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Arizona income tax credits are 93,000% larger for companies than individuals

By: - February 25, 2019 3:58 pm

If you’ve ever wanted proof that Arizona’s tax laws are skewed in the favor of businesses and not individuals, here it is: The average income tax credit claimed by corporations is 93,286% larger than the average income tax credit claimed by individuals.

In tax year 2016, the last year for which data is available, there were 549 corporations that took advantage of 17 different income tax credits, totaling more than $127 million. (Another nine tax credits on the books received no claims.)

By comparison, there were almost 1.8 million Arizonans who claimed 31 different types of credits that same year, totaling about $447 million. (There are eight tax credits that had no claims.)

That makes the average claim for businesses $232,284, while we individuals averaged claims of a mere $249.

And unlike tax deduction, which decrease the income on which taxes are paid, tax credits are a dollar-for-dollar shift: Every dollar in tax credit claimed is a dollar that doesn’t get paid to the state.

The most-claimed corporate tax credit was for research and development, with 363 firms receiving $62.4 million in credits. But the largest average credit was for corporate contributions to school tuition organizations to fund vouchers for low-income students to attend private schools: There were 79 such credits given out totaling $29.8 million, an average of about $377,000 per company.

For individuals, the most popular credit was for increased excise taxes paid, which more than 621,000 people claimed. The credit for new employment (for business owners who pay their company’s taxes as an individual, not a corporation) had the highest average at more than $52,000 for the 17 business owners who claimed it.

If the person or business doesn’t actually owe any income taxes, the laws also allow many tax credits to be carried forward to a future year when taxes are actually owed. In 2016, individuals carried about $82 million forward. Corporations, meanwhile, carried forward more than $1.3 billion.

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Jim Small
Jim Small

Jim Small is a native Arizonan and has covered state government, policy and politics since 2004, with a focus on investigative and in-depth policy reporting, first as a reporter for the Arizona Capitol Times, then as editor of the paper and its prestigious sister publications. He has also served as the editor and executive director of the Arizona Center for Investigative Reporting.