Federal Tax Conformity Debated By Arizona Leadership

Published: Wednesday, February 6, 2019 - 9:44am
Updated: Wednesday, February 6, 2019 - 12:28pm
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Arizona taxpayers might be paying a little more attention to the state legislature than normal. That’s because of the ongoing debate over tax conformity — whether or not the state will conform its income tax code to the federal one.

That’s important for the 2018 tax filing year, since Congress passed the Tax Cut and Jobs Act, which limits some deductions, while increasing the standard deduction.

Legislative Republicans passed a bill last week that would have conformed the state’s tax code, while also cutting income tax rates, to make the measure revenue-neutral.

Gov. Doug Ducey vetoed the bill, arguing any extra money that comes to the state as a result of tax conformity should go into the rainy day fund. Estimates suggest that amount could be around $150 million.

The Show has two perspectives on this, starting with Chad Heinrich, state director for the National Federation of Independent Business. His group supports the legislative approach.

Gov. Ducey, in his veto letter, referenced the idea of dealing with this issue as part of the budget, and called on lawmakers to conform the state’s tax code and invest in the rainy day fund.

Dave Wells is in favor of that approach. He’s research director of the Grand Canyon Institute, and helped write a policy paper on the subject.

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