Americans are a hard-working bunch and should keep what they earn. Our ideas for tax reform reduce the burden of taxes while ensuring governments have the resources to focus on core responsibilities.
The race to attract and retain jobs is on, and economic development organizations should take note. Targeted tax incentives and credits are little more than child's play. Like Arizona's 10 percent across-the-board income tax cut earlier this year, the real action is in broad-based tax relief. But as other states join the fray, Arizona's cut is only a baby step.
Policymakers have a wide variety of opinions on just about every issue. But there is one thing they all seem to agree on--cutting taxes attracts business.
For example, policymakers agree that a surefire way to spur economic growth is through tax cuts and credits. Just look to the Arizona Enterprise Zone program for proof, it was continued this year with near unanimous legislative support. It continues income and property tax relief within the zones to improve "the economies of areas in the state with high poverty and unemployment rates."
For those concerned about Arizona's economic health, there is no more important area for agreement than low tax rates. For as Chief Justice John Marshall once said, "The power to tax involves the power to destroy."
Tax rates often play a key role in determining where individuals and businesses locate. There is a consistent migration of individuals and businesses from high tax areas (the Northeast) to lower tax areas (South and Southwest).
A few weeks ago, officials shut down Loop 202 in Mesa to film a crash scene for the upcoming movie, The Kingdom. The flaming cars were the first tangible results of Arizona's new motion picture tax incentive program which took effect this spring.
Qualifying film production companies are eligible for a corporate income tax credit equal to 10-20 percent of in-state production costs. They are also 100 percent exempt from state and county sales taxes.
Every time I fill up my Toyota Camry, I pay more than $3.00 in state gas tax. Through this tax, the state will collect over $525 million in 2007 to finance highway construction and maintenance. This year, the state will kick in an additional $245 million from the General Fund to pay for accelerated construction. Highways, in short, are not "free"ways.
Who can forget Augustus Gloop, the robust tike whose voracious appetite led to his demise in the chocolate river. So goes one moral from this timeless story: Gluttony is bad.
Likewise with the Arizona budget. Government programs are devouring every dime in sight. Arizona state government is consuming half-again as many resources as it was ten years ago, growing almost three times faster than per capita personal income. Now, the Governor and legislature propose increasing spending by another 23 and 19 percent respectively over last year.
Arizona Free Enterprise Club responds to Mayor Gordon
Dear Mayor Gordon:
Your comments in the Arizona Republic (May 2) about the effect of the proposed income tax cut on Phoenix's distribution of Urban Revenue Sharing (URS) are misleading.
Columbia University President Lee Bollinger kicked up a controversy by arguing for revamping the school’s graduate journalism program curriculum. Bollinger argued that the news media is a vital democratic institution and that journalists require a more rigorous academic education in order to do their job responsibly. Occasionally I read articles which make me think that folks like Bollinger are on to something.
The West is known as a low-tax, business friendly part of the country, and Arizona is no exception. But the truth is four neighboring states have lower corporate income taxes than Arizona: Colorado, Utah, Texas and Nevada.
Arizona’s nearly seven percent corporate income tax rate ranks 29th lowest in the country; which is nice, but no cause for celebration when considering our neighbors. Colorado, Utah and Texas have corporate income tax rates at five percent or lower and Nevada doesn’t have one at all.
Arizonans who pay federal income tax spend 73 days on average working for Washington. Then, they spend another 20 to 40 hours filling out tax forms. Ahh, for the good old days.
Abraham Lincoln imposed the country’s first income tax in 1862 to finance the civil war. After the tax expired numerous attempts were made to reinstate it, all of which were rebuffed. In 1895 the U.S. Supreme Court found the income tax unconstitutional. This Court decision led to the Constitution’s Sixteenth Amendment, the legalization of government directly taking income, in 1913.