Byron Schlomach

Cut taxes and incentives to create jobs

Posted on October 17, 2009 | Type: Op-Ed | Author: Byron Schlomach
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There is no silver bullet that will transform Arizona's economy. And we're not in a competition with other states for a fixed number of "good" jobs. With unemployment at almost 10 percent, any job is a good job. We need more jobs, not to rearrange them.
So, the question should really be "How can companies and entrepreneurs be encouraged to invest, take risks and create jobs in Arizona?"
We already have many of the key ingredients in Arizona. But we do have room for improvement when it comes to encouraging business.
We have the ninth-lowest overall state and local tax burden, but our tax system is heavily weighted against business.
While residential-property taxes are relatively low, business-property taxes are fourth-highest in the nation. Our corporate-income tax rate is higher than almost every state in the West and is far higher than our personal-income tax rate.
The state sales-tax rate is low, but combined with local rates, it's 14th-highest in the nation. The governor's proposed sales-tax increase would push it to sixth-highest.
There's no question that a more business-friendly tax climate would help Arizona. If the state capital-gains tax was eliminated, it could help spark an investment boom. Income-tax rates should be reduced and flattened, which would reward hard work and risk-taking.
Our sales-tax rate needs to be reduced and the base broadened. Economic studies show these changes to our tax structure could help create more than 100,000 jobs.
We also need to get away from the mind-set of providing financial incentives to some businesses at the expense of others. We need to encourage all businesses, no matter the industry or type of job they bring.
Reducing government red tape would also create a job-friendlier climate. There are 30 licensing agencies at the state level and more licensing and permitting requirements at the local level. Much of this unnecessary regulation could be replaced with strict business-registration requirements and stronger fraud statutes.
State land policy is in the way, too. The State Land Department views success as getting the highest possible sum of money for the land it sells. So, the department hangs on to land until it reaches peak value.
Sounds like a smart move, but it creates an artificial land scarcity. Even though Arizona is the fifth-largest state in the country, most of the land is unlikely to ever be developed. Less than 18 percent of our land is privately owned. Combine that with what's owned by the State Land Department and Arizonans can rest assured that more than 40 percent of the state will be permanently wide open and natural as national parks, forests, tribal reservation and monuments. State trust land should be turned into productive, taxpaying property as quickly as possible.
The ability to move goods and services quickly is critical for many companies. But Phoenix and Tucson are some of the most congested cities in America.
Last session, the Legislature passed a law giving the Arizona Department of Transportation greater flexibility in building and paying for transportation infrastructure. ADOT should move swiftly to accommodate new development and let go of old transportation plans drawn up more than two decades ago.
Arizona has the framework we need to build and maintain economic prosperity. Making it easier for businesses to open their doors by reducing red tape, making it more profitable once they do by lowering taxes, and making it less time-consuming to move goods and services will pay dividends for generations.

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