State tax conformity to federal Tax Cuts and Jobs Act a top priority.
The 54th session of the Arizona State Legislature opens for business Jan. 14, 2019. A few pro-small-business proposals that NFIB supported and worked for came up short in 2018, making for a renewed effort in 2019.
Minimum Wage Freeze/Sick Leave Repeal
Senate Concurrent Resolution 1016 proposed placing a new referendum on the state ballot to freeze the minimum wage at $10.50 per hour, prohibiting counties and municipalities from establishing or otherwise requiring a higher minimum wage, and repealing statutes requiring paid sick time. Unfortunately, the resolution never got out of the Senate.
Federal Tax Reform and Jobs Act – State Conformity
This past winter, the Arizona Department of Revenue released its tax conformity report showing that Arizona taxpayers, because of the federal tax reform bill passed and signed into law by President Trump in December 2017, would end up paying as much as $250 million more in state income taxes in the Fiscal Year 2019 because of the federal changes. The number could climb to more than $300 million in FY 2020. NFIB and allied pro-taxpayer groups responded by advocating that Arizona change its tax conformity laws to ensure that such a tax increase would not happen. As of the end of the 2018 session, no action was taken. NFIB Arizona will continue to fight to make sure that such a tax increase does not befall Arizona taxpayers.
Presumption of Employer Retaliation
House Concurrent Resolution 2028 proposed putting a new referendum on the ballot to repeal a portion Proposition 206, which was approved by voters in 2016. In addition to increasing the minimum wage and mandating paid sick leave, Proposition 206, defined retaliation as the denial of minimum wage or earned paid sick time to an employee or any threat, discharge, suspension, demotion or reduction of hours against an employee for the request of minimum wage or earned, paid sick time and presumed employers to be guilty of retaliation if any adverse action is taken against an employee within 90 days of the employee’s request of minimum wage or paid sick time.
HCR 2028 repealed the presumption of employer retaliation established by an adverse action taken against an employee within 90 days of an assertion of wage or leave rights. The resolution was passed by the House but not acted upon by the Senate.
Business Personal Property Tax Exemption
House Concurrent Resolution 2029 (the Small Business Job Creation Act) proposed to place a referendum on the 2018 ballot asking voters to amend the state constitution to prohibit taxes from being levied on the first $2 million of full cash value of personal property that is initially acquired during or after 2019 and that is used for agricultural purposes or in trade or business.
Under current law, personal property used for agriculture, trade or business, which is adjusted for inflation and is currently valued at $167,130 in Tax Year 2018. Arizona small businesses suffer under this law not only because they are taxed on business equipment but also because the tax is a paperwork burden that is complex and time-consuming. The resolution was passed by the House but not acted upon by the Senate.
Local Regulation of Home-Based Businesses
Senate Bill 1397/House Bill 2333 would have prohibited local governments from prohibiting the operation of a no-impact “home-based business” or otherwise require a person to apply for or obtain a permit, license or other prior approval to operate a no-impact home-based business. The bill established a list of factors that qualify a residential property for use as a no-impact home-based business. The bill did permit counties and municipalities to establish reasonable regulations on a home-based business if the regulations are tailored for specified purposes, including protecting public health and safety. The bill was approved by the House but was not acted upon by the Senate.