Monday, January 7, 2019
Corporate Tax Credit for Private Schools Needs a Legislative Fix
(PHOENIX, AZ) – Arizona’s corporate tax credit for private school tuition scholarships is on pace to double every four years and wipe out all of Arizona’s corporate income tax revenue unless state lawmakers take action in 2019 to repeal the provision which allows the cap on this tax credit to grow automatically by 20 percent each year.
Nothing else is allowed to grow automatically by 20 percent annually, and the impact on state revenue is evident. In 2007, the first year of the corporate tax credit program, the cap was $10 million. In the current state budget year, it is $89 million. By 2025, the cap will reach $267 million.
Steve Yarbrough, former state legislator and prime sponsor of the private school tax credit legislation, summed up the problem accurately in a December 2017 Capitol Media Services article: “You don’t have to be a mathematician to have determined that a 20 percent escalator that is compounding, at some point in time is actually going to exceed the totality of the corporate income tax.”
“Putting the brakes on the automatic growth of corporate tax credits to private schools will be a top priority of the Arizona Center for Economic Progress in 2019 and we will work with lawmakers on both sides of the aisle to get this done.” said David Lujan, Director of the Arizona Center for Economic Progress.
The Center’s latest fact sheet shows the negative impact the automatic growth of the corporate private school tax credit is having on state revenues.
The Arizona Center for Economic Progress
3030 N. 3rd St., Suite 650
Phoenix, AZ 85012