corporate taxpayers; sales
factor
Allows corporate taxpayers, to select the current apportionment formula or a formula that weighs the sales factor at 75 percent for Arizona taxable corporate income. This bill contains a Strike everything amendment that reduces the corporate income tax rate to 5.04% over four years.
History for proposed
strike-everything amendment:
Every corporation doing business in Arizona is required to file a corporate income tax return. According to the Department of Revenue 2000 Annual Report, approximately 52,000 corporations filed returns during Fiscal Year 1999-2000 with payments of $637.7 million. The corporate tax rate for that period was a flat rate of 8% on taxable income. The current rate for tax year 2001 is a flat rate of 6.968%. There is a $50 minimum tax liability imposed on all corporate returns.
While states vary on how they arrive at corporate taxable liability, listed below is a comparison of the corporate tax rate to other western states:
California flat rate of 10.84% (minimum $800)
Colorado flat rate of 4.63%
Idaho flat rate of 8.0% (minimum $20)
New Mexico 4.8% - 7.6%
Oregon flat rate of 6.6% ($10 minimum)
Utah flat rate of 5.0% ($100 minimum)
The strike-everything amendment will reduce the corporate rate from the current 6.98% to 5.04% over four years. The 5.04% rate will match the highest rate imposed on individual filers in Arizona.
Based on information provided by DOR, the fiscal impact of each one-half percent reduction is approximately $33 million. However since corporations generally pay their income taxes over several fiscal years, the impact for FY 02 is approximately $8.25M and for FY 03 it is $29.45M.
Provisions for
proposed strike-everything amendment:
· Decreases the corporate income tax rate over a four-year period.