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Arizona Senate panel approves tax credit for low-income working families

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An Arizona Senate committee on Wednesday approved a Democratic proposal to create a new tax credit for low-income Arizona workers that Republican Gov. Doug Ducey adopted as part of his budget proposal.

Phoenix Democrat Sen. Sean Bowie’s proposal did not come out of the Finance Committee with the full support of the Republican majority. Republican Sen. Vince Leach and Michelle Ugenti-Rita opposed the move, a sign that the proposal could be a difficult time in such a tightly divided legislature.

But Bowie said he was optimistic, noting that he passed the Senate with a 26-3 vote in the last session before remaining in the House. And he said his inclusion in the governor’s new spending plan could influence him to give the budget a rare Democratic vote.

“I like the opportunities. I mean, I really liked the governor’s budget proposal,” Bowie said. “If we’re able to do that … and it’s included in the budget, that would go a long way to getting my budget.”

The $ 74 million plan is the first fiscal proposal the governor has backed in his eight legislative sessions that specifically aims to benefit lower-income workers. The tax cuts advocated by Ducey, including a nearly $ 2 billion income tax cut approved last year, have been aimed primarily at businesses or the rich.

The proposed income tax credit reflects federal credit, which provides reimbursements to working poor. He sets the credit at 5% of the federal amount and the average family would get $ 128 a year. A family with three children would receive more than $ 300 a year.

The proposal would benefit about 577,000 taxpayers, according to the governor’s office.

The idea is to provide extra money to working families who could use the money for food, utilities, gas and other necessities. And Bowie said the money would go straight back into the economy.

“It has been a very effective measure to reduce poverty across the country,” Bowie told the committee, with the federal credit pulling 5.6 million Americans out of poverty. “It’s something that can really help a lot of families across the state.”

The proposal faces opposition

The proposal did not sit well with Sen. Vince Leach, who said the tax credits were a move toward the government to provide basic income for everyone, an idea advocated by some progressives that Bowie said he did not support.

“This is precariously approaching, one step further, guaranteed income, which is floating again,” Leach said. “And I think we should all be concerned about that.”

A lobbyist for the Free Enterprise Club, a advocacy group that supports limited government and lower taxes, said the proposal forces some taxpayers to subsidize others.

“The legislature should never consider tax credits repayable,” lobbyist Amy Yentes told the panel. “We have opposed this for very large companies, special interest industries … and we also oppose it in this way, basically as direct welfare.”

The 7 to 2 vote of the committee sends the bill to the full Senate for consideration.

The Senate Finance Committee also approved a property tax cut for most business properties. Republican Sen. JD Mesnard’s cut adds to a proposal enacted last year that introduced rate cuts from 18% of the assessed valuation to 16% in 2025.

The new proposal cuts another percentage of the total appraisal value used to assess commercial property, such as telecommunications facilities and shopping malls. Business interest groups have long argued that Arizona business property taxes are too high.

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