PHOENIX – Several thousand Arizona teachers descended on the state Capitol March 28 as part of the national “Red for Ed” movement, demanding state legislators and Gov. Doug Ducey provide funding to increase pay for educators by 20 percent.

The call for such a massive pay increase comes amid a national debate about teacher pay, particularly in Republican-led states. Arizona’s teacher protests are coming on the heels of teacher strikes over low pay in West Virginia, Oklahoma and Kentucky.

And even if Arizona teachers’ pay were increased so dramatically, it would still lag the national average. When adjusted for costs of living, the median pay is $42,474 for Arizona elementary teachers and $46,070 for high school teachers, according to a 2017 Morrison Institute for Public Policy report. A 20-percent pay raise would bump those medians to $50,969 and $55,284, respectively.

Nationally, median elementary school teacher pay is $55,800 and median high school teacher pay is $58,030, adjusted for costs of living.

The odds are stacked against teachers hoping to persuade the Republican-led Legislature and Ducey to increase education funding by as much as $750 million. Ducey has touted increased funding for the K-12 system in recent years and pledged to do more, but has stopped short of committing to fund increased teacher pay at any level.

And last year, he and GOP lawmakers balked at a proposal by teachers to increase salaries by 2 percent a year for two years, at a cost of about $100 million.

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The primary reason given was that there simply wasn’t money available.

Although it is not entirely clear how much it would cost to meet the teachers’ demands, last year’s attempt to boost pay doesn’t bode well for this year’s effort. There are roughly 60,000 public school teachers in Arizona, and the estimates for increasing their salaries by 20 percent range from $680 million to $750 million.

The general fund budget for fiscal year 2018-19 that is currently being designed by lawmakers and Ducey is expected to be roughly $10.1 billion, of which approximately $4.5 billion will go to K-12 education.

If lawmakers and Ducey were inclined to find money for teachers, one place they could go looking is in the taxes that the state doesn’t collect: Arizona allowed more than $13.5 billion in taxes to go uncollected in fiscal year 2017, thanks to a litany of exemptions, deductions, allowances, exclusions or credits. And that number is likely to grow by another $1-to-2 billion once individual income tax deductions are tallied.

2016/2017 TPT expenditures by deduction

YEARCATEGORYSUBCATEGORYDEDUCTIONAMOUNT
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Legal$184,949,223
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Accounting, Tax Preparation, Bookkeeping and Payroll Services$81,993,339
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Architectural and Engineering$205,679,207
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Specialized Design Services$12,873,361
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Computer System Design and Related Services$284,519,381
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Management Consulting Services$107,054,409
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Environmental Consulting Services$9,700,940
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Other Scientific and Technical Consulting Services$17,369,860
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Scientific Research and Development$46,873,302
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Advertising, Public Relations and Technical Services$41,250,693
2016TPT EXEMPTIONPROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES:Other Professional, Scientific and Technical Services$70,843,738
2016TPT EXEMPTIONHEALTH CARE SERVICES:Physicians$454,003,981
2016TPT EXEMPTIONHEALTH CARE SERVICES:Dentists$121,940,571
2016TPT EXEMPTIONHEALTH CARE SERVICES:Chiropractors$13,660,269
2016TPT EXEMPTIONHEALTH CARE SERVICES:Optometrists$11,338,735
2016TPT EXEMPTIONHEALTH CARE SERVICES:Mental Health Practitioners$6,943,804
2016TPT EXEMPTIONHEALTH CARE SERVICES:Physical, Occupational and Speech Therapists$24,065,921
2016TPT EXEMPTIONHEALTH CARE SERVICES:All Other Health Practitioners$14,897,793
2016TPT EXEMPTIONHEALTH CARE SERVICES:Outpatient Care Centers$122,253,858
2016TPT EXEMPTIONHEALTH CARE SERVICES:Medical and Diagnostic Labs$58,450,857
2016TPT EXEMPTIONHEALTH CARE SERVICES:Home Health Services$54,382,600
2016TPT EXEMPTIONHEALTH CARE SERVICES:Other Ambulatory Health Services$94,655,882
2016TPT EXEMPTIONHEALTH CARE SERVICES:General Medical and Surgical Hospitals$810,136,127
2016TPT EXEMPTIONHEALTH CARE SERVICES:Nursing Care Facilities$62,878,536
2016TPT EXEMPTIONHEALTH CARE SERVICES:Residential Intellectual and Developmental Disability, Mental Health, and Substance Abuse Facilities$33,910,494
2016CREDITNAAccounting credit$16,479,702
2016PREFERENTIAL TAX RATENANonmetalliferous Mining; Oil and Gas Production$2,637,144
2016PREFERENTIAL TAX RATENACommercial lease$450,251,228
2016TPT EXEMPTIONHEALTH CARE SERVICES:Continuing Care Retirement Facilities and Assisted Living Facilities$57,652,614
2016TPT EXEMPTIONHEALTH CARE SERVICES:Other Residential Care Facilities$6,600,124
2016TPT EXEMPTIONHEALTH CARE SERVICES:Individual and Family Services$75,064,061
2016TPT EXEMPTIONHEALTH CARE SERVICES:Community Food and Housing, and Emergency and Other Relief Services$33,590,485
2016TPT EXEMPTIONHEALTH CARE SERVICES:Child Day Care Services$22,115,587
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Office Administrative$46,958,355
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Facilities Support$33,297,755
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Employment Services$225,508,901
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Business Support$83,895,484
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Travel Arrangement and Reservation$69,912,676
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Investigation and Security$53,885,290
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Services to Building and Dwellings$124,150,050
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Other Support Services$33,962,508
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Waste Collection$38,976,255
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Waste Treatment and Disposal$9,395,018
2016TPT EXEMPTIONADMINISTRATIVE AND BUSINESS SUPPORT SERVICES:Remediation and other waste management services$15,311,495
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Barber$558,193
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Beauty Salons$18,696,033
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Nail Salons$3,198,040
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Diet and Weight Reducing Centers$2,347,883
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Other Personal Care$5,404,798
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Death Care Services$9,295,402
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Personal and Laundry Services$23,049,258
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Pet Care (not Veterinary)$3,502,621
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Photofinishing$847,143
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Parking lot/Garages$11,030,718
2016TPT EXEMPTIONPERSONAL CARE SERVICES:Other Personal Services$4,044,066
2016TPT EXEMPTIONEDUCATIONAL SERVICES:Business School/Computer/Management Training$9,374,095
2016TPT EXEMPTIONEDUCATIONAL SERVICES:Technical and Trade Schools$31,760,003
2016TPT EXEMPTIONEDUCATIONAL SERVICES:Other Schools and Instruction$14,746,356
2016TPT EXEMPTIONEDUCATIONAL SERVICES:Education Support Services$9,443,827
2016TPT EXEMPTIONFINANCIAL SERVICES:Credit Unions$43,600,655
2016TPT EXEMPTIONFINANCIAL SERVICES:Sales Financing$94,694,891
2016TPT EXEMPTIONFINANCIAL SERVICES:Mortgage and Nonmortgage Loan Brokers$9,830,807
2016TPT EXEMPTIONFINANCIAL SERVICES:Financial Transaction Processing and Clearing$65,465,417
2016TPT EXEMPTIONFINANCIAL SERVICES:Other Activities Related to Credit Intermediation$14,145,203
2016TPT EXEMPTIONFINANCIAL SERVICES:Securities Brokerage$116,773,873
2016TPT EXEMPTIONFINANCIAL SERVICES:Portfolio Management$47,378,391
2016TPT EXEMPTIONFINANCIAL SERVICES:Investment Advice$35,553,156
2016TPT EXEMPTIONFINANCIAL SERVICES:Other Financial Investment Activities$505,763,137
2016TPT EXEMPTIONOTHER SERVICES:Automotive Repair and Maintenance$105,280,207
2016TPT EXEMPTIONOTHER SERVICES:Electronic and Precision Repair and Maintenance$13,577,059
2016TPT EXEMPTIONOTHER SERVICES:Commercial, Industrial Machinery Repair and Maintenance$27,600,549
2016TPT EXEMPTIONOTHER SERVICES:Personal and Household Goods Repair and Maintenance$5,634,071
2016TPT EXEMPTIONOTHER SERVICES:Religious, Grantmaking, Civic, Professional and similar Organizations$113,816,000
2016TPT EXEMPTIONALL OTHERWholesale trade (503)$3,533,905,095
2016TPT EXEMPTIONALL OTHERCash discounts (708)$11,873,190
2016TPT EXEMPTIONALL OTHERTrade-ins (711)$24,933,751
2016TPT EXEMPTIONALL OTHERServices provided by a retailer (549) Business activity on a Reservation for a Enrolled Native American or Tribal$198,812,231
2016TPT EXEMPTIONALL OTHERBusiness activity on a Reservation for a Enrolled Native American or Tribal entity (570)$12,335,085
2016TPT EXEMPTIONALL OTHERSale of postage stamps at face value (716)N/A
2016TPT EXEMPTIONALL OTHERSales to Foreign diplomats (777)N/A
2016TPT EXEMPTIONALL OTHERSale of warranty or service contracts (542)$23,944,620
2016TPT EXEMPTIONALL OTHERSale of tangible personal property by a nonprofit organization (725)$470,642
2016TPT EXEMPTIONALL OTHERSale of an aircraft sold to a carrier, government or nonresident (507)$1,212,693
2016TPT EXEMPTIONALL OTHERSale of stocks and bonds (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERPrescription drugs and medical oxygen (536)$641,606,275
2016TPT EXEMPTIONALL OTHERProsthetic appliances (559)$12,869,392
2016TPT EXEMPTIONALL OTHERInsulin, insulin syringe and glucose test strips (533)$68,214
2016TPT EXEMPTIONALL OTHERPrescription eyeglasses and contact lenses (590)$3,372,063
2016TPT EXEMPTIONALL OTHERHearing aids (594)$979,317
2016TPT EXEMPTIONALL OTHERDurable medical equipment (526)$23,505,387
2016TPT EXEMPTIONALL OTHERSales to nonresidents for use outside Arizona if the property is shipped or delivered outside the state (541)$39,596,526
2016TPT EXEMPTIONALL OTHERFood for home consumption (506 and 513)$359,337,787
2016TPT EXEMPTIONALL OTHERTextbooks that are required by any state university or community college -505$2,425,927
2016TPT EXEMPTIONALL OTHERMeals provided to Employee of restaurants (568)N/A
2016TPT EXEMPTIONALL OTHERFood used in school lunches (569)$3,057,815
2016TPT EXEMPTIONALL OTHERSale of Arizona lottery tickets (521)$42,603,325
2016TPT EXEMPTIONALL OTHERPrecious metal bullion and monetized bullion (567 and 601)$2,950,100
2016TPT EXEMPTIONALL OTHERSales of vehicle fuel and aviation fuel (515)$171,927,497
2016TPT EXEMPTIONALL OTHERTangible personal property sold to Personal property leasing business to lease (571)$1,497,109
2016TPT EXEMPTIONALL OTHERTangible personal property sold in interstate or foreign commerce (504)$259,431,738
2016TPT EXEMPTIONALL OTHERTangible personal property sold to a qualifying hospital or a qualifying health care organization or sold to or purchased by qualifying community health centers and health care organizations (545, 546, 572, 574)$44,696,146
2016TPT EXEMPTIONALL OTHERTangible personal property sold to a nonprofit organization which regularly serves meals to the needy and indigent (544)$823,513
2016TPT EXEMPTIONALL OTHERTangible personal property sold to a nonprofit organization which provides housing for low-income persons over 62 years of age (573)N/A
2016TPT EXEMPTIONALL OTHERTangible personal property sold to Qualifying Health Sciences Educational Institution (699)N/A
2016TPT EXEMPTIONALL OTHERMagazines or other periodicals or publications to encourage tourist travel -602N/A
2016TPT EXEMPTIONALL OTHERSale of articles to a contractor for incorporation or fabrication under a contract or for environmental response or remediation (552 and 589)$7,484,674
2016TPT EXEMPTIONALL OTHERTangible personal property sold to a Subcontractor for incorporation into a Prime Contracting project (584)$147,050
2016TPT EXEMPTIONALL OTHERExempt motor vehicle sales for certain nonresidents (580)$54,202
2016TPT EXEMPTIONALL OTHERExempt motor vehicle sales for Native Americans (530)$1,443,975
2016TPT EXEMPTIONALL OTHERTangible personal property purchased by a nonprofit charitable organization that uses such property for training, etc., for mentally or physically handicapped persons (575)$69,629
2016TPT EXEMPTIONALL OTHERTangible personal property sold by a nonprofit organization associated with a major league baseball team or a national touring professional golf association (762)$206,496
2016TPT EXEMPTIONALL OTHERTangible personal property sold by a nonprofit organization associated with a rodeo featuring primarily farm and ranch animals (763)N/A
2016TPT EXEMPTIONALL OTHERSales of commodities under futures contracts consigned to a warehouse for resale (583)$131,530
2016TPT EXEMPTIONALL OTHERSeeds, seedlings, etc., to commercially produce agricultural, horticultural, viticultural or floricultural crops in Arizona (537)$1,652,809
2016TPT EXEMPTIONALL OTHERMachinery, equipment and certain supplies used to assist the physically or developmentally disabled or those persons with head injuries (525)$3,077,315
2016TPT EXEMPTIONALL OTHERSales of natural gas or liquefied petroleum gas used to propel a vehicle -509$1,736,766
2016TPT EXEMPTIONALL OTHERPaper machine clothing used or consumed in paper manufacturing (586)N/A
2016TPT EXEMPTIONALL OTHERMachinery, equipment, utility product, materials and other tangible personal property used to construct a qualified environmental technology facility -607$73,018
2016TPT EXEMPTIONALL OTHERSales of coal, petroleum, coke, natural gas, virgin fuel oil and electricity to an environmental technology facility (511)$788,748
2016TPT EXEMPTIONALL OTHERSales of liquid, solid or gaseous chemicals used in manufacturing, processing, fabricating, mining, refining, metallurgical operations or research or development (510)$8,662,075
2016TPT EXEMPTIONALL OTHERSales of food or drink consumed on the premises of a jail or prison (514)$400,663
2016TPT EXEMPTIONALL OTHERMotor vehicles and any tangible personal property or repair that becomes a part of the motor vehicles sold to a licensed motor operator that lease or rent the property (528)$4,403,902
2016TPT EXEMPTIONALL OTHERLivestock, poultry feed, salts, vitamins for livestock or poultry consumption (520)$7,880,314
2016TPT EXEMPTIONALL OTHERSale or purchase of implants used as growth promotants and injectable medicine (516)N/A
2016TPT EXEMPTIONALL OTHERSales of motor vehicles at auction to nonresidents of Arizona for use outside Arizona (529)$5,732,040
2016TPT EXEMPTIONALL OTHERPersonal hygiene products which are furnished to and to be consumed by hotel occupants (534 and 566)N/A
2016TPT EXEMPTIONALL OTHERSales or purchases of alternative fuel to a used oil fuel burner (587)N/A
2016TPT EXEMPTIONALL OTHERPrinted, photographic, electronic or digital media materials for use in publicly funded libraries (519)$317,390
2016TPT EXEMPTIONALL OTHERTangible personal property consisting of food, beverages and condiments sold to or purchase by a commercial airline (512)$192,228
2016TPT EXEMPTIONALL OTHERSale of new alternative fuel vehicles and conversion equipment (592)N/A
2016TPT EXEMPTIONALL OTHERSale of spirituous, vinous or malt liquor by a liquor wholesaler (588)N/A
2016TPT EXEMPTIONALL OTHERTangible personal property by a nonprofit that produces, organizes or promotes cultural or civic related festivals (764)$361,077
2016TPT EXEMPTIONALL OTHERApplication services designed to assess or test student learning (596)$121,940
2016TPT EXEMPTIONALL OTHERSale of motor vehicle fuel and use fuel to a Healthy Forest business (598) Sale of repair parts in equipment used by a Healthy Forest business (603)$1,623,844
2016TPT EXEMPTIONALL OTHERSales or transfer of renewable energy credits (604)$243,861
2016TPT EXEMPTIONALL OTHERSales of computer data equipment for use in a certified computer data center (565)$359,585
2016TPT EXEMPTIONALL OTHERSales of orthodontic devices dispensed by a dental professional (582)N/A
2016TPT EXEMPTIONALL OTHERProperty sold to a Contractor for a MRRA project on an Indian Reservation
2016TPT EXEMPTIONALL OTHERProperty sold to a Contractor for a MRRA project on an Indian Reservation -712$418,229
2016TPT EXEMPTIONALL OTHERWorks of fine art sold to nonresidents and used outside of the state (773)$210,637
2016TPT EXEMPTIONALL OTHERMachinery or equipment used directly in manufacturing, processing, fabricating, job printing, refining or metallurgical operations (522)$29,230,895
2016TPT EXEMPTIONALL OTHERSale of machinery or equipment used in mining and in drilling for or extracting oil or gas from the earth (523 and 579)$14,761,624
2016TPT EXEMPTIONALL OTHERCertain equipment used in the telecommunications industry (539)$612,884
2016TPT EXEMPTIONALL OTHERMachinery, equipment or transmission lines used directly in producing or transmitting electrical power (524)$3,981,890
2016TPT EXEMPTIONALL OTHERNeat animals, horses, asses, sheep, swine or goats used or to be used as breeding or production stock (605)$188,135
2016TPT EXEMPTIONALL OTHERPipes or valves 4” in diameter used to transport oil, natural gas, artificial gas, water or coal slurry (535)$577,449
2016TPT EXEMPTIONALL OTHERCertain aircraft, navigational and communication instruments (508)$10,493,195
2016TPT EXEMPTIONALL OTHERMachinery, tools, equipment used in repairing, remodeling or maintaining aircraft, aircraft engines or aircraft component parts (532)$305,337
2016TPT EXEMPTIONALL OTHERRailroad rolling stock, rails, ties and signal control equipment used to transport persons or property for hire (576)$92,959
2016TPT EXEMPTIONALL OTHERBuses or other urban mass transit vehicles used to transport persons for hire or pursuant to a governmentally adopted and controlled urban mass transportation program (606)N/A
2016TPT EXEMPTIONALL OTHERCertain groundwater measuring devices and their installation (581)N/A
2016TPT EXEMPTIONALL OTHERNew machinery and equipment used for commercial production of agricultural, horticultural, viticultural and floricultural crops (585)$554,545
2016TPT EXEMPTIONALL OTHERMachinery or equipment used in research and development (553)$2,285,303
2016TPT EXEMPTIONALL OTHERTangible personal property used by an direct broadcast satellite television or data transmission service or facility (591)N/A
2016TPT EXEMPTIONALL OTHERClean rooms used for manufacturing, processing, fabrication or research and development (595)$1,299,175
2016TPT EXEMPTIONALL OTHERMachinery or equipment for poultry and egg production (577)N/A
2016TPT EXEMPTIONALL OTHERMachinery and equipment used by agriculture to prevent, monitor, control or reduce pollution (597)N/A
2016TPT EXEMPTIONALL OTHERMachinery and equipment to prevent pollution for farming and ranching -599N/A
2016TPT EXEMPTIONALL OTHERDigital television machinery and equipment purchases for compliance with the Telecommunications Act of 1996 (578)N/A
2016TPT EXEMPTIONALL OTHERMachinery and equipment sold or rented to a healthy forest certified business (554)N/A
2016TPT EXEMPTIONALL OTHERFederal luxury excise tax on heaving trucks and trailers (609)N/A
2016TPT EXEMPTIONALL OTHERSales made to the U S Government by a manufacturer, modifier, assembler or repairer (547)$31,319,600
2016TPT EXEMPTIONALL OTHERSales of component parts made to a manufacturer, modifier, assembler or repairer for sale to the U S Government (543)$4,614,918
2016TPT EXEMPTIONALL OTHERSales of overhead materials used in a contract between the U S Government and a manufacturer, modifier, assembler or repairer (611)$470,597
2016TPT EXEMPTIONALL OTHER50% of retail sales made to U S Government; 100% of Use Tax (548)$5,638,580
2016TPT EXEMPTIONALL OTHERGross income from motor vehicle manufacturer’s cash rebates if assigned to the retailer (501)$14,628,023
2016TPT EXEMPTIONALL OTHERGross income derived from the waste tire disposal fee (613)$76,652
2016TPT EXEMPTIONALL OTHERSales of solar energy devices (538)$31,949,970
2016TPT EXEMPTIONALL OTHERSales of wireless telecommunication equipment as an inducement to enter into or continue a contract for telecommunication services or sales commissions received (614)$75,714
2016TPT EXEMPTIONALL OTHERSales of motor vehicle to a nonresident from a state with a lower tax rate -531$2,418,947
2016TPT EXEMPTIONALL OTHERTransportation by vehicles subject to fees paid to MVD (715)$702,304
2016TPT EXEMPTIONALL OTHERTransportation network company’s income or fees or driver’s income -772N/A
2016TPT EXEMPTIONALL OTHERVehicle for hire company’s income or driver’s income (778)$82,126
2016TPT EXEMPTIONALL OTHERTransportation of persons by air if taxation is prohibited by Federal Law -615$2,027,354
2016TPT EXEMPTIONALL OTHERAmbulances or ambulance services (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERPublic transportation services for dial-a-ride programs and special needs transportation services (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERGross proceeds for transporting freight or property by an exclusively Arizona railroad for portions of single shipments involving other railroads -616$1,053,167
2016TPT EXEMPTIONALL OTHERGross proceeds for arranging transportation as a convenience or service to a customer if the business is not engaged in the transportation business (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERGross proceeds of sales or gross income derived from transporting for hire persons, freight or property by a railroad pursuant to a contract with another railroad (620)N/A
2016TPT EXEMPTIONALL OTHERSales taxed under another business code (640)$245,738
2016TPT EXEMPTIONALL OTHERSales of transportation or amusement activities arranged by another business that is exempt (612)$746,779
2016TPT EXEMPTIONALL OTHERSales of transportation or amusement activities arranged and taxed by another (702)$99,543
2016TPT EXEMPTIONALL OTHERGross proceeds of sales or gross income derived from transporting fertilizer by a railroad from a point in Arizona to another point in Arizona -625N/A
2016TPT EXEMPTIONALL OTHERSales of electric services to a retail electric customer who is located outside Arizona for Delivery and use outside Arizona (617)N/A
2016TPT EXEMPTIONALL OTHERRental of space on utility poles (759)N/A
2016TPT EXEMPTIONALL OTHERSales from transfer of electricity by a retail electric customer to an electric distribution system (618)N/A
2016TPT EXEMPTIONALL OTHERDevelopment fees charged by a municipally owned utility (621)$298,216
2016TPT EXEMPTIONALL OTHERRevenue received by any person owning a utility system in the form of reimbursement or compensation for property and equipment installed to provide utility access to, on or across land of any actual utility consumer -626N/A
2016TPT EXEMPTIONALL OTHERInterstate sales of electricity, natural gas and waterN/A
2016TPT EXEMPTIONALL OTHERInterstate telecommunications services (643)$900,539
2016TPT EXEMPTIONALL OTHERSales of intrastate telecommunications services by a cable television system or by a microwave television transmission system (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERSales of internet access services (517)$1,341,207
2016TPT EXEMPTIONALL OTHERSales of intrastate telecommunications services to a direct broadcast satellite television or data transmission service (619)N/A
2016TPT EXEMPTIONALL OTHEREnd-user common line charges and carrier access charges established by federal communications regulations (641 and 627)$219,273
2016TPT EXEMPTIONALL OTHERSales of direct broadcast satellite television services (633)Data Not Releasable
2016TPT EXEMPTIONALL OTHERTelecommunications services purchased with a prepaid calling card (649)N/A
2016TPT EXEMPTIONALL OTHERManufacturing or publishing books (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERGross income of publications derived from advertising (628)Included in services
2016TPT EXEMPTIONALL OTHERCommissions paid in the Transient Lodging classification (648)N/A
2016TPT EXEMPTIONALL OTHERTransient lodging sales for lodging for more than thirty days (718)$655,359
2016TPT EXEMPTIONALL OTHERLeasing films, tapes or slides used by theaters or movies or used by television stations or radio stations (784)N/A
2016TPT EXEMPTIONALL OTHERAmusement activities sponsored by the Arizona exposition and state fair board (785)N/A
2016TPT EXEMPTIONALL OTHERLease of tangible personal property by a parent to a subsidiary or by a subsidiary to another subsidiary (631)$359,401
2016TPT EXEMPTIONALL OTHEROperating coin-operated washing, drying and dry cleaning machines or car washing machines (786)N/A
2016TPT EXEMPTIONALL OTHERLeasing or renting aircraft or training equipment by a nonprofit school offering aviation and aerospace degrees (787)N/A
2016TPT EXEMPTIONALL OTHERLeasing or renting photographs, transparencies, etc. used by Arizona on the internet, in magazines or other publications encouraging tourism -651N/A
2016TPT EXEMPTIONALL OTHERLeasing for billboards that are visible from any street (774)N/A
2016TPT EXEMPTIONALL OTHERLeasing or renting certified ignition interlock devices (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERVehicle registration fee reimbursements (656)$73,818
2016TPT EXEMPTIONALL OTHERLeasing or renting a motor vehicle if the motor carrier fee has been paid -660$3,570,708
2016TPT EXEMPTIONALL OTHERAmounts received by a motor vehicle dealer for the 1st month of a lease payment if the lease is transferred to a third party (556)$571,776
2016TPT EXEMPTIONALL OTHERCar rental surcharge charges (680)N/A
2016TPT EXEMPTIONALL OTHERFreight charges relating to nonmetalliferous mineral products (652)N/A
2016TPT EXEMPTIONALL OTHERProcess cost on nonmetalliferous mineral products shipped out of state -658$836,039
2016TPT EXEMPTIONALL OTHERPrivate or group instructional activities (657)$775,386
2016TPT EXEMPTIONALL OTHERMonthly membership fees (527)$3,136,162
2016TPT EXEMPTIONALL OTHERMusical, dramatic or dance groups or a botanical garden, museum or zoo that qualifies as a nonprofit charitable organization (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERSales of admissions to intercollegiate football contests (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERFees and assessments received by a homeowners organization (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERArranging an amusement activity as a service to a person’s customers (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERPari-mutuel and purse monies (661)$386,190
2016TPT EXEMPTIONALL OTHERTransient Lodging recreational establishment membership fees (666)$269,245
2016TPT EXEMPTIONALL OTHERSale to transient lodging business for resale (670)$181,750
2016TPT EXEMPTIONALL OTHEREntry fees for 501c3 organizations’ run, walk, swim, ride, or similar events -735N/A
2016TPT EXEMPTIONALL OTHERGratuities distributed to servers or service employees (724)$210,023
2016TPT EXEMPTIONALL OTHERSales by Congressionally-chartered veterans organization of food or drink -744$50,848
2016TPT EXEMPTIONALL OTHERSales by churches, fraternal benefit societies and other nonprofit organizations which don’t regularly engage or continue in the restaurant business for the purpose of fund raising (no deduction code)N/A
2016TPT EXEMPTIONALL OTHERRestaurant sales to a school district (662)N/A
2016TPT EXEMPTIONALL OTHERPrime Contracting income from out of state projects (681)$7,568,979
2016TPT EXEMPTIONALL OTHERSale of used manufactured buildings (562)$72,386
2016TPT EXEMPTIONALL OTHERSale for resale to another manufactured building dealer (668)$119,639
2016TPT EXEMPTIONALL OTHER35% Deduction from Prime Contracting Base (502)$151,465,573
2016TPT EXEMPTIONALL OTHERPurchase by a Prime Contractor of machinery, equipment or other tangible personal property by a that is exempt under another classification (608, 622, 623, 624, 632, 635, 639, 644, 645, 646, 653, 654, 665, 672, 674, 675, 676, 677, 678, 679, 685, 697, 706, 799)$14,776,257
2016TPT EXEMPTIONALL OTHERLand Deduction (518)$16,696,837
2016TPT EXEMPTIONALL OTHERFurniture and Appliances not incorporated into a Manufactured building -663N/A
2016TPT EXEMPTIONALL OTHERContracting in a military reuse zone for a manufacturer, assembler or fabricator of aviation or aerospace products (667)N/A
2016TPT EXEMPTIONALL OTHERGross proceeds of sales from a contract to install, assemble, repair or maintain machinery that does not become permanently attached (600)$1,851,366
2016TPT EXEMPTIONALL OTHERIncome from contracts for construction of facilities for raising egg producing poultry or the production and packaging of eggs (683)$1,774,779
2016TPT EXEMPTIONALL OTHERIncome from contracts for construction of a launch site (698)N/A
2016TPT EXEMPTIONALL OTHERncome from contracts for construction of a domestic violence shelter -673N/A
2016TPT EXEMPTIONALL OTHERGross proceeds from contracts to perform post-construction treatment of
2016TPT EXEMPTIONALL OTHERreal property for termite and general pest control (686)$169,746
2016TPT EXEMPTIONALL OTHERGross proceeds from contracts to certain state university research infrastructure projects (696)N/A
2016TPT EXEMPTIONALL OTHERGross proceeds from construction contracts for healthy forest business -555$58,872
2016TPT EXEMPTIONALL OTHERGross proceeds from development or impact fees (560)$1,364,316
2016TPT EXEMPTIONALL OTHERGross proceeds from construction of a mixed waste processing facility located on a municipal solid waste landfill (719)N/A
2016TPT EXEMPTIONALL OTHERSubcontracting income (550)$308,212,610
2016TPT EXEMPTIONALL OTHERLawn maintenance services (689)$1,297,246
2016TPT EXEMPTIONALL OTHERCost of architectural or engineering service (557)$3,025,567
2016TPT EXEMPTIONALL OTHERManufactured building delivered out of state (694)N/A
2016TPT EXEMPTIONALL OTHERConstruction Design phase or professional services (690)$4,245,179
2016TPT EXEMPTIONALL OTHERMaintenance, repair, replace or alteration contract with a property owner -500$129,494,024
2016TPT EXEMPTIONALL OTHERCredit for tax paid to an equivalent jurisdiction (684)Data Not Releasable
2016TPT EXEMPTIONALL OTHERComponent parts for a manufactured product for resale (687)$1,950,367
2016TPT EXEMPTIONALL OTHERTangible personal property not exceeding $200 purchased by an individual at retail outside the continental U.S. - USE TAX ONLY (693)N/A
2016TPT EXEMPTIONALL OTHERAdvertising Supplements (688)N/A
2016TPT EXEMPTIONALL OTHERTangible personal property purchased by a nonprofit charitable organization from the parent or affiliate organization located out of state - USE TAX ONLY (695)$263,182
2016TPT EXEMPTIONALL OTHERMotor vehicles removed from inventory and provided to charitable or educational institutions or state universities or their affiliated organization - USE TAX ONLY (703)$71,006
2016TPT EXEMPTIONALL OTHERTangible personal property which directly enters into or becomes an ingredient or part of cards used as prescription plan identification cards - USE TAX ONLY (705)N/A
2016TPT EXEMPTIONALL OTHERLiquefied natural gas used to fuel compressor equipment - USE TAX ONLY -563N/A
2016TPT EXEMPTIONALL OTHERTangible personal property exempt under the Utility classification (707)$494,089
2016TPT EXEMPTIONALL OTHERPurchase price of electricity bought by a retail electric customer from a utility when tax is paid under utility classification (709)$72,355
2016TPT EXEMPTIONALL OTHERPurchase price of electricity or natural gas by a manufacturer or smelting operations (710)$3,515,812
2016TPT EXEMPTIONALL OTHERPurchase price of electricity or natural gas by a business that operates an international operations center that is certified by the Arizona Commerce Authority (783)N/A
2016TPT EXEMPTIONALL OTHERSales to Direct Pay permit holder (692)$607,555
2016TPT EXEMPTIONALL OTHER3% of tax collected for 911 tax on prepaid wireless products (564)$212,875
2016TPT EXEMPTIONALL OTHERLeasing between affiliated companies (634)$4,037,211
2016TPT EXEMPTIONALL OTHERRentals of personal property shipped & used exclusively out-of-state (593)$3,015,359

Arizona Department of Revenue data shows that more than half of all possible state taxes haven’t been collected for at least the past eleven years. Called “tax expenditures,” they amount to $137.7 billion since fiscal year 2008.

That figure is roughly equivalent to sum of state budgets spanning the past 15 years.

The majority of tax expenditures come from a variety of carve-outs to the transaction privilege tax, Arizona’s version of a sales tax. In fiscal year 2017, $12 billion was excluded from TPT collections, almost half of which was due to services being exempted.

Tax carve-outs on individual income taxes, corporate income taxes and property taxes account for almost all of the rest of the tax expenditures.

If Ducey or lawmakers wish to revisit existing tax expenditures, they will have to win the support of a legislative supermajority. An amendment added to Arizona’s constitution by voters in 1992 requires that any change to the tax code that results in increased state revenues, including removing a carve-out or reducing the expenditure it creates, be passed with a two-thirds supermajority in each legislative chamber.

However, legislation that creates new tax expenditures or expands existing carve-outs needs only a simple majority. For instance, a Senate committee on March 21 approved, along a party-line vote, a bill that doubles the amount of capital gains income that is exempted from the individual income tax.

The bill, HB2528, is sponsored by House Speaker JD Mesnard and will allow half of capital gains income to be tax-free. Legislative staff estimates the measure, if it becomes law, will cost the state more than $23 million a year when it is fully implemented in 2023.

According to an analysis by The Arizona Center for Economic Progress, a liberal think tank, roughly three of every five dollars in tax cuts under HB2528 will go to about 4,100 Arizonans making more than $500,000 a year.

2007 – 2017 tax expenditures by type

TAX TYPEVALUE OF FY17 EXPENDITURESVALUE OF FY16 EXPENDITURESVALUE OF FY15 EXPENDITURESVALUE OF FY14 EXPENDITURESVALUE OF FY13 EXPENDITURESVALUE OF FY12 EXPENDITURESVALUE OF FY11 EXPENDITURESVALUE OF FY10 EXPENDITURESVALUE OF FY09 EXPENDITURESVALUE OF FY08 EXPENDITURESVALUE OF FY07 EXPENDITURES
AIRCRAFT LICENSE TAX EXPENDITURES$7,818,845$5,032,946$4,985,055$5,237,479$5,509,385$3,095,615$2,084,593$2,479,951$1,523,378$854,854$921,600
AVIATION FUEL TAX EXPENDITURES$186,795$162,479$149,151$200,361$63,474$88,549$92,922$64,269$63,999$40,198$11,291
BINGO TAX EXPENDITURES$54,015$73,028$70,960$72,180RANGE?RANGE?$115,562$112,500RANGE?RANGE?RANGE?
BOXING & MIXED MARTIAL ARTS TAX EXPENDITURES$2,340$3,510$3,330$2,393$780$1,020$1,350$1,425$2,092$2,000$3,000
CORPORATE INCOME TAX EXPENDITURES$139,195,470$133,477,546$132,899,546$460,328,800$114,379,124RANGE?$314,863,700$187,617,700$237,019,914$285,615,371$89,531,000
FIDUCIARY INCOME TAX EXPENDITURES$57,633,493$53,703,660$32,067,130$25,482,180$16,238,279$15,755,607$16,118,150$26,942,943$29,646,534$20,940,976$35,143,579
FLIGHT PROPERTY TAX EXPENDITURES$3,315,973$2,536,654$939,316$1,160,836$900,812$1,516,123$1,953,607$2,001,723$2,436,567$3,953,457$6,619,415
INDIVIDUAL INCOME TAX EXPENDITURES$394,654,932$375,651,568$310,643,144$2,233,441,000$255,280,000$244,660,000$1,987,662,000$2,219,662,000$1,957,121,000$2,166,308,000$1,935,253,000
INSURANCE PREMIUM TAX EXPENDITURES$253,031,965$241,218,934$242,399,848$192,143,864$205,251,402$199,799,610$187,803,012$129,100,469$194,628,617$176,187,264$159,951,660
JET FUEL EXCISE AND USE TAX EXPENDITURES$6,134,819$6,164,499$6,635,958$5,131,667$6,213,031$6,524,014$7,895,136$7,597,099$6,782,105$8,161,586$8,278,846
LUXURY TAX EXPENDITURES$1,932,621$14,597,098$38,433,557$23,095,734$440,305,626$439,559,322$19,316,561$13,699,267$452,778,717$471,489,841$479,588,433
MOTOR CARRIER FEE EXPENDITURES$160,804,400$157,993,764$153,633,293$146,508,936$143,829,818$143,357,849
MOTOR VEHICLE FUEL TAX EXPENDITURES$11,759,017$12,446,181$10,974,015$9,159,048$9,250,359$8,971,864$7,427,328$6,872,750$6,231,754$7,714,558$6,501,703
PARI-MUTUEL TAX EXPENDITURES$2,105,316$3,775,986$4,016,340$4,032,441$4,126,235$4,362,684$4,372,304$5,103,187$6,161,565$8,398,010$9,166,397
PRIVATE CAR PROPERTY TAX EXPENDITURES$494,754$384,354$312,407$425,322$408,268$354,940$301,413$320,420$215,426$154,066$195,483
PROPERTY TAX EXPENDITURES$420,079,174$403,693,834$377,979,585$359,909,184$328,874,395$322,669,313$338,142,925$388,598,989$423,642,708$403,635,384$366,134,820
SEVERANCE TAX EXPENDITURES$18,377,156$15,196,006$24,862,000$26,190,000$29,829,000$40,580,000$40,236,000$29,100,000$18,210,000$43,750,000$43,550,000
TRANSACTION PRIVILEGE AND USE TAX EXPENDITURES$12,000,474,483$12,262,397,152$12,212,283,076$12,611,204,000$12,107,810,000$11,540,920,000$10,034,020,000$11,282,560,000$9,509,380,000$10,095,961,000$9,139,532,000
USE FUEL TAX EXPENDITURES$48,192,409$45,731,318$43,621,085$45,526,448$44,186,840$47,752,045$42,195,849$40,513,612$52,167,262$18,513,943$29,414,001
WORKERS’ COMPENSATION PREMIUM LIEU TAX EXPENDITURES$5,596,060$1,251,000$1,809,939$4,995,967$2,180,526$2,512,473$12,738,142$16,588,835$6,800,000$2,976,526$2,507,346
TOTAL$13,519,340,955$13,735,491,517$13,598,718,735$16,154,247,840$13,714,637,354$13,022,481,028$13,017,340,554$14,358,937,139$12,904,811,638$13,714,657,034$12,312,303,574