Arizona Tax Research Association: Proposition 204 – Earmarking at its Worst

Vote No On 204

Vote No On 204

The Arizona Tax Research Association ( ATRA ) encourages a NO vote on Proposition 204 (1-16-2012). ATRA has long opposed ballot-box budgeting , where special interests use the initiative process to earmark revenues outside the state’s budgeting process. This initiative is arguably the most egregious earmarking effort ever placed before Arizona voters and it should be rejected.

This permanent sales tax increase locks in place an estimated $25 billion in spending over the next 17 years that can never be changed. Regardless of one’s perspective on the adequacy of education or transportation funding, putting spending for 12 different earmarks on auto-pilot is simply irresponsible. The Great Recession taught us a number of lessons regarding budgeting mistakes that aggravated Arizona’s chronic budget deficits. The biggest lesson was to avoid making permanent budget decisions that tie up billions of taxpayer dollars on the belief that neither the economy nor the state’s priorities will ever change.

In addition to a permanent sales tax rate increase in a state with the second highest combined rates in the nation, the initiative also takes the extraordinary step of freezing the current sales tax base. Freezing the sales tax base will undermine the growing momentum to reform Arizona’s antiquated state and local sales tax code and demonstrates not even a modicum of consideration for the taxpayers saddled with complying with this tax increase.

Lastly, funding for K-12 schools has always been the largest state expenditure. K-12 appropriations are driven by many complicated formulas that account for differences across Arizona schools. Prop 204 (1-16-2012) handcuffs policymakers’ ability to change these funding formulas. Presuming there will never be a legitimate reason to modify these statutes is shortsighted and an abuse of the initiative process.

Kevin J. McCarthy, President, Arizona Tax Research Association, Gilbert

Lori Daniels, Board Member, Arizona Tax Research Association, Chandler

Proposition 204 Hurts Arizona’s Middle Class and Low Income Families


Proposition 204 disproportionately hurts Arizona’s middle class and low income families

What is a regressive tax? Simply, if a taxes’ burden falls more on the middle class or the poor than those who are wealthy, the tax is considered regressive or disproportionately punitive on those who can least afford it.

Proposition 204 is the perfect example of a regressive tax, targeting those Arizona families that can least afford to pay more for the goods that they need. Proposition 204 makes Arizona’s “temporary” sales tax “permanent,” making Arizona the second highest sales taxed state in America. Incredibly, the only state that has a higher sales tax is Tennessee, a state with no income tax.

Proposition 204 is marketed for education, but the revenue raised is not required to go to teachers or the classroom. In fact, the measure is a grab bag for special interest groups, containing over $100 million dollars for public transit and roads. So, while Proposition 204 contains money for politically connected special interest groups, the revenue raised is coming from those who cannot afford to be politically connected.

By their very nature, sales taxes are regressive because expenses such as clothing, shelter, food, and other household goods tend to be the primary costs of a middle class and low income households’ budget.

That’s why opposition to Proposition 204 is coming from all sides, from those who know it is bad for business and job creation and from those who know it will hurt poor Arizona families. Why are we “permanently” raising taxes on those people who can least afford it? Why are we “permanently” increasing taxes during a time when Arizona’s unemployment rate is still high? Why are we raising taxes under the auspices of education, but sending that revenue to groups not related to education?

There is nothing more important than the education of our children. Arizonans want a bright future for their kids and improving education is an important priority. But, we need real education reforms, not permanently mandated tax increases devoid of independent oversight or accountability.

Proposition 204 is bad for Arizona middle class and low income families, it is bad for teachers, and it is bad for Arizona’s economy. We need to Vote No on Proposition 204.

To learn more about Proposition 204, please visit our Website or our Facebook Page for more information.

There is nothing more important than the education of our children. That is why we oppose Proposition 204, a broken promise to make Arizona’s temporary tax increase “permanent.” Proposition 204 brings a permanent, billion-dollar-per-year price tag to Arizona families. While raising your taxes, Proposition 204 provides no real reform and contains no real accountability.

Arizonans want a bright future for their kids and improving education is an important priority. Although wanting to improve education, throwing money at the problem is not the answer. We need real education reforms, not permanently mandated tax increases devoid of independent oversight.

Additionally, Proposition 204 was written by special interests for special interests.

While Arizonans continue to struggle, do we really want to continue to raise their tax burden? Are we willing to have the second highest sales tax in America?

Arizona needs real education reform and jobs. Proposition 204 will make Arizona less competitive while providing very little benefit to Arizona’s education system.

Proposition 204 is too taxing on Arizona families, Vote No on 204.


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