Gov. Ducey supports closing ‘loopholes’ in tax code

Gov. Doug Ducey touts the concept — but not the specifics — of the Republican tax plan Monday, Nov. 6, 2017, at the state capitol as protesters state their case that it is simply relief for corporations and the wealthy. (Howard Fischer/Capitol Media Services)

Gov. Doug Ducey touts the concept — but not the specifics — of the Republican tax plan Monday, Nov. 6, 2017, at the state capitol as protesters state their case that it is simply relief for corporations and the wealthy. (Howard Fischer/Capitol Media Services)

PHOENIX — Gov. Doug Ducey endorsed the concept of the President Donald Trump and Republican tax cuts Monday even though he conceded he has little idea of what’s in the plan.

And some of what he does know is in there he does not like.

But the governor said he wants action on tax cuts — and wants it by the end of the year.

“The time for excuses is over,” he told a small audience at a rally organized by the Job Creators Network, a business advocacy organization that is traveling around the country by bus and scheduling similar events.

“It is time right now to make our tax code simpler and fairer,” Ducey continued.

“We can’t wait til next year,” he said. “We shouldn’t even wait til next month.”

But the governor, questioned by reporters after the event, quickly backed away from any suggestion that he supports — or even likes — what emerged from the president and Republican congressional leadership.

“Today is not an endorsement of the plan,” he said.

“It’s an endorsement of the idea that it’s time for Congress to act on tax reform and tax cuts,” the governor said. “I want to understand the details of the full plan.”

Overall, the governor said he supports closing “loopholes” in the tax code.

“That’s what’s going to happen when they pass this bill in Congress at the end of this year,” Ducey said.

Still, Ducey said he’s already found things to dislike in closing some of those “loopholes.”

For example, one of the deductions that would disappear is the $250 available for teachers who use their own money to buy classroom supplies.

Unlike a credit, that’s not an actual dollar-for-dollar loss. But for a teacher making up to $37,950 who is in the 15 percent tax bracket, that translates to $37.50; those earning more than that — up to $91,900 — are in the 25 percent tax bracket, where the loss of the deduction equals $62.50.

That would cut into the 1 percent across-the-board increase in teacher pay approved by state lawmakers earlier this year which, for the average teacher, computes out to about $455 a year, before federal and state taxes.

“I don’t want to see anything to hurt our teachers,” the governor said when asked about that provision in the federal plan.

“I want to see it help our teachers,” he continued. “But I want to understand the details of the full plan.”

That’s not all that Ducey has found troubling.

“I have concern for things like elimination of the adoption credit,” he said. That one-time credit of up to $13,570 is an actual dollar-for-dollar decrease in federal taxes for parents who adopt from foster care and in other situations.

But Ducey, who was adopted by his stepfather and who has promoted adoptions, even by same-sex couples, said he also has been told that few people actually use the credit.

“That’s why we want to understand what’s in the plan across the board before we’re commenting on the specifics,” the governor said.

So when will Ducey weigh in?

“We’ll have some specific comments on how we think this affects Arizona and how it can benefit small businessmen and women of Arizona so that they have more money in their pocket,” he said.

Ducey bristled when he was asked if his professed lack of knowledge of the plan, released last week, is a way for him to avoid taking a position.

“No, it’s not a way to avoid the issue,” he responded.

“I ran on a better tax system, a simpler, fairer, flatter tax system,” Ducey continued. “And we have that in Arizona today.

But pushed for specifics of that “simpler, fairer, flatter tax system,” the governor conceded that there have not been significant changes in the tax code since he took office in January 2015.

The number of tax brackets remains the same. Instead, what’s changed is that the bracket break points and the standard deductions have been indexed for inflation.

“We’ve reduced taxes moderately each of the years that I’ve been governor,” he said. Ducey said there’s a good reason that there hasn’t been more significant tax reform at the state level.

“We did come in to a billion-dollar deficit,” the governor said. “We had to balance the budget.”

And Ducey said some of the state’s revenues were put into additional funding for K-12 education above and beyond inflation.

The governor did give his endorsement to one thing GOP leaders are considering adding to the plan: repeal of the “individual mandate” tax in the federal Affordable Care Act for those who do not have insurance, whether from the government, employers or purchased outright.

“We have over 150,000 Arizonans who paid an average of $450 each under this tax,” he said, with 40 percent of them making less than $25,000 a year.

“That’s taking $70 million from hardworking Arizona families and sending it to Washington with no return on this investment,” Ducey said. “That’s $70 million that could be used to put food on the table, buy clothing, pay the mortgage or rent, or any other bills.”

Monday’s event drew about two dozen supporters, including a handful of Republican legislators, along with an equal number of protesters holding signs decrying the tax plan as relief only for the wealthy and corporations.