Governor Napolitano's office has warned there might not be enough revenue to cut taxes this year. That is, as Barry Goldwater might have put it, Poppycock! There is plenty of revenue. The problem is that everyone at the capitol wants to spend it all.
Total revenue for fiscal year 2007 was $9.5 billion. Sales and individual taxes made up 90 percent of that amount. The corporate income tax represented nine percent, or just over $900 million.
The corporate income tax could have been eliminated if the state had simply limited spending in 2007 to what it spent the year before. In fiscal year 2006, Arizona's General Fund budget was $8.5 billion or $1 billion less than total revenue in 2007. That difference is more than enough to eliminate this anti-competitive tax.
Why the corporate income tax? Twenty-one states have lower corporate income tax rates than Arizonas 6.97 percent. Regional competitors Nevada, Wyoming and Texas have no corporate income tax. Colorado, Utah, Florida, and Georgia are all at 6 percent or below. When trying to maintain regional competitiveness and increase national competitiveness, these rates matter.
Simply controlling spending can free up ample money for tax cuts, and keep our economy growing.
Noah Clarke is an economist with the Goldwater Institute.
-Goldwater Institute: Three Paths to Prosperity: An Examination of Proposals for Fundamental Tax Reform
-Thomas Sowell: Low Taxes do What?
-Joint Legislative Budget Committee: General Fund Operating Budget Spending - Fiscal Years 1979-2007