Hoffman, Freedom Caucus, expand Arizona's welfare state

There's a reason Hobbs wants to take credit for their handiwork.

As part of the irresponsible decision by GOP legislative leaders to deplete all of a $2 billion surplus in a single year, each legislator got to direct the spending of millions of dollars to whatever he or she wanted.

The members of the Arizona Freedom Caucus pooled their money to create a $260 million fund for a one-time rebate for families with children – $250 per child, up to a maximum of $750. 

The caucus also sought, through legislated restrictions, to prevent Gov. Katie Hobbs from taking credit as the checks went out. Hobbs, nevertheless, is trying to take credit as the checks go out, which has the caucus members sputtering and fuming – particularly Sen. Jake Hoffman, its loudest voice.

Hoffman probably lacks the mental dexterity to ask and ponder the following question, whose pondering is quite illuminating: Why would a liberal Democrat such as Hobbs want to associate herself with a program concocted by a cadre of MAGA street fighters?

The reason is that the rebate program constitutes a significant expansion of Arizona’s welfare state, albeit temporarily. What liberal Democrat wouldn’t want to associate herself with that?

Because there is no income limit on eligibility for the rebate, the Freedom Caucus collaborators probably don’t think it qualifies as a social welfare expansion. But it does. People are being given a check from the government strictly to supplement their income. A dole is a dole, even if rich people also get it.

That said, Hobbs should have been more cautious in associating herself with this particular program. It is rife with gross, and indefensible, inequities.

There has long been disagreement and tension between economic and social conservatives over tax policy.

Economic conservatives believe the tax structure should be constructed to raise the requisite revenue for the government in the way that least disturbs or distorts productive private sector economic activity. That means low rates on broad tax bases. The objective is to provide the maximum possible return on the next increment of work or investment. That’s how an economy grows and expands economic opportunity for all.

Social conservatives believe, as do liberals, in using the tax code to achieve social welfare objectives. For social conservatives, that principally involves helping families with children. While recently there have been differences in details, liberal and social conservative proposals to use the tax code to financially assist families with children largely overlap in terms of their objectives.

Economic conservatives see tax credits and deductions, however meritorious their objectives, as eroding the tax base and putting upward pressure on tax rates, which is economically counterproductive. And they generally oppose rebates, such as that devised by the Freedom Caucus. Economically, a rebate is Keynesian stimulus, not a supply-side, growth oriented reform.

The caucus’s rebate is redistributionist, although not in the usual sense of taking wealth from the rich to give to the poor. Instead, wealth is being redistributed from childless adults, irrespective of how poor, to families with children, irrespective of how rich.

To be eligible for the caucus’s rebate, a family has to have paid something in income taxes. That means the poorest families with children are ineligible for the assistance. There’s utterly no policy justification for this exclusion.

Sales taxes, which everyone pays, generate roughly half of all state revenue. The individual income tax generates only a third. So, poor Arizonans with children are paying sales taxes to fund a rebate program for which they are not eligible. In other words, they are subsidizing the children of people making more than they are, and in many cases considerably more.

The exclusion of poor families was probably intentional. It would require an obtuseness even beyond the capacity of a MAGA politician not to know what the effect of the income tax requirement would be on poor families. 

However, there is another category of exclusion that probably wasn’t intended and, in fact, will undoubtedly disproportionately catch those the Freedom Caucus purports to represent and intended to help.

Arizona has a generous system of individual income tax credits for things such as contributions to private school scholarships and charitable organizations. It is entirely possible, given Arizona’s low income tax rates, for a middle-income family to fully extinguish their income tax liability to the state through the use of these credits. It is highly probable that religiously oriented social conservatives with children are overrepresented in that cohort. And, thus, ineligible for the caucus’s rebate. 

MAGA street fighters are hardly alone in not fully thinking through the unintended consequences of their proposals. And their indignation about Hobbs’s attempted theft of credit for the rebate program is both understandable and even warranted.

But given how flawed and inequitable their rebate program, fully considered, turns out to be, their self-righteousness about this, and in general, is pretty hard to take.

Reach Robb at robtrobb.com.