A plan by some Republican gubernatorial hopefuls to eliminate the state income tax is getting a cool reception from the woman they hope to replace.
At a forum of candidates Wednesday, both Secretary of State Ken Bennett and state Sen. Al Melvin said they want to scrap the tax on both individuals and corporations. Together they provide about $4.4 billion of the current $9.2 billion state budget – and close to $4.9 billion if the separate premium tax charged to insurers as an alternative to corporate income taxes is included.
Bennett has said he would make up the difference with sales taxes. In fact, he said he actually could lower the rate from the current 5.6 percent, making up the difference by imposing the levy on services and other transactions not currently taxed.
And Melvin figures that phasing it out over eight years, coupled with “tort reform” limits on jury awards against corporations and others, will generate enough economic activity to make up any losses with the current sales tax rate.
But incumbent Jan Brewer, who crafted the basis for the new budget just adopted by lawmakers which includes income and premiums taxes, said she doesn’t see that happening.
“It’s going to be very difficult,” said Brewer who sat through Wednesday’s joint appearance that featured the top six Republican contenders. Nor does she accept the idea that the revenues can be made up, whether through sales taxes or even some enhanced business climate.
“I don’t believe it would work in the state of Arizona,” Brewer said.
The campaign promises came at a forum sponsored by the Arizona Manufacturers Council where the GOP contenders sought to break out from the pack and claim a lead for their party’s nomination to replace Brewer, who is not seeking re-election. Presumed Democratic nominee Fred DuVal also made a pitch for support to the business-friendly audience.
There were no real surprises. Nor was there any real chance for debate, as the format had each candidate answer a different non-controversial question pulled from a fish bowl.
That left the contenders with a mere two minutes at the end to explain how they differ.
Former Mesa Mayor Scott Smith took advantage of the audience – including Brewer – to point out his support of both the Common Core school curriculum that she approved, as well as the decision last year by the governor to expand the state’s Medicaid program.
Both programs also are back by the Manufacturers Council and its parent organization, the Arizona Chamber of Commerce and Industry. More to the point, other Republicans have come out against both.
That did not go unnoticed by Brewer, who has not seen all the candidates together until now. The governor will have to decide whether to endorse any Republican ahead of the Aug. 26 primary.
“I will look very carefully and cautiously at each and every one of them,” she said after the event. But Brewer made it clear the No. 1 prerequisite to getting her blessing is a commitment to continue her policies.
“We have been through some tough times the last 5 1/2 years here in Arizona,” the governor said, saying she has laid out a “strategic plan” for recovery, including tax cuts, reduced regulation, more school choice options for parents – as well as Medicaid expansion and Common Core implementation.
“I would like to see that plan carried forward,” Brewer said.
Brewer has supported lower taxes, particularly for business. That includes an overall 30 percent drop in corporate income taxes still being phased in as well as targeted cuts aimed at luring specific industries or firms to the state.
But the governor has never suggested eliminating income taxes, a move that would make the state dependent on just one source of revenues. That’s because Arizona has no statewide property tax, with virtually all the revenues coming from sales and income taxes.