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Arizona’s Low-Income Families Have the Most “Skin In The Game” When it Comes to Paying State and Local Taxes

Phoenix contact: Dana Wolfe Naimark
dnaimark@azchildren.org
(602) 266-0707 #214  work
(602) 882-5755 cell
Tucson contact: Penelope Jacks
psjacks@azchildren.org
(520) 795-4199 work

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Arizonans with modest earnings contribute a much larger share of their income to support schools, roads and other public assets than do better-off households and profitable corporations, according to a new report by Children’s Action Alliance.

The report, called Skin in the Game, shows that even those who earn too little to owe income taxes pay proportionately more in other taxes than upper-income Arizonans.   Creating a “flat” state income tax, as some have suggested, would make the situation even worse.

Skin in the Game looks beyond the political talking points, slogans and false claims to examine who really pays taxes in Arizona. 

“We hear it repeated time and time again in Washington, D.C. and here in Arizona that families with low incomes don’t pay their fair share of taxes and should have more ‘skin in the game,'” said Dana Wolfe Naimark, President and CEO of Children’s Action Alliance.  “The facts show just the opposite.   Arizonans with the very highest incomes actually have the very least skin in the game.”

At the same time, Arizona’s tax code provides numerous ways for profitable corporations and wealthy individuals to pay less in state and local taxes.  Families and corporations can use a variety of tax credits to completely wipe out their state income tax bill. Corporate tax cuts and tax credits that are intended to stimulate new jobs and encourage specific investments and donations are  also shrinking the state’s tax base for economic priorities like education and health care.

Key findings include:

  • Arizona households earning less than $20,000 spend $12.50 out of every $100 of their income on state and local taxes; the wealthiest Arizonans spend less than half that. Those earning $437,000 or more spend only $5.60 out of every $100 of their income on taxes.
  • Nearly three out of four of corporations paid just $50 in income tax, the legal minimum.  Fewer than one in ten corporations paid $5,000 or more.
  • Thirty percent of household tax returns filed for tax year 2009 owed no state income tax.  More than two thirds of these eliminated their tax liability through the standard or itemized deductions.
  • Arizona’s varied income tax rates partially offset the sales, excise, and property taxes that eat up a larger share of what low- and moderate-income families earn.
  • When fully phased in, cuts to corporate income and property taxes,   combined with the many corporate tax credits passed during the last six years, will cost the state $778 million each year.  That would be enough to fund all-day Kindergarten statewide, help families afford child care, provide health insurance to children in working families, build and repair schools, and buy new equipment for K-12 classrooms and campuses.

“Our findings underscore why Arizona should reject proposed tax schemes, like the flat tax, that cut taxes for the wealthy at the expense of everyone else,” Naimark said.  “Arizona needs a budget and tax system that fuels our goals for a vibrant economy with plentiful jobs and strong families.  We can’t afford policies that sell out our future and damage the health and education of the children who face the biggest struggles.”

The complete report is available here

Children’s Action Alliance is an independent voice for Arizona children at the state capitol and in the community.  CAA works to improve children’s health, education, and security through information and action.

Arizona’s Low-Income Families Have the Most “Skin in the Game” When it Comes to Paying State and Local Taxes

pages from skin in the game 1-25-12Arizonans with modest earnings contribute a much larger share of their income to support schools, roads and other public assets than do better-off households, according to a new CAA report. The report, called Skin In the Game, shows that even those who earn too little to owe income taxes pay proportionately more in other taxes than upper-income Arizonans. At the same time, Arizona’s tax code provides numerous ways for profitable corporations and wealthy individuals to pay less in state and local taxes.

Arizona’s Low-Income Families Have the Most “Skin in the Game” When it Comes to Paying State and Local Taxes

Arizonans with modest earnings contribute a much larger share of their income to support schools, roads and other public assets than do better-off households, according to a new CAA report. The report, called Skin in the Game, shows that even those who earn too little to owe income taxes pay proportionately more in other taxes than upper-income Arizonans. At the same time, Arizona’s tax code provides numerous ways for profitable corporations and wealthy individuals to pay less in state and local taxes.

“We hear it repeated time and time again in Washington, D.C. and here in Arizona that families with low incomes don’t pay their fair share of taxes and should have more ‘skin in the game,'” said Dana Wolfe Naimark, President and CEO of Children’s Action Alliance. “The facts show just the opposite. Arizonans with the very highest incomes actually have the very least skin in the game.”

The new report illustrates how both upper-income households and profitable corporations can use a variety of tax credits to completely wipe out their state income tax bill. Key findings include:

  • Arizona households earning less than $20,000 spend $12.50 out of every $100 of their income on state and local taxes; the wealthiest Arizonans spend less than half that. Those earning $437,000 or more spend only $5.60 out of every $100 of their income on taxes.
  • Nearly three out of four of corporations paid just $50 in income tax, the legal minimum. Fewer than one in ten corporations paid $5,000 or more.
  • When fully phased in, cuts to corporate income and property taxes, combined with the many corporate tax credits passed during the last six years, will cost the state $778 million each year. That would be enough to fund all-day Kindergarten statewide, help families afford child care, provide health insurance to children in working families, build and repair schools, and buy new equipment for K-12 classrooms and campuses.

Read the full report here.

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Childhood obesity has tripled in the US since in the last 30 years, with Arizona seeing the biggest increase in childhood obesity of any state in recent years. Physical activity is key to children being healthy, yet many Arizona children do not have playgrounds in their neighborhoods. However, nearly all neighborhoods have schools with playgrounds, which are all too often locked up during non-school hours.

SB1059 is a bill supported by CAA and the American Heart Association to address this, and it is being heard in the Senate Education Committee on Tuesday, January 17, at 8 a.m. This bill clarifies the current state law about liability for recreation, which mentions parks, forests, and agricultural land, but is silent about schools. The bill would make clear that schools may be opened up to the public outside of instructional hours under the same liability laws as local parks. A fact sheet on SB1059 can be found here.

Children at Risk of Being Homeless in Arizona

A recent report, America’s Youngest Outcasts 2010, ranks each state in the areas of the numbers of homeless children, their well-being, the risk for child homelessness in the state, and state level planning and policy activities. Using the most recent data available this report ranks Arizona 47th in the nation in the composite score and as the worst state in terms of children at risk of being homeless. Thankfully, it gets better from there. According to this report, Arizona’s planning and policies place closer to the middle of the pack as does the overall well being of children in Arizona.

Even this good news is tainted with the prospect of it becoming bad news if our legislators don’t have their state spending priorities in order. For example, the Housing Trust Fund is one of the factors that keeps Arizona from being at the bottom of these rankings. For now this fund is safe, but we’ll be keeping our eyes on it to make sure it stays that way.