PHOENIX — Ken Bennett formally kicked off his bid to become governor Tuesday with a proposal to replace the state's income tax by increasing the number of goods and services subject to the state sales tax.
Bennett said he's convinced Arizona can broaden the base of what's subject to the levy while at the same time lowering the rate from the current 5.6 percent. Bennett said he might even eliminate the exemption that now exists for all food products, though he said he might still carve out an exception for “essential” items.
But Bennett repeatedly refused to explain not only what he would tax that is now exempt, but exactly how he would raise enough additional money through a revamped state sales tax to make up for the $3.5 billion in lost individual income taxes and more than $700 million in corporate taxes that together fund about 45 percent of the state's operating budget.
“We'll bring you some of those details over time,” he said.
“We'll work those things out,” Bennett continued, waving off other inquiries. "We're here about launching the campaign.”
Bennett took a slap of sorts at incumbent Jan Brewer, also a Republican, who has repeatedly touted her leadership for creating what she has called the “Arizona comeback.”
“In my opinion, it's coming back way too slow,” Bennett said. And he said those new jobs will drive up what have been stagnant wages for most employees.
“Imagine if Arizona workers could have a good probability that their paycheck next year is going to be 6 or 8 or 10 percent more than it was this year,” he said. “They haven't been seeing that for a long, long time and it's time to do that.”
Bennett conceded that Brewer, who became governor when Democrat Janet Napolitano quit to take a job in the Obama administration, inherited a $3 billion deficit. He said it took a long time to recover from that, though some of that was done with “accounting tricks and gimmicks” that moved around expenses to make the books look balanced as well as borrowing money, including by mortgaging off the House and Senate buildings.
He said the state needs to get out of debt and eliminate those accounting maneuvers.
“She's done a good job but I think we can do even better,” Bennett said.
Bennett actually could end up running against Brewer in the Republican primary. She has refused to remove herself as a potential candidate in 2014, insisting that a constitutional provision which limits elected officials to two terms — with a partial term counting as a full term — does not apply in her case.
Other Republicans already in the race or exploring include state Treasurer Doug Ducey, Sen. Al Melvin of Tucson, former website hosting company GoDaddy general counsel Christine Jones and former Maricopa County Attorney Andrew Thomas. Mesa Mayor Scott Smith also has been mentioned as a potential GOP candidate.
In proposing to scrap the income tax, Bennett is staking out a position he hopes will prove popular. Bennett said he remembers hearing from a representative of an economic development organization which had been tracking more than 300 companies that had left California during a 12-month period.
“You know how many of them came to Arizona?” Bennett asked. “One.”
He said they instead went to other states, “most of which do not have an income tax.”
“I think we can look at, and work together with economists and our budget people and look at how we can replace the income tax with a low-rate, broad-based sales tax,” Bennett said.
But he would not explain exactly how he could make the numbers work, especially if he intends to lower the current 5.6 percent sales tax rate and, even with taxing more items, make up the $4.2 billion that would be lost in income tax revenues.
Bennett is opting to run with public funds; if he gets a sufficient number of $5 donations, it will get him a check for $753,616 from the Citizens Clean Elections Commission. Bennett said he presumes he will get more support than that from “independent expenditure” committees who are permitted by law to collect and spend what they want as long as they do not coordinate their campaigns with a candidate.