Target Practice

Posted on January 24, 2006
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Governor Napolitano’s “targeted tax relief” plan is targeted indeed’"it rewards a few groups, on a few days, and only for certain behaviors.

Who will get touched by the targeted tax-cut wand this year?

Hybrid-fuel car owners stand to benefit; the better the mileage, the bigger the tax cut. But, with a sticker price well over $20,000 for most hybrids, this certainly won’t provide relief for lower income Arizonans.  Nor will it help a family who needs a new minivan or a construction worker who buys a new truck.

Next up is a three day sales tax holiday to help pay for back-to-school supplies. Clearly, this helps families by making pencils and backpacks cheaper. But, what constitutes school supplies for one child may be a new tuba for band, or new soccer cleats for another.  Assuming at least one parent works, wouldn’t it be simpler to cut income tax rates so parents have more take home pay to buy whatever their child needs?  Further, if three days are good, wouldn’t a month be better?

Finally, Napolitano is proposing a tax credit for small businesses with two to 24 employees that provide health insurance. Yet there are over 320,000 businesses in Arizona with no employees besides the owner, and over 50,000 with more than 24. Health care costs are rising for everyone, not just businesses with two to 24 employees.   

These policies may be good politics, but they are bad policy. The government shouldn’t function like a fairy godmother, bestowing gifts upon their favorite children. Policymakers need to put away their magic wands and get real: all workers need tax-cuts.

Key Links:

-Goldwater Institute: “Three Paths to Prosperity: An Examination of Proposals for Fundamental Tax Reform”
-United States Congress Joint Economic Committee: “The Inefficiency of Targeted Tax Policies”
-Office of the Governor: “Executive Budget Fiscal Year 2007”

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