ARIZONA HOUSE OF REPRESENTATIVES Fifty-sixth Legislature First Regular Session
	Senate: FIN DP 4-3-0-0 | 3^rd Read 16-12-2-0

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SB 1559: businesses; fees; income tax reduction

Sponsor: Senator Kaiser, LD 2

Committee on Ways & Means

Overview

Directs that the Arizona Department of Administration (ADOA) encourage awarding of contracts to new businesses through various methods and establishes a tax subtraction for individuals and corporations for their first three years of operation.

History

In Arizona, individual income tax is levied on an individual's income at a single tax rate of 2.5 percent. Corporate income tax is levied on a corporation's taxable income at 4.9 percent. The calculation of Arizona individual income tax begins with the federal adjusted gross income and the corporate income tax begins with federal taxable income, which are then subject to various additions, subtractions and deductions, as applicable. (A.R.S. Title 43, Chapter 10 and 11)

Provisions

1. Directs that the ADOA be encouraged to award 5% of state contracts each year to new businesses. (Sec. 3)

2. Directs the ADOA to evaluate lowering barriers for new businesses to compete for state contracts by:

a) Reducing the time for approving a contract;

b) Reducing the time for payment of services rendered in a contract;

c) Marketing and outreach to new businesses;

d) Prioritizing innovation as a selection factor;

e) Measuring past performance based on non-state customers ; and

f) Training and educating new businesses. (Sec. 3)

3. Requires the ADOA to submit a report each year to the Governor, President of the Senate and Speaker of the House on the following:

a) The total number of state contracts awarded in the prior year;

b) The total number awarded to new businesses;

c) The dollar amount of all contacts awarded in the prior year;

d) The total dollar amount awarded to new businesses;

e) Any actions taken to reduce barriers for new businesses to compete for state contracts; and

f) Recommendations to improve access to state contracts for new businesses. (Sec. 3)

4. Requires that a copy of the report submitted by the ADOA be given to the Secretary of State and posted on the ADOA's public website. (Sec. 3)

5. Defines new business. (Sec. 3)

6. Exempts new businesses from the $12 fee when applying for an annual transaction privilege tax license. (Sec. 4)

7. Directs that individuals who received income from a new business have the following subtracted from Arizona gross income:

a) 100% of the income received from the new business in the first year;

b) 50% of the income received from the new business in the second year; and

c) 25% of the income received from the new business in the third year. (Sec. 5)

8. Directs that corporations who are also new business have the following subtracted from Arizona gross income:

a) 100% for the corporations first year of operation;

b) 50% for the corporations second year of operation; and

c) 25% for the corporations third year of operation. (Sec. 6)

9. Makes conforming changes. (Sec. 1,2)

10. Makes technical changes. (Sec. 1,2)

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14.                   SB 1559

15. Initials VP  Page 0 Ways & Means

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