UPDATE: Arizona Federation of Taxpayers also came out against the Mason Solar Tax Credit bill. Mason has decided to hold the bill at this point.
Forgive my lack of posts over the last two days. We are more than knee-deep in garbage here at the Capitol and instead of pressing forward to negotiate a responsible budget we are passing out bills that without question will result in increased taxes.
Two of these bills I am referring to are provisions that were in the now defunct job stimulus package: Lucy Mason's Solar Tax Credit and Pima County's Cactus League~Spring Training Bill. Unfortunately for the taxpayer, both of these bills passed out of committee despite objections from such groups as the Arizona Free Enterprise Club, the D.C. based Taxpayer Foundation, and the Arizona Restaurant Association. The Mason Solar-Energy Tax Credit received a thorough beating during our recent republican caucus so perhaps there is a ray of hope (get it?) that it will go down in flames.
As you have probably read by now, the Senate passed out their horrific budget proposal last night ( or rather, at 5:33 this morning) that includes $2 BILLION DOLLARS IN NEW BORROWING besides the fact that we are currently facing a $2.3 BILLION DOLLAR SHORTFALL! Ugh! Props to my good friend and seatmate, Senator Ron Gould for seriously doing all he could to protect the citizens of Arizona and prevent the Senate from successfully passing the budget. Senator Gould got almost no assistance from his fellow republicans...it is a shame that he has to take heat from his colleagues for taking seriously his oath of office.
Oh, surprise, surprise...house leadership just put the APPALLING Senate Budget Feed Bill (HB 2209) on the "Board of Truth" and the bill passed with the assistance of the following republicans:
Lucy Mason
Jennifer Burns
Michelle Reagan
Pete Hershberger
Without these REPUBLICANS ( though now perhaps, RINOS), the outrageous Senate Budget Feed Bill would not have passed and we would have then had the opportunity to negotiate a more fiscally responsible budget on behalf of the taxpayers.
FYI, I will list the travesties of the Senate Budget in a later post...must pay attention to the bills as they are voted. Can you believe that I am receiving emails from district 3 AEA members pleading me to vote in favor of this Senate budget? Increased gambling, increased photo radar, increased borrowing...and AEA members believe this is prudent?
Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts
Thursday, June 26, 2008
Sunday, June 22, 2008
AZ Free Enterprise Club Press Release
UPDATE: As of today, June 24th, it looks like this proposal is dead in its tracks! The commerce committee hearing scheduled to hear the bill has been cancelled! Glory be...there is still a bit of reason left among my colleagues.
Arizona Legislature Should Reject Stimulus Package
Christmas Tree of goodies will hurt, not help, Arizona economy
Phoenix, AZ – The Arizona Free Enterprise Club, a pro-economic growth advocacy group, today announced its opposition to an “economic stimulus” package that reportedly consists of subsidies for a downtown entertainment district, solar production, and research and development. The package also intends to grant Pima County the authority to hold an election seeking a sales tax increase on restaurants, hotels and rental cars to enhance Tucson-area spring training facilities. The package, the details of which have not been released, is being formulated by a handful of special interest groups and lobbyists.
“There is no way a package larded down with this much pork should ever get off the ground,” said Steve Voeller, president of the Club. “not only is this not economic stimulus, it’s not even decent public policy. Tax credits and exemptions are exactly like spending items. Proponents of this package want to pay people for these activities. Do they need to be reminded that the state faces a $2.2 billion budget deficit?”
The plan does not address the looming statewide property tax increase set to occur next year.
“The state faces a $250 million tax hike next year since the governor vetoed a bill to prevent it from occurring. The notion that you can bestow tax subsidies on a few developers and companies and think you’re going to turn around the economy, all while ignoring a massive tax hike on millions of Arizona taxpayers, is sadly absurd. You want to create jobs? Let’s start by not raising taxes.”
In addition to the veto of the property tax repeal, the governor and some business leaders are pushing for a 17.8 percent statewide sales tax rate increase for roads, trains, light rail, open space, non-profit groups, and other endeavors.
“The policies coming out of the state legislature should scare everybody concerned about the status of the state’s economy.”
Arizona Legislature Should Reject Stimulus Package
Christmas Tree of goodies will hurt, not help, Arizona economy
Phoenix, AZ – The Arizona Free Enterprise Club, a pro-economic growth advocacy group, today announced its opposition to an “economic stimulus” package that reportedly consists of subsidies for a downtown entertainment district, solar production, and research and development. The package also intends to grant Pima County the authority to hold an election seeking a sales tax increase on restaurants, hotels and rental cars to enhance Tucson-area spring training facilities. The package, the details of which have not been released, is being formulated by a handful of special interest groups and lobbyists.
“There is no way a package larded down with this much pork should ever get off the ground,” said Steve Voeller, president of the Club. “not only is this not economic stimulus, it’s not even decent public policy. Tax credits and exemptions are exactly like spending items. Proponents of this package want to pay people for these activities. Do they need to be reminded that the state faces a $2.2 billion budget deficit?”
The plan does not address the looming statewide property tax increase set to occur next year.
“The state faces a $250 million tax hike next year since the governor vetoed a bill to prevent it from occurring. The notion that you can bestow tax subsidies on a few developers and companies and think you’re going to turn around the economy, all while ignoring a massive tax hike on millions of Arizona taxpayers, is sadly absurd. You want to create jobs? Let’s start by not raising taxes.”
In addition to the veto of the property tax repeal, the governor and some business leaders are pushing for a 17.8 percent statewide sales tax rate increase for roads, trains, light rail, open space, non-profit groups, and other endeavors.
“The policies coming out of the state legislature should scare everybody concerned about the status of the state’s economy.”
Big Boondoggle Bill of 2008
The latest attempt to garner good press at the expense of good public policy, otherwise known as the Big Boondoggle Bill of 2008 is now posted on the AZLEG website in the form of an 81-page amendment to Senate Bill 1433. If you do not have the fortitude to read the entire amendment, I will touch on the 4 main ideas:
Solar Tax Credits - This would offer incentives for qualifying new businesses that manufacture solar energy components in Arizona.
Research and Development Tax Credits - This would enhance current corporate and income tax credits for new research and development projects.
Cactus League Baseball - This would allow Pima County voters to approve targeted taxes, proposed by a private Tucson-area group, to pay for improvements to new and existing Cactus League ballpark facilities, and is targeted at keeping teams in their southern Arizona location.
Urban Redevelopment Project - This would establish new entertainment districts, targeted at urban downtown areas.
Though these proposals may sound innocuous, the devil is in the details. The list of organizations opposed to this measure is growing and now includes:
Arizona Federation of Taxpayers
The Arizona Free Enterprise Club
Arizona Restaurant Association
Friday, June 20, 2008
More Opposition to the Big Boondoggle Bill of 2008
NOTE: The Cactus League Baseball Proposal is part of the bill that the Arizona Federation of Taxpayers is calling the Big Boondoggle Bill of 2008. Please call Speaker Jim Weier's office at 602-926-4173 and urge him to rethink his support of this measure. If you would prefer to email, his email address is jweiers@azleg.gov.
Re: Cactus League Baseball Proposal
Dear Representative,
On behalf of the Arizona Restaurant Association (ARA) I am writing to respectfully request that you oppose the Cactus League Baseball proposal which would create a 0.75% tax on restaurants, bars, hotels and rental car companies. As you know, this proposal is part of the Jobs Creation Package which is expected to be voted on very soon. As recently as today, there has been discussion on modifying this proposal but keeping the above mentioned entities as the tax revenue source, we oppose this recommendation as well. The ARA understands the importance of preserving and promoting the sport’s industry in Southern Arizona, however, imposing a tax on restaurants, bars, hotels and rental cars is not the answer.
Issues such as these are not taken lightly and as a member-based organization we contacted each of our Southern Arizona members to get their understanding and position on the proposed measure. We found that members are overwhelmingly opposed to any additional tax increase on our industry including a tax for Cactus League Baseball. Our members are in part against this measure because the revenue generated from sports in Southern Arizona is beneficial to all businesses and forcing a select few to shoulder the burden is not a fair or palatable solution to this problem.
Furthermore, restaurants generate 24% of their revenue from tourism while hotels and rental cars generate 2.5 to 3 times that amount from tourism…clearly the paradigm is different for restaurants in this case. We want to see baseball training thrive in Southern Arizona. However, we cannot support a measure that unfairly taxes an industry and thus forces a select few to pay for a measure that would benefit all Southern Arizona businesses.
On behalf of the Arizona Restaurant Association, I thank you for your consideration and urge you to oppose the Cactus League Baseball component of the Jobs Creation Package. As always, please feel free to contact me with any questions or comments.
Sincerely,
Steve Chucri
President and CEO
Arizona Restaurant Association
Re: Cactus League Baseball Proposal
Dear Representative,
On behalf of the Arizona Restaurant Association (ARA) I am writing to respectfully request that you oppose the Cactus League Baseball proposal which would create a 0.75% tax on restaurants, bars, hotels and rental car companies. As you know, this proposal is part of the Jobs Creation Package which is expected to be voted on very soon. As recently as today, there has been discussion on modifying this proposal but keeping the above mentioned entities as the tax revenue source, we oppose this recommendation as well. The ARA understands the importance of preserving and promoting the sport’s industry in Southern Arizona, however, imposing a tax on restaurants, bars, hotels and rental cars is not the answer.
Issues such as these are not taken lightly and as a member-based organization we contacted each of our Southern Arizona members to get their understanding and position on the proposed measure. We found that members are overwhelmingly opposed to any additional tax increase on our industry including a tax for Cactus League Baseball. Our members are in part against this measure because the revenue generated from sports in Southern Arizona is beneficial to all businesses and forcing a select few to shoulder the burden is not a fair or palatable solution to this problem.
Furthermore, restaurants generate 24% of their revenue from tourism while hotels and rental cars generate 2.5 to 3 times that amount from tourism…clearly the paradigm is different for restaurants in this case. We want to see baseball training thrive in Southern Arizona. However, we cannot support a measure that unfairly taxes an industry and thus forces a select few to pay for a measure that would benefit all Southern Arizona businesses.
On behalf of the Arizona Restaurant Association, I thank you for your consideration and urge you to oppose the Cactus League Baseball component of the Jobs Creation Package. As always, please feel free to contact me with any questions or comments.
Sincerely,
Steve Chucri
President and CEO
Arizona Restaurant Association
Big Boondoggle Bill of 2008
Dear Arizona Taxpayer:
As I wrote yesterday, the Arizona Senate is considering SB1450, a bill that would award a private company the privilege of issuing $750 million in tax-free bonds, so that it can build a rock music theme park in Eloy.
Proponents of SB1450 have contacted me, arguing that the bill's language removes any legal obligation for taxpayers to bail out the theme park district in the event that it cannot attract enough visitors to pay back the bond creditors.
That appears to be true about the legal obligation, but the legislation does not remove the political obligation to bail out the theme park district. If the Eloy theme park turns out to be a flop, future legislatures will be under intense pressure to bail out the theme park. If they do not, the failure of the district to pay back creditors will hurt Arizona's bond ratings, effectively raising the interest rates for revenue bonds for traditional public-private partnerships, such as road construction projects.
Again, the economic downsides of the Decades Theme Park deal are not nearly as important as the question of principle at stake: Should the government give special taxing privileges to chosen companies? Again, the answer to that question is, "NO." The government should not be in the business of picking winners and losers in the economy.
Further, if we let the Eloy deal pass, it will only encourage the rest of the sharks, who are already pestering the Legislature to pass the Big Boondoggle Bill of 2008, which includes special tax breaks for entertainment districts, ballparks, and other politically-favored industries, all in the name of "economic stimulus." Remember that every dollar given to a favored industry in a tax credit is a dollar that cannot be cut from the taxes of ordinary individuals, families, and businesses. Somehow, that does not seem very stimulating...
For emerging details on the Big Boondoggle Bill of 2008, see this story in the Republic:
http://www.azcentral.com/news/articles/2008/06/18/20080618stimulus0618.html
The tax credit handouts in the Big Boondoggle Bill of 2008 make the Eloy deal look almost innocent. It seems that our politicians just can't break the habit of picking winners and losers in the Arizona economy-no matter how many losers they pick. We will keep you posted on developments related to the Big Boondoggle Bill.
For Liberty,
Tom Jenney
Arizona Director
Americans for Prosperity
(Arizona Federation of Taxpayers)
http://www.aztaxpayers.org/
tjenney@afphq.org
As I wrote yesterday, the Arizona Senate is considering SB1450, a bill that would award a private company the privilege of issuing $750 million in tax-free bonds, so that it can build a rock music theme park in Eloy.
Proponents of SB1450 have contacted me, arguing that the bill's language removes any legal obligation for taxpayers to bail out the theme park district in the event that it cannot attract enough visitors to pay back the bond creditors.
That appears to be true about the legal obligation, but the legislation does not remove the political obligation to bail out the theme park district. If the Eloy theme park turns out to be a flop, future legislatures will be under intense pressure to bail out the theme park. If they do not, the failure of the district to pay back creditors will hurt Arizona's bond ratings, effectively raising the interest rates for revenue bonds for traditional public-private partnerships, such as road construction projects.
Again, the economic downsides of the Decades Theme Park deal are not nearly as important as the question of principle at stake: Should the government give special taxing privileges to chosen companies? Again, the answer to that question is, "NO." The government should not be in the business of picking winners and losers in the economy.
Further, if we let the Eloy deal pass, it will only encourage the rest of the sharks, who are already pestering the Legislature to pass the Big Boondoggle Bill of 2008, which includes special tax breaks for entertainment districts, ballparks, and other politically-favored industries, all in the name of "economic stimulus." Remember that every dollar given to a favored industry in a tax credit is a dollar that cannot be cut from the taxes of ordinary individuals, families, and businesses. Somehow, that does not seem very stimulating...
For emerging details on the Big Boondoggle Bill of 2008, see this story in the Republic:
http://www.azcentral.com/news/articles/2008/06/18/20080618stimulus0618.html
The tax credit handouts in the Big Boondoggle Bill of 2008 make the Eloy deal look almost innocent. It seems that our politicians just can't break the habit of picking winners and losers in the Arizona economy-no matter how many losers they pick. We will keep you posted on developments related to the Big Boondoggle Bill.
For Liberty,
Tom Jenney
Arizona Director
Americans for Prosperity
(Arizona Federation of Taxpayers)
http://www.aztaxpayers.org/
tjenney@afphq.org
Wednesday, June 18, 2008
No Budget In Sight...
No budget in sight...no rumor of a budget at all...no whispers, NO NOTHING!
On a more positive note, the House did vote on and pass the Partial Birth Abortion Ban and the bill is now headed to the Governor.
We are working tomorrow...the first time in about two months that we will be meeting on a Thursday. I expect to hear details of the monstrous "job stimulus" package that bears the name of the Speaker, Andy Tobin and Michelle Reagan. I am relieved to say that this proposal is not being received enthusiastically by my colleagues so perhaps there is another reason for hope.
I am exhausted, a bit emotionally drained and completely embarassed about all of the garbage that makes up these late days of session. I will post more tomorrow but for now, I am turning off the computer and turning in to bed.
G'night.
On a more positive note, the House did vote on and pass the Partial Birth Abortion Ban and the bill is now headed to the Governor.
We are working tomorrow...the first time in about two months that we will be meeting on a Thursday. I expect to hear details of the monstrous "job stimulus" package that bears the name of the Speaker, Andy Tobin and Michelle Reagan. I am relieved to say that this proposal is not being received enthusiastically by my colleagues so perhaps there is another reason for hope.
I am exhausted, a bit emotionally drained and completely embarassed about all of the garbage that makes up these late days of session. I will post more tomorrow but for now, I am turning off the computer and turning in to bed.
G'night.
Tuesday, June 17, 2008
A Message from Arizona Federation of Taxpayers
Dear Arizona Taxpayer:
Right now, members of the Arizona Senate are considering whether or not to award a private company the privilege of issuing $750 million in tax-free bonds, so that it can build a rock music theme park in Eloy.
If the project turns out to be a flop, and if tourists fail to come to Eloy in sufficient numbers, the state could have to pay back creditors, or it could jeopardize its bond rating, making it more expensive in the future to borrow money for traditional projects, such as road construction.
But the economic downsides of the Decades Theme Park deal are not nearly as important as the question of principle at stake: whether or not the government should not be handing out special privileges to chosen companies. The answer to that question is clearly, “NO.” The government should not be in the business of picking winners and losers in business.
PLEASE CONTACT YOUR STATE SENATOR, AND ENCOURAGE HIM OR HER TO OPPOSE THIS BILL. WE ARE ESPECIALLY CONCERNED ABOUT ANY SENATOR WHO VOTED YES (“Y”) ON THE EARLIER VERSION OF THE BILL:
http://www.azleg.gov/FormatDocument.asp?inDoc=/legtext/48leg/2r/bills/sb1450.sthird.1.asp
In response to a query from the Senate, AFP Arizona hereby announces that the bill, SB1450, will be included in our 2008 Legislative Scorecard. Given the potential yearly fiscal impact, and the importance of the principle at stake, the bill will be a 50-point bill. In last year’s scorecard, that would have been just under 5 percent of the total, but there are fewer bills this year, so SB1450 could weigh as much as 10 percent of the overall score.
For more information about why SB1450 is a bad bill, see the pieces from the Goldwater Institute and the AZ Free Enterprise Club (pasted below).
For Liberty,
Tom Jenney
Arizona Director
Americans for Prosperity
(Arizona Federation of Taxpayers)
www.aztaxpayers.org
tjenney@afphq.org
(602) 478-0146
Springtime for Decades: Eloy theme park bill bad for Arizona
By Byron Schlomach, Ph.D., director of the Goldwater Institute Center for Economic Prosperity.
In the Mel Brooks play, The Producers, a planned swindle would only succeed if a joke of a Broadway play was a monumental flop. The play, Springtime for Hitler, ended up being a success against all reason. Right now the Arizona legislature is planning a similar heist: the Decades Music Theme Park.
The Arizona legislature has proposed a law to create a “special attraction district” in Eloy that would only include the Decades park and give it quasi-governmental status. Why is this proposed law a scam? In essence, the law is designed to subsidize private companies that cannot raise the money or otherwise get financing without special government treatment. In this case, the special privilege is the ability to issue government bonds. The bill now being considered would allow the owners of Decades to issue $750 million in government bonds.
People who buy government bonds accept less interest than they would otherwise for two reasons. First, they don’t have to pay federal income tax on the interest earned. Second, government bonds are backed by the ability of a government entity to tax its citizens, so they are generally safe investments.
In the case of the proposed theme park, the bonds will be financed by sales taxes paid only by park visitors. That means these bonds are really every bit as speculative as corporate bonds, because they are entirely dependent on the ability of a company to attract customers.
There are very likely to be good-faith buyers of these special attraction district bonds who will have every reason to think the bonds are as safe as school district bonds. Then, if the park doesn’t work out and goes out of business, widows, retirees, and institutional investors could find their government-grade bonds worth pennies on the dollar at best. If this unfortunate scenario were to happen, disappointed investors would likely sue those responsible, including the State of Arizona.
Even if there’s no lawsuit, Arizona’s bond ratings will suffer if the park goes belly-up. Future bond buyers, with no idea if they’re really buying speculative corporate bonds or genuine government bonds, might avoid buying Arizona bonds all together.
Not only could Arizonans lose financially if policymakers ultimately approve this highly speculative project, we could lose in other ways. The private sector sets a pretty high bar for potential enterprises to pass in order to get funding. That doesn’t mean there is always success when enterprises are privately funded, but it does mean the winners often win big. Who knows what kind of big winner this government-backed project might prevent from opening.
If a theme park comes to Arizona, it needs to stand on its own financial feet. The test any such proposal passes should come from the private sector school of hard work, not the political school of smooth talking.
Decades Music Theme Park Bill Strikes the Wrong Chord~
exempting income and property taxes is corporate and investor welfare
Phoenix, AZ – The Arizona Free Enterprise Club, a pro-economic growth advocacy group, today announced its opposition to SB1450, the Regional Attraction District, otherwise known as the Decades Music Theme Park. The legislation exempts for-profit companies within the district from paying income and property taxes.
During testimony on the bill in Senate Commerce, proponents claimed that without this legislation, the area in Eloy where the park is proposed would not be an internationally recognized music theme park. Proponents of the bill also stated that some of the private investment was contingent on the bill.
“What gets built in Eloy should not be determined by legislating corporate subsidies being pushed by those who stand to benefit financially,” said Steve Voeller, president of the Club. “When corporate welfare is needed so that the private investment pays off, you could say the role of government has been exceeded.”
The legislation exempts businesses who locate with the district from paying property or income taxes. The park’s supporters claim that because they are required to raise $100 million in private investment before the bonds can be issued, the state’s investment is a sound one.
“If building a music theme park in Eloy makes economic sense, so much so that the first $100 million can be raised privately, then the project should be financed like other large projects and the owners should pay taxes like everybody else.”
Right now, members of the Arizona Senate are considering whether or not to award a private company the privilege of issuing $750 million in tax-free bonds, so that it can build a rock music theme park in Eloy.
If the project turns out to be a flop, and if tourists fail to come to Eloy in sufficient numbers, the state could have to pay back creditors, or it could jeopardize its bond rating, making it more expensive in the future to borrow money for traditional projects, such as road construction.
But the economic downsides of the Decades Theme Park deal are not nearly as important as the question of principle at stake: whether or not the government should not be handing out special privileges to chosen companies. The answer to that question is clearly, “NO.” The government should not be in the business of picking winners and losers in business.
PLEASE CONTACT YOUR STATE SENATOR, AND ENCOURAGE HIM OR HER TO OPPOSE THIS BILL. WE ARE ESPECIALLY CONCERNED ABOUT ANY SENATOR WHO VOTED YES (“Y”) ON THE EARLIER VERSION OF THE BILL:
http://www.azleg.gov/FormatDocument.asp?inDoc=/legtext/48leg/2r/bills/sb1450.sthird.1.asp
In response to a query from the Senate, AFP Arizona hereby announces that the bill, SB1450, will be included in our 2008 Legislative Scorecard. Given the potential yearly fiscal impact, and the importance of the principle at stake, the bill will be a 50-point bill. In last year’s scorecard, that would have been just under 5 percent of the total, but there are fewer bills this year, so SB1450 could weigh as much as 10 percent of the overall score.
For more information about why SB1450 is a bad bill, see the pieces from the Goldwater Institute and the AZ Free Enterprise Club (pasted below).
For Liberty,
Tom Jenney
Arizona Director
Americans for Prosperity
(Arizona Federation of Taxpayers)
www.aztaxpayers.org
tjenney@afphq.org
(602) 478-0146
Springtime for Decades: Eloy theme park bill bad for Arizona
By Byron Schlomach, Ph.D., director of the Goldwater Institute Center for Economic Prosperity.
In the Mel Brooks play, The Producers, a planned swindle would only succeed if a joke of a Broadway play was a monumental flop. The play, Springtime for Hitler, ended up being a success against all reason. Right now the Arizona legislature is planning a similar heist: the Decades Music Theme Park.
The Arizona legislature has proposed a law to create a “special attraction district” in Eloy that would only include the Decades park and give it quasi-governmental status. Why is this proposed law a scam? In essence, the law is designed to subsidize private companies that cannot raise the money or otherwise get financing without special government treatment. In this case, the special privilege is the ability to issue government bonds. The bill now being considered would allow the owners of Decades to issue $750 million in government bonds.
People who buy government bonds accept less interest than they would otherwise for two reasons. First, they don’t have to pay federal income tax on the interest earned. Second, government bonds are backed by the ability of a government entity to tax its citizens, so they are generally safe investments.
In the case of the proposed theme park, the bonds will be financed by sales taxes paid only by park visitors. That means these bonds are really every bit as speculative as corporate bonds, because they are entirely dependent on the ability of a company to attract customers.
There are very likely to be good-faith buyers of these special attraction district bonds who will have every reason to think the bonds are as safe as school district bonds. Then, if the park doesn’t work out and goes out of business, widows, retirees, and institutional investors could find their government-grade bonds worth pennies on the dollar at best. If this unfortunate scenario were to happen, disappointed investors would likely sue those responsible, including the State of Arizona.
Even if there’s no lawsuit, Arizona’s bond ratings will suffer if the park goes belly-up. Future bond buyers, with no idea if they’re really buying speculative corporate bonds or genuine government bonds, might avoid buying Arizona bonds all together.
Not only could Arizonans lose financially if policymakers ultimately approve this highly speculative project, we could lose in other ways. The private sector sets a pretty high bar for potential enterprises to pass in order to get funding. That doesn’t mean there is always success when enterprises are privately funded, but it does mean the winners often win big. Who knows what kind of big winner this government-backed project might prevent from opening.
If a theme park comes to Arizona, it needs to stand on its own financial feet. The test any such proposal passes should come from the private sector school of hard work, not the political school of smooth talking.
Decades Music Theme Park Bill Strikes the Wrong Chord~
exempting income and property taxes is corporate and investor welfare
Phoenix, AZ – The Arizona Free Enterprise Club, a pro-economic growth advocacy group, today announced its opposition to SB1450, the Regional Attraction District, otherwise known as the Decades Music Theme Park. The legislation exempts for-profit companies within the district from paying income and property taxes.
During testimony on the bill in Senate Commerce, proponents claimed that without this legislation, the area in Eloy where the park is proposed would not be an internationally recognized music theme park. Proponents of the bill also stated that some of the private investment was contingent on the bill.
“What gets built in Eloy should not be determined by legislating corporate subsidies being pushed by those who stand to benefit financially,” said Steve Voeller, president of the Club. “When corporate welfare is needed so that the private investment pays off, you could say the role of government has been exceeded.”
The legislation exempts businesses who locate with the district from paying property or income taxes. The park’s supporters claim that because they are required to raise $100 million in private investment before the bonds can be issued, the state’s investment is a sound one.
“If building a music theme park in Eloy makes economic sense, so much so that the first $100 million can be raised privately, then the project should be financed like other large projects and the owners should pay taxes like everybody else.”
Friday, April 11, 2008
Chambers of Commerce Letter to the Governor Re: HB 2220 Property Tax Repeal
UPDATE: The Governor vetoed this bill.
NOTE: I am so pleased to see that both the Lake Havasu Area Chamber of Commerce and the Bullhead City Chamber of Commerce signed on in support of the bill. I wonder where the Kingman Chamber of Commerce stands.
April 11, 2008
The Honorable Janet Napolitano
Office of the Governor
1700 W. Washington Street
Phoenix, Arizona 85007
Dear Governor Napolitano:
As chambers of commerce across Arizona, we encourage you to sign HB 2220 to
permanently repeal the state equalization property tax. Signing this legislation would
prevent an approximately $250 million annual tax hike on businesses and residential
property owners during a time when Arizonans are experiencing economic strain.
The statewide business community has made permanent repeal of the state equalization
rate a top priority for the 2008 legislative session. Currently, commercial property owners in Arizona pay more than twice the amount in taxes that residential property owners pay. That places Arizona in the top highest for commercial property taxes and far above our neighboring states, thus harming our competitiveness.
The business community recognizes the severity of the state’s fiscal crisis. We remain
convinced; however, that the economy is best stimulated by private enterprise. Creating an environment in which businesses can flourish will allow companies to make additional investments that will advance our economy in a powerful way. During this economic crisis, we have an opportunity to put policies in place that position us for future success. Permanently repealing the statewide equalization rate is one important step in that direction.
Sincerely,
Ajo District Chamber of Commerce
Arizona Chamber of Commerce & Industry
Bullhead Area Chamber of Commerce
Benson-San Pedro Valley Chamber of Commerce
Camp Verde Chamber of Commerce
Chino Valley Area Chamber of Commerce
East Valley Chambers of Commerce Alliance:
Ahwatukee Foothills Chamber of Commerce
Apache Junction Chamber of Commerce
Chandler Chamber of Commerce
Gilbert Chamber of Commerce
Mesa Chamber of Commerce
Queen Creek Chamber of Commerce
Scottsdale Chamber of Commerce
Tempe Chamber of Commerce
Flagstaff Chamber of Commerce
Fountain Hills Chamber of Commerce
Lake Havasu Area Chamber of Commerce
Greater Phoenix Chamber of Commerce
Pinetop-Lakeside Chamber of Commerce
Prescott Chamber of Commerce
Prescott Valley Chamber of Commerce
Sedona Chamber of Commerce
Southern Arizona Chambers of Commerce Alliance:
Marana Chamber of Commerce
Nogales-Santa Cruz County Chamber of Commerce
Northern Pima County Chamber of Commerce
Rio Rico Chamber of Commerce
Greater Sierra Vista Area Chamber of Commerce
Tucson Gay, Lesbian, Bisexual, Transgendered Chamber of Commerce
Tucson Hispanic Chamber of Commerce
Tucson Metropolitan Chamber of Commerce
St. John’s Regional Chamber of Commerce
Tri-City Hispanic Chamber of Commerce
West Valley Chambers of Commerce Alliance:
Buckeye Valley Chamber of Commerce
Glendale Chamber of Commerce
Peoria Chamber of Commerce
Southwest Valley Chamber of Commerce
Surprise Regional Chamber of Commerce
Wickenburg Chamber of Commerce
Williams-Grand Canyon Chamber of Commerce
Yuma County Chamber of Commerce
NOTE: I am so pleased to see that both the Lake Havasu Area Chamber of Commerce and the Bullhead City Chamber of Commerce signed on in support of the bill. I wonder where the Kingman Chamber of Commerce stands.
April 11, 2008
The Honorable Janet Napolitano
Office of the Governor
1700 W. Washington Street
Phoenix, Arizona 85007
Dear Governor Napolitano:
As chambers of commerce across Arizona, we encourage you to sign HB 2220 to
permanently repeal the state equalization property tax. Signing this legislation would
prevent an approximately $250 million annual tax hike on businesses and residential
property owners during a time when Arizonans are experiencing economic strain.
The statewide business community has made permanent repeal of the state equalization
rate a top priority for the 2008 legislative session. Currently, commercial property owners in Arizona pay more than twice the amount in taxes that residential property owners pay. That places Arizona in the top highest for commercial property taxes and far above our neighboring states, thus harming our competitiveness.
The business community recognizes the severity of the state’s fiscal crisis. We remain
convinced; however, that the economy is best stimulated by private enterprise. Creating an environment in which businesses can flourish will allow companies to make additional investments that will advance our economy in a powerful way. During this economic crisis, we have an opportunity to put policies in place that position us for future success. Permanently repealing the statewide equalization rate is one important step in that direction.
Sincerely,
Ajo District Chamber of Commerce
Arizona Chamber of Commerce & Industry
Bullhead Area Chamber of Commerce
Benson-San Pedro Valley Chamber of Commerce
Camp Verde Chamber of Commerce
Chino Valley Area Chamber of Commerce
East Valley Chambers of Commerce Alliance:
Ahwatukee Foothills Chamber of Commerce
Apache Junction Chamber of Commerce
Chandler Chamber of Commerce
Gilbert Chamber of Commerce
Mesa Chamber of Commerce
Queen Creek Chamber of Commerce
Scottsdale Chamber of Commerce
Tempe Chamber of Commerce
Flagstaff Chamber of Commerce
Fountain Hills Chamber of Commerce
Lake Havasu Area Chamber of Commerce
Greater Phoenix Chamber of Commerce
Pinetop-Lakeside Chamber of Commerce
Prescott Chamber of Commerce
Prescott Valley Chamber of Commerce
Sedona Chamber of Commerce
Southern Arizona Chambers of Commerce Alliance:
Marana Chamber of Commerce
Nogales-Santa Cruz County Chamber of Commerce
Northern Pima County Chamber of Commerce
Rio Rico Chamber of Commerce
Greater Sierra Vista Area Chamber of Commerce
Tucson Gay, Lesbian, Bisexual, Transgendered Chamber of Commerce
Tucson Hispanic Chamber of Commerce
Tucson Metropolitan Chamber of Commerce
St. John’s Regional Chamber of Commerce
Tri-City Hispanic Chamber of Commerce
West Valley Chambers of Commerce Alliance:
Buckeye Valley Chamber of Commerce
Glendale Chamber of Commerce
Peoria Chamber of Commerce
Southwest Valley Chamber of Commerce
Surprise Regional Chamber of Commerce
Wickenburg Chamber of Commerce
Williams-Grand Canyon Chamber of Commerce
Yuma County Chamber of Commerce
Saturday, March 22, 2008
THE FISCAL NOTE
An Examination of Tax and Fiscal Matters by the Arizona Free Enterprise Club
Economic Stimulus: What to Embrace, What to Avoid
Economic Stimulus: What to Embrace, What to Avoid
Former U.S. Treasury economist Stephen Entin wrote: There is no such thing as a quick, temporary fiscal stimulus for the economy that does not lead to offsetting damage down the road. The only worthwhile tax changes that are beneficial in the short run are those that are also beneficial in the long run, ones that lead to a tax system with fewer obstacles to production.
There has been much discussion recently around designing an “economic stimulus” package for Arizona. It is easy to see why. Revenues for fiscal year 2008 will be up only 1%, and we’ll be lucky if 2009 is any better. What to do? Given the backdrop from Mr. Entin, here are some suggestions.
AVOID: Do not incur additional debt to “stimulate” construction activity. A plan being circulated by universities and contractors to borrow $1.4 billion to facilitate construction at Arizona’s three universities is not an economics stimulus package. Here’s why. If the state needs to issue additional debt to cover the activity of construction, it is simply borrowing the economic benefit created by the construction, leaving no additional benefit to the public, since they (we) own the debt. Arizona already faces a state and local debt burden of $32 billion, which is 16th highest in the country as a percentage of personal income, and the state has a $3 billion budget deficit. The added debt from this proposal will be extremely painful long-term.
AVOID: Do not advance a plan comprised of tax credits, new spending items, and new debt packages. In the face of Arizona’s huge budget deficit, a plan being discussed in the House to add new credits, grants, and spending would exacerbate the problem. With mounting debt and flat revenues, adding new subsidies and spending items will further choke off economic growth. Economic stimulus packages require an incentive effect. When tax rates are cut, for example, the incentive to earn the next dollar increases, since the return on investment is now greater. Tax credits, like rebates or subsidies, have no incentive effect, do not increase output or demand, and simply leave fewer taxpayers to pay for existing services.
SUPPORT: Make the 2006 state equalization tax cut permanent. Isn’t it ironic that proponents of a construction “stimulus package” are some of the same people who oppose making permanent the temporary elimination of the state equalization rate? There is no compelling reason to not make permanent a tax cut that lawmakers and the governor saw fit to provide in 2006. There is no negative impact to the state’s general fund next year by passing this permanent moratorium. Raising taxes $250 million in an economy that is already experiencing anemic growth, however, will further slow economic recovery. It will drive up expenses for everyone from latte drinkers to the construction industry (and everyone in between). Any economic stimulus plan that doesn’t include making this tax cut permanent isn’t a serious plan.
Given the state’s $3 billion budget deficit for 2008 and 2009 and the membership of the House and Senate, it is well-understood that asking for more than the permanent repeal of the state equalization tax is pushing the envelope. If, however, there is interest in other stimulus plans that will have both a short and long-term benefit to our economy and tax code, here are two:
SUPPORT: Reduce Arizona’s business personal property tax. Reducing the tax on business equipment, or allowing for immediate expensing, would spur new spending on plants and equipment, increase wages, increase jobs, and ultimately increase tax revenue to the state. A recent study completed for Idaho by Stephen Entin at the Institute for Research on the Economics of Taxation demonstrates the economic benefits of this rate cut.
SUPPORT: Reduce Arizona’s corporate income tax rate. Arizona’s tax on corporate income is 6.968% and is among the highest in the west (behind only California and New Mexico). Corporate taxes affect three things: 1) customers, through prices; 2) shareholders, through returns on invested capital; and 3) employees, through employment opportunities and wage growth. According to a new study by Fritz Foley and Mihir Desai of Harvard and James Hines of the Univ. of Michigan, workers share between 45 and 70 percent of the corporate tax burden. Reducing corporate taxes down to 4.76%, the average among western states, would instantly make Arizona more competitive in the region and across the country, increase after tax profits, increase employment opportunities, and increase wage growth. Reducing this tax to 4.54% would place the corporate income tax on equal footing with Arizona businesses and individuals who file income taxes in the state’s highest personal income tax bracket. In a fair tax system that encourages growth, neutrality is paramount.
Finally, the adage of “First, do no harm,” applies to this debate. Cutting taxes on capital would be the preferred tax changes to help Arizona’s economy both short and long-term. Short of that, however, doing nothing is far better than some of what’s being discussed at the Capitol.
###
The Arizona Free Enterprise Club is a 501(c)(4) non-profit organization whose mission is to advance policies that promote a strong and vibrant Arizona economy. The Club believes that entrepreneurs and private enterprise are the principle drivers of our economy. The Club lobbies Arizona lawmakers in support of policies that allow the market to flourish and vigorously opposes policies that hinder private industry. Visit us at www.azfec.org.
Monday, February 11, 2008
Arizona~Great Place for Business
According to Chief Executive Magazine, as a place to do business Arizona ranks 5th in the nation with Texas snagging the top spot. California finished dead last.
Tuesday, February 7, 2006
Taxpayer Appreciation and Investment Act
Top 10 Reasons to Support the TAIA
by Tom Jenney
Executive Director, Arizona Federation of Taxpayers
Testimony to House Ways and Means, February 6, 2006
10) The surplus is a clear sign that taxes are too high. Arizona has collected between $850 million and $1 billion in extra revenue over projections. The Taxpayer Appreciation and Investment Act would reduce personal and corporate income tax burdens for all Arizona taxpayers by about ten percent, providing much-needed tax relief for the working people and retirees of Arizona. The current package, which would be phased in over two years, will use up between a quarter and a fifth of the surplus.
9) Arizona already spends far too much. Arizona’s FY 2006 budget is $1.3 billion, or almost 18 percent, over what it would have been had the state limited its budget growth to the rate of population plus inflation. The ten-year average for the rate of population growth plus inflation in Arizona has been 4.8 percent. But the average growth in general fund spending has been 6.7 percent. Anecdotally, the year of greatest infamy was FY 2005, when the Governor and her Big Spender friends teamed up to increase total expenditures by 17.4 percent, or $1.2 billion. That was an outrageous increase. Most taxpayers haven’t seen anything like 17-percent annual increases in their incomes. Even the relatively restrained FY 2006 budget grew faster (7.2 percent) than the 12-year average growth in personal income of 6.8 percent and more than twice as fast as the increase of wages.
8) There is plenty of room in the surplus if the Big Spenders don’t blow it on new spending. Without new spending, we could have the full TAIA as it was introduced, and the Martin-Huffman property tax cut package.
7) There is even more room in the surplus if the Big Borrowers don’t blow it on repaying the raided funds and the K-12 rollover. If there’s any conflict between tax cuts and repaying the funds, cut taxes. The raided funds should be reimbursed out of the general fund, through savings in current programs. Otherwise, we’re setting up what the insurers call “moral hazard.” If the taxpayers bail out the Big Borrowers every time there’s a surplus, the Big Borrowers will never learn to control themselves.
6) This is a tiny tax cut, in the big scheme of things. In Figure 2, which uses simple trendlines, we can see how the TAIA compares with trendline revenue growth (6.4 percent) and with a proposal to eliminate the income tax over 20 years. Notice the difference between the mythical static trendlines (labeled “Stat”) and the one-third dynamic-scoring feedback for both taxes (labeled “Dyn”). AFT supports the 20-year phase-out of the income tax, because it would reduce revenue to a level consistent with budgets that are limited in growth to the rate of population plus inflation. But that’s another matter for another committee. The point here is how modest the TAIA is.
5) Arizona’s “three-legged stool” is unbalanced. The average combined burden of personal and corporate income taxes as a portion of state tax revenue for the past twelve years has been over 40 percent. By cutting ten percent off that 40 percent, we would get closer to reducing income taxes to one-third of state tax revenues.
4) Arizona should rely more heavily on consumption taxes. Here are four reasons:
A) Sales taxes are highly visible, which makes it harder for the government to raise them. Sales taxes are visible in every purchase we make, especially the larger ones. But many folks do not keep a close eye on their income taxes because they are withheld by their employers.
B) Consumption taxes are among the least damaging of taxes to economic growth (their marginal excess burden is lower than that for other taxes).
C) Reducing Arizona’s income taxes would not increase the volatility of general fund revenue sources—and it might even decrease that volatility. Arizona’s sales tax revenue has been much more stable than Arizona’s income revenue.
D) Sales taxes are not necessarily regressive. First, lifetime income mobility means that only a tiny fraction of persons is poor for longer than a few years. Most people are poor when they’re 22 years old, but those same people are not poor when they’re 42 years old.
3) Americans vote with their feet, and they vote for low taxes and strong business climates. According to Arizona Republic columnist Robert Robb, there are 19 states with lower personal income tax rates than Arizona, and the Tax Foundation lists ten states with lower personal income taxes in per-capita terms. [This just in: a new Tax and Budget Bulletin from the Cato Institute shows that 14 states have lower state and local tax burdens than Arizona, measured as a percent of income.] The TAIA would reduce Arizona’s highest rate to 4.64 percent, even with Colorado’s flat income tax rate. That’s not as good as the zero-percent rates of Nevada and Texas, but it’s a good start.
2) Arizona needs to dramatically reduce—if not abolish—its corporate income tax. It is especially important to reduce corporate income taxes as part of the overall package. Corporate income taxes are far and away the most volatile of Arizona’s large taxes. And they are perhaps the most destructive taxes on a dollar for dollar basis when it comes to retarding employment growth. As any economist will tell you, corporations do not pay taxes. Workers pay part of those taxes through lower wages, customers pay part of them through higher prices, and shareholders—including retirees—pay part through lower dividends.
(Link to Slivinski report: http://www.goldwaterinstitute.org/pdf/materials/292.pdf)
And the number one reason (drum roll, please)…
1) Income taxes are especially destructive because they are taxes on capital and taxes on savings. In the jargon of economics, they have very high marginal excess burdens. A dollar of revenue raised through income taxes destroys more economic activity than a dollar of revenue raised through almost any other kind of tax. As economist Richard Vedder explained in a survey of various state taxes, “The income tax is the champion of bad taxes, in terms of its destructive effect on people, prosperity, and their economic well-being.” Arizona’s destructive, growth-harming income taxes have not been cut in ten years. We are asking you to give us relief from these taxes. Do it now. Please.
--Tom Jenney is executive director of the Arizona Federation of Taxpayers. To view AFT’s 2005 Legislative Scorecard, visit www.aztaxpayers.org.
by Tom Jenney
Executive Director, Arizona Federation of Taxpayers
Testimony to House Ways and Means, February 6, 2006
10) The surplus is a clear sign that taxes are too high. Arizona has collected between $850 million and $1 billion in extra revenue over projections. The Taxpayer Appreciation and Investment Act would reduce personal and corporate income tax burdens for all Arizona taxpayers by about ten percent, providing much-needed tax relief for the working people and retirees of Arizona. The current package, which would be phased in over two years, will use up between a quarter and a fifth of the surplus.
9) Arizona already spends far too much. Arizona’s FY 2006 budget is $1.3 billion, or almost 18 percent, over what it would have been had the state limited its budget growth to the rate of population plus inflation. The ten-year average for the rate of population growth plus inflation in Arizona has been 4.8 percent. But the average growth in general fund spending has been 6.7 percent. Anecdotally, the year of greatest infamy was FY 2005, when the Governor and her Big Spender friends teamed up to increase total expenditures by 17.4 percent, or $1.2 billion. That was an outrageous increase. Most taxpayers haven’t seen anything like 17-percent annual increases in their incomes. Even the relatively restrained FY 2006 budget grew faster (7.2 percent) than the 12-year average growth in personal income of 6.8 percent and more than twice as fast as the increase of wages.
8) There is plenty of room in the surplus if the Big Spenders don’t blow it on new spending. Without new spending, we could have the full TAIA as it was introduced, and the Martin-Huffman property tax cut package.
7) There is even more room in the surplus if the Big Borrowers don’t blow it on repaying the raided funds and the K-12 rollover. If there’s any conflict between tax cuts and repaying the funds, cut taxes. The raided funds should be reimbursed out of the general fund, through savings in current programs. Otherwise, we’re setting up what the insurers call “moral hazard.” If the taxpayers bail out the Big Borrowers every time there’s a surplus, the Big Borrowers will never learn to control themselves.
6) This is a tiny tax cut, in the big scheme of things. In Figure 2, which uses simple trendlines, we can see how the TAIA compares with trendline revenue growth (6.4 percent) and with a proposal to eliminate the income tax over 20 years. Notice the difference between the mythical static trendlines (labeled “Stat”) and the one-third dynamic-scoring feedback for both taxes (labeled “Dyn”). AFT supports the 20-year phase-out of the income tax, because it would reduce revenue to a level consistent with budgets that are limited in growth to the rate of population plus inflation. But that’s another matter for another committee. The point here is how modest the TAIA is.
5) Arizona’s “three-legged stool” is unbalanced. The average combined burden of personal and corporate income taxes as a portion of state tax revenue for the past twelve years has been over 40 percent. By cutting ten percent off that 40 percent, we would get closer to reducing income taxes to one-third of state tax revenues.
4) Arizona should rely more heavily on consumption taxes. Here are four reasons:
A) Sales taxes are highly visible, which makes it harder for the government to raise them. Sales taxes are visible in every purchase we make, especially the larger ones. But many folks do not keep a close eye on their income taxes because they are withheld by their employers.
B) Consumption taxes are among the least damaging of taxes to economic growth (their marginal excess burden is lower than that for other taxes).
C) Reducing Arizona’s income taxes would not increase the volatility of general fund revenue sources—and it might even decrease that volatility. Arizona’s sales tax revenue has been much more stable than Arizona’s income revenue.
D) Sales taxes are not necessarily regressive. First, lifetime income mobility means that only a tiny fraction of persons is poor for longer than a few years. Most people are poor when they’re 22 years old, but those same people are not poor when they’re 42 years old.
3) Americans vote with their feet, and they vote for low taxes and strong business climates. According to Arizona Republic columnist Robert Robb, there are 19 states with lower personal income tax rates than Arizona, and the Tax Foundation lists ten states with lower personal income taxes in per-capita terms. [This just in: a new Tax and Budget Bulletin from the Cato Institute shows that 14 states have lower state and local tax burdens than Arizona, measured as a percent of income.] The TAIA would reduce Arizona’s highest rate to 4.64 percent, even with Colorado’s flat income tax rate. That’s not as good as the zero-percent rates of Nevada and Texas, but it’s a good start.
2) Arizona needs to dramatically reduce—if not abolish—its corporate income tax. It is especially important to reduce corporate income taxes as part of the overall package. Corporate income taxes are far and away the most volatile of Arizona’s large taxes. And they are perhaps the most destructive taxes on a dollar for dollar basis when it comes to retarding employment growth. As any economist will tell you, corporations do not pay taxes. Workers pay part of those taxes through lower wages, customers pay part of them through higher prices, and shareholders—including retirees—pay part through lower dividends.
(Link to Slivinski report: http://www.goldwaterinstitute.org/pdf/materials/292.pdf)
And the number one reason (drum roll, please)…
1) Income taxes are especially destructive because they are taxes on capital and taxes on savings. In the jargon of economics, they have very high marginal excess burdens. A dollar of revenue raised through income taxes destroys more economic activity than a dollar of revenue raised through almost any other kind of tax. As economist Richard Vedder explained in a survey of various state taxes, “The income tax is the champion of bad taxes, in terms of its destructive effect on people, prosperity, and their economic well-being.” Arizona’s destructive, growth-harming income taxes have not been cut in ten years. We are asking you to give us relief from these taxes. Do it now. Please.
--Tom Jenney is executive director of the Arizona Federation of Taxpayers. To view AFT’s 2005 Legislative Scorecard, visit www.aztaxpayers.org.
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