Arizona Lawmakers Consider Corporate Tax Giveaway as State Faces Budget Pressures

PHOENIX — Joseph Palomino, Director of the Arizona Center for Economic Progress, will testify Wednesday in committee in opposition to HB 2288, legislation that would reduce corporate tax accountability for large multinational corporations while worsening Arizona’s long-term budget outlook.

The bill would decouple Arizona from federal anti-profit-shifting tax rules designed to prevent multinational corporations from moving profits to low-tax foreign jurisdictions — a move that would cost the state significant revenue at a time when Arizonans are struggling with rising housing, health care, and child care costs.

“At a time when Arizonans are struggling to afford the basics, this bill cuts taxes for multinational corporations and sends the bill to working families,” Palomino said.

WHY THIS MATTERS

Congress enacted federal guardrails — known as GILTI/NCTI — to stop large corporations from hiding profits overseas to avoid paying taxes. Arizona already is decoupled from GILTI, and HB 2288 also would decouple the state from NCTI, allowing likely billions of dollars in corporate profits to escape the state tax base.

• GILTI – Global Intangible Low-Taxed Income
• NCTI – Net Controlled Foreign Corporation Tested Income

More than 21 states and Washington, D.C. already tax some portion of this income, primarily affecting the largest corporations — not small businesses.

IRS data show:

• Corporations with over $2.5 billion in assets account for more than 93% of this income
• Businesses without foreign subsidiaries are not impacted at all

“This bill asks teachers, first responders, and small businesses to make do with less so multinational corporations can shift profits overseas,” Palomino said.

IMPACT ON ARIZONA

Arizona’s Constitution makes long-term deficits unsustainable, which means lost revenue always comes with consequences.

“Arizona can’t afford tax policies that work for the few and fail the many,” Palomino said. “Every dollar we give away in corporate tax breaks is a dollar we can’t invest in schools, infrastructure, housing, or public safety.” “

This bill doesn’t help everyday Arizonans — it deepens the hole in our state budget so big corporations can pay less,” Palomino said.

TESTIMONY DETAILS

WHO: Joseph Palomino, Director, Arizona Center for Economic Progress WHAT: Committee testimony opposing HB 2288

WHEN: Wednesday, Jan. 21 at 10 a.m.

WHERE: House Ways & Means, House Hearing Room 3, Arizona Legislature

LIVESTREAM: https://www.azleg.gov/videoplayer/?clientID=6361162879&eventID=2026011051

WHY: To oppose a bill that cuts taxes for large multinational corporations while worsening Arizona’s fiscal outlook