Repeal; individual income tax
The repeal of the individual income tax is expected to have wide-ranging implications for state revenues and public service funding. Proponents argue that abolishing the income tax could stimulate economic growth by increasing disposable income for citizens, thus encouraging spending and investment. However, opponents highlight concerns regarding budget shortfalls that could arise due to reduced state revenue, potentially leading to cuts in essential services such as education, healthcare, and public safety.
House Bill 2395 aims to repeal Title 43, Chapter 10 of the Arizona Revised Statutes, which relates to the individual income tax. If passed, the bill will remove the existing framework governing individual income tax in the state, thus eliminating any associated taxation on personal income for resident taxpayers. The effective repeal date is set for December 31, 2023. This bill introduces a significant shift in the state's tax policy, whereby removing income tax could influence both individual taxpayers and the broader economic landscape of Arizona.
Notable points of contention revolve around the potential fairness of such a repeal. Those in favor of the bill maintain that a lack of income tax makes the state more attractive to businesses and higher-income individuals, suggesting economic benefits. Conversely, critics argue that removing the income tax disproportionately affects lower and middle-income residents, as they rely more heavily on state services funded by tax revenues. Legislative debates on this bill are likely to focus on these economic consequences and the equity of the tax system in Arizona.