Repealing Bracket Indexing is a $1.25 Billion Income Tax Increase over 10 years on all Arizonans
The Joint Legislative Budget Committee (JLBC) released a memo analyzing the impact of the Prop 207/InvestInEd proposal which eliminates income tax bracket inflation adjustments. They conclude the proposal resets income tax brackets to 2014 levels and eliminates the estimated 2.26% annual bracket shift as a result of inflation. The purpose of adjusting brackets to inflation is to prevent a tax increase associated with wage inflation over time. Prop 207 permanently eliminates this feature.
The 10-year impact of this change is an estimated $1.252 billion tax increase which will be shouldered by all Arizona income taxpayers. The first year impact is roughly $50 million and by the tenth year in this study, it grows to $211 million, demonstrating the compounding impact of removing the inflationary adjustments. This tax increase will be deposited in the State General Fund which can be spent by the Legislature in any legal manner.
The Arizona Tax Research Association, using the assumptions developed by JLBC, calculates the 10-year impact of this tax increase to be $1,255 on a single filer with $50,000 in taxable income and $2,509 for a family with a combined income of $100,000.
"While proponents have attempted to deflect the issue by calling this tax increase insignificant, JLBC analysis shows it's anything but small. This permanent tax increase grows exponentially, annually increasing income tax exposure for all Arizonans." - Kevin McCarthy, President
For questions and media inquiries please contact Sean McCarthy at (602) 253-9121
