Candidates running to represent a south Phoenix legislative district in the state House clashed in a debate on Sept. 2 over taxation and whether to revoke tax incentives for data centers.
Rep. Oscar De Los Santos, who serves as the House Democratic leader, said he wants to restructure Arizona’s tax system so the wealthiest people and corporations pay their “fair share.”
Arizona has had a flat 2.5% income tax since 2023, one of former Republican Gov. Doug Ducey’s signature policy changes. Democrats say the policy brings minimal benefits to lower- and middle-income taxpayers while the highest earners reap the most benefits. Democrats also contend the flat tax doesn’t generate enough revenue to adequately fund state services.
“It is absolutely insane that a police officer or a firefighter or a teacher or a waitress is paying the same tax rate as a multi-millionaire. That is ridiculous,” De Los Santos said.
During the debate, which was hosted by the Arizona Citizens Clean Elections Commission, Republican Joseph Dailey took issue with De Los Santos’ use of the term “fair share,” calling it a red herring.
“Nobody has ever been able to define what the fair share is, and I think that’s a blanket statement that is very partisan and should not be used,” Dailey said. “I think the real goal is to look at what the taxes are supposed to benefit … and how does it benefit the people?”
Voters in Legislative District 11, which encompasses much of south Phoenix and parts of Laveen, the Town of Guadalupe and parts of southwest Phoenix, will choose two House representatives and one senator on Nov. 3. Early ballots go out Oct. 7.
Legislative District 11
Rep. Junelle Cavero joins De Los Santos on the Democratic ticket. Dailey’s Republican running mate for the House is Cesar Aleman.
Dailey said he’s “inclined to reduce or almost eliminate income tax and find other tax structures” because it is the working class that pays the majority of the taxes.
De Los Santos said 71% of Arizona corporations pay $50 or less in income taxes, and he noted that jet fuel for private airplanes and luxury artwork are not taxed while diapers are.
“So, if you want to talk specifics, I’m happy to get into the nitty-gritty of tax policy,” De Los Santos said.
Like De Los Santos, Cavero said she wants a tax structure “where everyone contributes their fair share” and where “investments help create economic opportunity for everyone.”
“We need a lot of work, and this flat tax is not contributing to that path,” Cavero said.
Aleman said he wouldn’t support a repeal of the flat tax, but there needs to be some thought given to whether higher earners should be paying more.
Raising taxes is not easy in Arizona.
In 1992, voters approved a change to the state Constitution that requires a two-thirds supermajority vote in both chambers of the Legislature for lawmakers to pass any measure that “provides for a net increase in state revenues.” Even if Democrats take control of the Legislature, they would need a large segment of Republicans to vote with them on a tax increase.
The debate shifted to whether Arizona should revoke tax exemptions it started offering data centers to build here years ago.
Data centers enable cloud computing and storage, and advanced automation such as artificial intelligence, smart technology and robotics. But they require a lot of land, water and power, and they cause noise pollution.
De Los Santos said he wants to end all tax “handouts” to data centers.
“These massive data centers spend God knows how much money on these lobbyists to crawl all over the Capitol to convince politicians that somehow giving them a tax break is more important than feeding seniors … more important than helping children with disabilities,” De Los Santos said.
Dailey said he wouldn’t revoke the tax exemptions because data centers bring jobs that contribute to the tax base, and they support the supply chain. But the incentives do need to be restructured, he said.
“As it is, we’re giving them tax revenue, or, you know, discounts, and they need to be able to show us Arizona’s recoup on that investment because we are investing in their company,” the Republican said. “We need to get that revenue back.”
Cavero said the tax incentive system for data centers needs to be revamped and redirected into areas such as the supply chain and “areas that can contribute to the growth.”
“The current model does not work,” Cavero said.
Democratic Sen. Catherine Miranda did not attend the debate, so her opponent, Republican Senate candidate Joshua Ayala, sat for a separate Q&A with the debate moderator.
Aleman said tax incentives need to be strategically deployed to help the community, and that he would be against data centers being located in the district.
Ayala also noted Miranda’s absence, saying it “shows a lot about who she is.”
“I mean, I’m gonna say 90% of my family are Democrats, and they want her here,” Ayala said. “They want her here to talk with me.”