Arizona Senate OKs bill creating low-income tax credit

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Arizona State Capitol

PHOENIX - A Democratic proposal to create a new tax credit for working low-income Arizonans that Republican Gov. Doug Ducey adopted as part of his budget proposal was approved by the Arizona Senate on Feb. 23.

The proposal from Sen. Sean Bowie, a Phoenix Democrat, drew support from all 10 of 16 Senate Republicans and all Democrats who voted. The measure now heads to the House for consideration.

Bowie has been optimistic of the bill’s chances, noting that it passed the Senate on a 26-3 vote last year before stalling in the House. And he said recently that its inclusion in the governor’s new spending plan could sway him to give the budget a rare Democratic vote.

The $74 million plan is the first tax proposal the governor has backed in his eight legislative sessions that specifically aims to benefit lower-income workers. Tax cuts Ducey has championed, including a nearly $2 billion income tax cut passed last year, have instead mainly flowed to businesses or the wealthy.

The Earned Income Tax Credit proposal mirrors the federal credit, which provides refunds to the working poor. It sets the credit at 5% of the federal amount, and the average family would get $128 per year. A family with three children would get 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 cash to working families who could use the money for food, utilities, gas and other necessities. And Bowie said that money would flow right back into the economy.