Both major party candidates in last year’s presidential election proposed getting rid of federal taxes on tips workers earn. And this week, state lawmakers will consider a similar idea on the state level.
Howie Fischer of Capitol Media Services joined The Show to preview the week ahead at the state capitol.
Full conversation
MARK BRODIE: Good morning, Howie.
HOWIE FISCHER: Good morning. So where's my tip?
BRODIE: Well, here, here's a good tip. You should keep coming on the show Monday mornings.
FISCHER: I like it.
BRODIE: So this is, is this basically exactly what it sounds like? Workers who earn tips would not have to pay taxes, state taxes on those tips.
FISCHER: That's exactly it. I mean, in some ways, this is a mirror of the federal proposal that Mr. Trump had trotted out, then obviously the Democrats went, me too. It seems to have a certain popularity, with the idea that folks who are working for tips are probably at the bottom end of the income scale. If you want to go ahead and provide some sort of relief, the way to do it is with eliminating taxes.
Now, obviously it's a much more, much bigger impact on the federal level. I mean, state tax rate is 2.5%, and that's of your adjusted income. So we're not talking about large amounts of money here. But it's a philosophical thing that should you be doing this. Now, obviously there are issues there, not the least of which is whether it can be gamed. Some Democrats were complaining that look, let's say you're a doctor or a professional, and you arrange to have your fees, quote unquote paid in tips.
Now, can you shield $50,000 to $60,000 or $100,000 or $200,000 as tips from the people that you helping. Interesting question. And when they tried to put a limit on it in terms of the dollars, the Republicans said, nope, not going to do it.
BRODIE: Well, so Howie, this will be coming up for a what's called a third read basically yay or nay on the big board in the House later today. Has this had bipartisan support so far? Has it mostly been Republicans supporting it?
FISCHER: It's mostly been Republican support here in Arizona, but again, given that Democrats don't like to be seen as going against poor people. That's part of the reason what they did is they tried to put on that floor amendment to say, well, there should be some limits on this, and then that way we can all feel comfortable. Their excuse could be now, well, you didn't put limits on this, so why should we vote for this?
BRODIE: All right. So Howie, also later today a Senate committee will be taking up a bill that would essentially lease the state prison in Marana to the federal government for a buck per year, is that right?
FISCHER: Exactly. This is designed to deal with a couple of things. The Marana prison is vacant. It was originally built as a kind of a lease purchase arrangement and run by a private contractor, they don't need it anymore. They don't have any inmates in there.
And so they figure, OK, we can sort of kill two birds with one stone. We can have somebody in there maintaining it and making it useful, and the feds, they presume, are going to be looking for a place to house migrants who have been arrested, who are still going through whatever the process is to determine where they should be deported. And they figure, OK, we've got the facilities and we want to show that we are working with the feds, so we will do this for $1 a year.
BRODIE: Have the feds said that this would be a useful facility for them?
FISCHER: Feds haven't said much of anything. I think they're still trying to figure out what they can and cannot do. You know, obviously they've been deporting people so that raised the question of do you need an interim prison? I know that they're talking about some place to deal with folks who are in the process of debating whether they should be deported, but as you've also seen, they're making direct flights to countries in Central and South America, so there doesn't seem to be a lot of need for a place to house them in the interim.
BRODIE: Interesting. All right, Howie, let's move on to a House committee. On Wednesday, this is a bill that's gotten a decent amount of attention since it was introduced. It would basically remove state prohibitions against having things like grenades and bombs and automatic weapons and things like that.
But as you have said in the past and you've written about this, this is more of a political statement than actually saying Arizonans who want to make bombs should be allowed to.
FISCHER: Pretty much. I mean, the fact is that much of the stuff is banned by federal law. You cannot possess a pipe bomb or an improvised explosive device. Curiously enough, one of some of the stuff that state law prohibits you from possessing right now actually is legal in some cases under federal law.
You actually can get a license under federal law to have a machine gun. You can get a license under federal law to take some additional background checks to get a silencer and yet they're absolutely illegal under state law.
And what Alexander Kolodin is saying is, look, I believe in the Second Amendment. I am an absolutist, you know, Congress, you know, the laws against possession of shall not be infringed. In fact, the Arizona law is even broader than the federal law because you remember the federal Second Amendment talks about a well regulated militia. Arizona's version of the Second Amendment says the right of individuals to defend themselves shall not be abridged.
So he figures, look, we can't deal with the federal government. We can't tell the federal government what to do. We can make sure that we are not complicit in something that infringes on Second Amendment rights, and so this becomes our way of doing it. Now the other part of the politics of this is this is something that is going around the governor who would probably veto it anyway and would go directly on the ballot in 2026. And that might bring out certain people who not just support this but support other Republican causes. So there's a little bit of gamesmanship behind this.
BRODIE: All right, Howie, before we let you go, let me ask you about one other bill that will be coming up in a House committee on Wednesday that would stop cities from taxing groceries. This has been a big issue. I know when Phoenix was debating this a few years back, it seems like there are a few cities that still have grocery taxes.
BRODIE: Sure, voters got rid of the tax years and years ago. They said the state should not be taxing groceries. The idea being, you know, these are necessities. You know, some states, in fact, don't even tax clothing as being necessities. Arizona's decision was, if you go to the grocery store, you buy a dozen eggs, although Lord knows you can afford it or not, you should not be paying the state's 5.6% tax.
But cities have their own taxes of, you know, up to 2, sometimes 3%, and they say they need that money to provide certain services. Well, this is a mirror of the fight that we had a year or so ago over rental taxes, you know, some cities were level rental taxes. The idea is, again, should, should cities be making money this way.
Now if in fact cities lose that revenue source, their argument is they will either have to cut services or tax something else. And those are the details to be worked out. Should they raise the taxes on other items, you know, to a higher level to make up for the food taxes?
