Despite a projected $10 million surplus when Arizona’s budget was approved earlier this year, the state now faces a $400 million shortfall.
Researcher Dave Wells with the Grand Canyon Institute says this all stems from Arizona’s new 2.5% flat income tax. It’s led to a big loss in state revenue from wealthy residents.
“Just the folks over $200,000 are going to cost us $1.4 billion next year, which is more than enough obviously to cover the deficit,” Wells said.
Under the guise that it would provide great tax breaks for all, he says for the average Arizonan, it saved enough money to buy a large pizza. For the very few making over $5 million, they saved over $200,000.
Wells says in a growing economy like Arizona's a surplus should have been possible. He dismisses claims by lawmakers that inflation was to blame instead of the flat tax.
