(AZ Central) - Heading into the holidays, Americans are facing soaring energy prices, sky-high inflation and a costly scheme from Washington, D.C. – Democrat politicians in our nation’s capital want to increase taxes on Arizonans and all Americans by nearly $2 trillion over the next 10 years, while hiking spending even more.
D.C.’s lurch leftward stands in stark contrast to the 13 states that cut their income tax rates this year. Arizona is leading the pack, reducing the state income tax to a flat rate of 2.5%, the lowest flat tax rate in the country.
Contrast Arizona’s action with the Democrats in Arizona’s House delegation, all of whom voted for the federal high-tax grab. But this astronomical tax increase is not a done deal. If either Sen. Kyrsten Sinema or Sen. Mark Kelly votes no, this threat to our economy will be stopped dead in its tracks.
They'd only tax the rich ... to start. It trickles down
If the just-passed House legislation is enacted, it would increase the top individual personal income tax rate to a whopping 57.4%, the highest in the developed world – higher than China, higher than Russia, higher than Europe. All 50 states would have combined federal-state top marginal income tax rates above 50%.
Alarmingly, Arizona’s would be 55.9%, reversing the state’s long-held reputation as an entrepreneurial haven.
This sharp increase in income taxes is a sign of things to come – and not just for higher-income Americans. The two highest income tax rates would hit individual Americans and Subchapter S businesses who earn more than $10 million and $25 million, respectively – at first.
But when taxes go up, no one is safe. One remembers that the personal income tax in 1913 was to have a top tax rate of 7% on Americans earning more than $11 million in today’s dollars. And yet today, the higher rates have “trickled down” to where the lowest tax rate is 10%.
Politicians who say they will only tax the rich have not finished the sentence. They will “only hike taxes on the rich – to start.”
Expect lower wages, higher prices
The Washington bill would hike the capital gains tax to 37% – the highest rate since President Carter’s era of inflation and malaise. There is an $8 billion tax on home heating, and socialist price controls on American pharmaceutical manufacturers. Any company that rejects this will be hit with a 95% excise tax.
The bill would increase taxes on businesses by more than $1 trillion – taxes paid by workers in the form of lower wages and consumers in the form of higher prices. The bill also violates President Biden’s pledge to oppose even “a penny more” of new or higher taxes on Americans making less than $400,000.
Under the bill, IRS bureaucracy would grow exponentially. There would be 1.2 million more annual IRS audits, half of which will hit households earning less than $75,000.
In fact, the Democrats in Washington want to increase taxpayer funding for the IRS by $80 billion to hire 87,000 more IRS agents to audit and snoop on your finances. The IRS has publicly admitted it wants to increase small business audits by 50%. The upshot of this bureaucratic explosion would be to harass, not help, taxpayers.
The last thing we need is an oppressive tax system
The rest of the proposed spending measures are just as bad, including a $2.5 billion special handout to trial lawyers, and a $1.6 billion handout to media companies. To force average Americans to subsidize trial attorneys and liberal media outlets is beyond unconscionable.
Fortunately, none of this has to happen. Spending restraint and tax reductions have proven to be extremely successful right here in Arizona.
This year, the Goldwater Institute and its allies passed legislation to cut income taxes for all Arizonans. Arizona’s state income tax will be reduced to a flat rate of 2.5%, the lowest flat tax rate in the country. This dramatic tax reform cuts income taxes for all of Arizona’s residents.
Our U.S. senators have the opportunity to emulate that success in Washington, D.C. They can stop the drive to impose the highest personal income tax rates in the developed world and the highest capital gains taxes since the 1970s. They can say no to runaway spending and “trickle-down taxation” – which ultimately damage all taxpayers.
Our country should not be in a race with China and Russia to see who can have the most oppressive tax system and the most overbearing government. Arizona’s senators can make sure this doesn’t happen.
By Victor Riches and Grover Norquist
Dec. 16, 2021
Victor Riches is president and CEO of The Goldwater Institute. Grover Norquist is president of Americans for Tax Reform, a taxpayer advocacy organization.
