Phoenix -- An Arizona State University study released Wednesday reports that Arizona's per capita tax burden is among the lowest in the nation. The study also reports that Arizona's total tax burden fell from 20th highest in the nation in 1972 to 37th in 2000.
But Stephen Slivinski, director of tax and budget studies at the Goldwater Institute, argues that the ASU report is misleading. "The per capita numbers published in the ASU study understate the tax burden on working Arizonans," Slivinski said.
According to Slivinski, per-capita figures can be misleading because they assume every person in the state pays taxes, including babies, senior citizens with property tax exemptions, and low-wage workers who don't file income tax returns every year. For Slivinski, a better barometer of the state and local tax burden is to measure that burden as a portion of overall state personal income.
Interestingly, the ASU study seems to agree with Slivinski about the desirability of using calculations based on personal income. On page 31, the study states, "Acknowledging differences in income levels (ability to pay) across states is important and makes this a more useful measure than the per capita tax burden."
By Slivinski's calculations, using the same Census data as the ASU study, Arizona had the 28th heaviest state and local tax burden in the nation in 2000, higher than competitor states Colorado (43rd) and Nevada (41st). "This is a significantly higher burden than the ASU study leads us to believe," Slivinski argues. Accordingly, Arizona's total tax burden as a percentage of state personal income fell from 15th highest in the nation in 1972 to 28th in 2000.
Slivinski also cites other studies showing Arizona tax burdens to be comparatively high in the region. For instance, the Utah State Tax Commission recently reported that the total business tax burden in Arizona as a percent of the overall economy, which includes the corporate income tax and the property tax, is higher than Colorado, Utah, and even California.
"Arizona's high tax burden should be a matter of great importance to policymakers," Slivinski concludes. "States with comparatively lower tax burdens attract business faster, spur more job creation and income growth, and have better overall economic health than states with comparatively higher tax burdens. The lighter the tax burden, the faster our economy will grow."
Press Contact: Stephen Slivinski (602) 462-5000.