Arizona Interfaith Network Statement on the Flat Tax Proposal

While Arizona struggles to emerge from the economic destruction of the pandemic, we learn that Arizona’s elected leaders have proposed a 2.5% “flat tax”.  This flat tax proposal would be a handout to the rich on the backs of the poor and middle-class families who already sacrificed the most during the pandemic. This is not just short-sighted; it is dangerous and immoral. Their justification for this action is a budget forecast showing the state ending fiscal 2021 with a $2.6 billion surplus.

This plan further harms essential workers who have taken the brunt of the virus while the rest of us could harbor safely.  Such a short-sighted and unprecedented tax policy change will cripple Arizona’s economy for generations to come.

Lowering income tax brackets across the board will handcuff future generations of Arizonans as they attempt to deal with inevitable future recessions, or as they try to invest in long-starved public programs like education, safety nets and infrastructure.

A reduction in the state’s income tax collections would directly and permanently reduce state revenue-sharing with cities and towns as well. 70% of municipal budgets are devoted to public safety. Cuts in municipal budgets would most likely result in cuts to vital services. Local public services touch our lives in an immediate way: slower emergency response times cost lives.

It is stunning that those who have been entrusted with the leadership of the state would craft a massive tax cut for the wealthiest Arizonans and effectively undo the will of the voters to raise the state’s investment in public education. This is indefensible disregard for the needs of the battered and bruised people of this state who are victims of this calamitous year.

Moreover, a permanent tax cut based on a clearly temporary budget surplus is highly irresponsible. We keenly remember the pain of the draconian budget cuts we suffered in the Great Recession. Those budget cuts were the result of over 30 years of tax cuts that straight-jacketed the Legislature’s response with a structural deficit. A flat-tax tax would severely impair Arizona’s already fragile and brittle ability to protect vulnerable people in the economic downturns and other catastrophes that we will inevitably face in the future.

We call on the governor and legislature to reject this short-sighted and ruinous tax plan.

We call on them to bring the budget into the public light. This process should allow for citizens to provide input and make our budget process transparent so it may better reflect the will of the voters - it should not be pushed through in the dark of night.

Lastly, we urge the Governor and Legislative Leadership to regard the budget surplus as a blessing, an abundance that should be particularly applied for the good of Arizonans who have suffered the most during this pandemic. They should instead consider a one-time enhancement to the earned income tax credit or child tax credits for families.

State leaders should abandon their fixation with a flat tax. It is a dangerous plan.