deeper into the economy and into society, insinuating the power of government into new and more areas of our lives, imposing heavy costs on families and business and restricting personal freedom. The courts, once the fierce protectors of freedom and the guardians of government restraint, have in recent years often become an extension of the activist government.
It is time for government to take steps to restrain its growth and it is up to ordinary citizens to make sure it does.
The focus of the budget control should be on reducing spending as a proportion of income.
Entitlement programs should be corked through reform or elimination. Entitlement programs unfairly obligate future taxpayers and middle-class entitlements-such as Medicare (AHCCCS) are growing at unsustainable rates, threatening huge tax increases on future generations and threatening the economy. These problems must be addressed now.
Spending should be based on core Constitutional principles. The budget should contain measures of liabilities and obligations and force us to plan to meet these obligations.
TABOR would require lawmakers to set priorities, reduce wasteful spending, and reform entitlement programs.
TABOR would save taxpayers hundreds of millions of dollars over the next decade and could be enforced by requiring a 2/3's supermajority to pass the budget or any spending bill that exceeds TABOR allowances. Such a bar is low enough to clear during an emergency and yet high enough to prevent abuse.
Next-Establish a "Base-Closing" Commission on wasteful programs:
To make it easier for members to eliminate programs, the legislature should appoint a commission, similar to the Federal Government's successful military base-closing Commission of the late 80's to crate a list of all wasteful, outdated, duplicative and unnecessary programs that should be eliminated. Lawmakers should then be required to cast a vote up or down to eliminate ALL programs on the list, preventing individual lawmakers from amending the list to protect their special-interest projects or programs.
Principles-Regulation is a burdensome and a hidden tax on American consumers:
According to estimates prepared by Mark Crain and Thomas Hopkins for the Small Business Administration, regulation's cost Americans $843 billion (over $8000 per house hold), and that was in 2000. This is almost half the amount collected in federal taxes and close to the $1 trillion paid in personal income tax that year.
While some regulations are justified they should be imposed only when market solutions and voluntary action have been proven not to work.
Arizona has become a huge, bloated welfare state – teetering on fiscal insanity.
We hear it all the time, "if a family should be forced to reduce its budget in bad times, so should government." It's become something of a mantra among fiscal conservatives.
Those on the opposite side have extended the analogy, arguing that just like families, government must often spend more than it has to pay for its needs. However, you don't mortgage your home every-year.
The state's budget has little in common with family finances. Given projected deficit of at least $1.2 billion, it's important to understand why.
While both are subject to overall conditions of the economy, the state has little incentive to reduce spending. Pressure from a seemingly endless array of interest groups encourages legislators to spend, but little countervailing force protects taxpayers from having to foot the bill.
Government, however, rarely considers such constraints when deciding how to tax and spend. Taxation, consequently, is rarely designed to be efficient, such that it will cause the least amount of economic disruption.
Without some kind of strict institutional check, we can't realistically hope for a consistently prudent budget from year to year - the evidence indicates few states ever do. Even a constitutional requirement for a balanced budget hasn't done the trick. With culpability not falling on any one person, the legislative and executive branches are able to spread blame without anyone actually taking the fall.
This would require the voters approval in 2010.
The Budget stabilization Act:
Limits State Spending to Population Growth Plus Inflation.
Senator Russell Pearce, LD18, Mesa www.russellpearce.com
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