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Our View: Fixing state tax increase should be lawmakers’ priority

March 5, 2018 GMT

The state of Arizona could reap an estimated $250 million more from wage-earning taxpayers thanks to a quirk of the new federal tax reductions. Arizona lawmakers have an obligation to revamp state income tax methods to assure taxpayers don’t get stung by this stealth tax increase.

The tax hit is a result of the way in which Arizona’s income tax system is coupled to federal tax forms. A revamp of the federal tax code changes a calculation for “adjusted gross income” and also changes personal deduction calculations. These combine to increase income taxes if not corrected.

A few lawmakers are making noise about the need to fix the current problem and also decouple Arizona’s income tax system from the federal forms.

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In the meantime, other tax bills, specifically one offering tax credits for children, are moving through the Legislature.

Tax revenue reductions that come from this targeted tax cut and potentially others could well make a broader tax fix less appealing to lawmakers.

We’re all for children, but the beneficiaries of this $250 per-child credit aren’t necessarily the ones generating the expected tax windfall for the state. In essence, and without a broader tax reduction, approval of this expensive tax credit means raising taxes for all and shifting the money to parents of young children.

Even without the expected tax windfall from the federal tax change, Arizona is doing just fine on tax receipts. Revenue is well ahead of expectations.

The child tax credit, sponsored by Rep. Paul Mosley of Lake Havasu City and the father of seven youngsters, may be justified on its own, even with the broader repair of the state’s tax system. , It shouldn’t win approval as one of several piecemeal approaches to the bigger windfall issue.

Individuals, not businesses, are the most affected by the stealth income tax increase. The ordinary working people of this state are the ones who’ll pay the bill.

They deserve to avoid this tax increase.

Arizona’s Legislature needs to tackle the income tax fix head on and right away before redistributing the windfall to narrower interests.

— Today’s News-Herald