Everybody knows Arizona is a low tax state. Our legislature has been cutting rates for decades, and as a result, according to the Institute on Taxation and Economic Policy, we're number 35 in overall state taxes; only 15 states have rates lower than ours. Not so if you're poor, however. If you make $27,000 or less, your tax rate is the fifth highest in the nation for your income level.
Why do the poor pay shoulder so much of the burden? The simple answer: low income tax rates.
[H]aving low personal income taxes comes at a cost. In order to pay for state and local government services, Arizona’s sales and excise taxes are 27 percent above the national average. Measured relative to personal income, Arizona has the 8th highest sales and excise tax collections in the entire country. According to the Institute on Taxation and Economic Policy (ITEP), the poorest 20 percent of Arizona households spend 8.3 percent of their income on these taxes, compared to just 1.1 percent of income for the state’s most affluent residents.
The last figure in that paragraph bears repeating. If you're poor, you spend 8.3 percent of your income on sales and excise tax. If you're affluent, you pay 1.1 percent. A rate almost 8 times higher for the poor than the rich. That's regressive taxation with a vengeance.
Governor-elect Doug Ducey says he doesn't plan to raise taxes, but it's possible that the reality of an impending $1 billion deficit — and that doesn't count the $300 million-plus the courts say the state owes to schools — will force him to change his mind. If it does, you can bet he'll go with a sales or excise tax hike. If you're gonna stick it to anyone, might as well stick it to the poor.