Do You Think Arizona will ever Get Rid of State Income Tax? (Phoenix: car registration, employment)

[teddyearp]

Originally Posted by azriverfan.

I don't want normal people. That is the problem. We've had too many "normal" people move here ie poorly educated low skilled individuals with socially conservative values. We need to attract the best and brightest. We need to stop catering to poor snowbirds and people in their 20's who just want to take advantage of the low COL.

I don't care about COL. I care about jobs. If the COL increases because we've created more higher earning jobs and attracted more professionals, that is a plus.

Hmm, while that sounds good on the surface, somehow I also see your post as wanting to steer towards a system of lords and vassels. And you want all the vassels to go away. Who then will serve you, lord?

[Valley Native]

One other reason to end the state income tax: IRA distributions. Anytime you withdraw funds from a 401K or standard IRA, you are automatically subject to federal income tax which is bad enough. On top of this, there's an additional state income tax which includes withdrawals from retirement plans. Owing income taxes can be difficult for many people ... especially those on fixed incomes.

[PhoenixSomeday]

Getting rid of sales tax would be absolutely great, I'd definitely notice and appreciate that. But even at $60k, AZ is only taking a couple hundred per month in income tax. When in a financially sound and stable position, that's not going to mean anything to me.

Not sure where CA being 2x AZ is coming in. In basic state income tax it's actually $8 lower per check for me in CA with the same salary in both states. If you include CAs work disability thing you usually automatically pay into, CA comes out to about $1 more than AZ. Maybe we're referring to other kinds of taxes here or much, much higher tax brackets for straight personal income.

[man4857]

Originally Posted by Valley Native

One other reason to end the state income tax: IRA distributions. Anytime you withdraw funds from a 401K or standard IRA, you are automatically subject to federal income tax which is bad enough. On top of this, there's an additional state income tax which includes withdrawals from retirement plans. Owing income taxes can be difficult for many people ... especially those on fixed incomes.

You're trying to intentionally create a loophole?

You get a tax break because you put aside pre-tax money for retirement, now you say get rid of the income taxes on the withdrawal, so you're saying, essentially don't tax me at all? How is that fair to those who are working paying taxes but you can withdraw but pay no tax? If anything when you work and earn an income you should pay no tax as well if that's the case for fairness.

If you don't want to deal with income taxes, put money into a Roth IRA with post-tax money and it will grow and withdrawals are tax free...

[adriver]

The reason it will never happen is pretty simple. The state needs to collect money, and that's one of the few places they can get it where it won't effect the large amount of retirees/snowbirds as opposed to other places they would tax. I would love to see a breakdown for the ages of the 2/3rds that voted. I WOULD BET EVERYTHING, that the 65 and older crowd has the highest percentage of people who voted. If voting wasn't in November when all the snowbirds are here it might have a chance, otherwise its a career ender for anyone that tried it.

[cjseliga]

Originally Posted by PhoenixSomeday

Getting rid of sales tax would be absolutely great, I'd definitely notice and appreciate that.

There was an article in The Daily Star yesterday, that talked about the Arizona State Senate reviewing all of the sales-tax exemptions in the state:

Bill to review Arizona sales-tax exemptions advances to Senate

State lawmakers took the first steps Wednesday to potentially eliminating exemptions from sales taxes that cost the state more than $12 billion a year. The exemptions include such things as the sale of food for home consumption, hospital services, auto repair, legal and doctors’ services, the sale of lottery tickets and prescription drugs. SB 1144 does not cut any of the hundreds of tax breaks that have been shepherded through the Legislature, many decades ago, often at the behest of special interest lobbyists. Instead it requires each of these exemptions be regularly reviewed to see which still make sense.

Looks like there might be new sales-taxes that could happen in the future.

[teddyearp]

One thing I've seen in my lifetime. Once the .gov has their hand in your pocket, it is very, very hard to get it out. So it would take an extreme effort to abolish the state income tax. And if it ever was, do expect property and/or sales taxes to increase exponentially.

What I noticed about property taxes while I lived in WA (where they have no income tax) is that the local county assessor(s) seem to have a real free hand in assessing value(s). At the onset of the 'great recession' in 2009 while property values were actually dropping, assessed values rose. Without any legislative oversight, making it next to impossible to challenge. Unless of course you had a bunch of money and time to do so.

At least with income and sales taxes, we have a tiny bit of legislative 'pull' so to speak.

[JayVanderbilt]

Is it realistic that the income tax will ever be abolished in Arizona? I don't understand why they have it, the State would become much more attractive if they took it down to 0, like Nevada and Texas.

[cjseliga]

Originally Posted by JayVanderbilt

Is it realistic that the income tax will ever be abolished in Arizona? I don't understand why they have it, the State would become much more attractive if they took it down to 0, like Nevada and Texas.

What do you propose to replace the money generated from the state income tax? Raise property taxes? Raise sale taxes?

I think anybody who hates state income tax should just move to one of the states that don't have it on earned income:

Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire and Tennessee.

I'm sure with all of those states you could find a nice little place to live, since those states make up 1.4 million square miles out of the 3.8 million square miles that make up the US!

[JayVanderbilt]

No need to replace it with anything. What do they need tax dollars for?

What I'm saying is that Arizona could be booming a lot more and get more companies moving there and jobs available for its residents if they abolished it. My question then was if it was possible, or if it has been up for debate.