Budget analysts have completed their projections of the tax increase Proposition 207 will trigger by eliminating inflation indexing, and it’s not a pretty picture for low income families and seniors. The Joint Legislative Budget Committee estimates that Arizona taxpayers will pay $1.25 billion more in taxes over the next 10 years if the annual inflation adjustment is repealed under Prop 207.
Arizona’s income tax brackets were indexed to inflation to protect taxpayers from unfairly paying more due to wage inflation and cost of living adjustments that occur over time. Without indexing, taxpayers will see more and more of their paychecks eaten away by inflation. Based on the JLBC numbers, the Arizona Tax Research Association calculates that the average household earning $50,000 will lose over $1,200 in the next ten years as a result of the inflation tax.
Combined with the 98% tax increase on small businesses and the hidden $300 million conformity tax hike, Prop 207 has been revealed as a poorly drafted measure that will inflict long term damage on Arizona’s economy and our most vulnerable taxpayers. The only real winners appear to be big corporations and fortune 500 companies that were exempted from the tax increases in Prop 207 and will now have a competitive advantage in the marketplace.
Voters need to send a message to the Washington DC labor unions funding Prop 207 to keep their special interest tax policy out of Arizona.