Tax Reform

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.

<p>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. </p>

A recent court ruling could make direct tax incentives illegal. The time-honored tradition of brokering specialized tax deals to lure companies to locate or expand in one state over another could finally be coming to an end. "The economic war among the states," as Minneapolis Fed research director Art Rolnick describes it, could be over. 

"Desert tourism meccas" like Phoenix, Tucson, Palm Springs and Las Vegas may be "thriving," as an Arizona Republic headline suggests, but they are not all thriving alike.

In a detailed review of the four desert oases, the Republic covered nearly every eccentricity that defines the character of each destination, save one: taxes.

Revenue-hungry cities are always looking for taxes to levy. The latest is the so-called "fat tax," which is a tax on foods the government deems unhealthy. 

Detroit, recently ranked as the third fattest city in America by Men's Health magazine, is considering a new 2 percent tax on fast food restaurants like McDonald's to help it balance a $300 million budget gap.

Entrepreneurs are a hardy bunch. They may start their own businesses for a variety of reasons, weathering any number of adverse conditions to make it work. One thing they have in common is a willingness to take risks. Lots of people have good ideas, but how exactly do we encourage people to turn those ideas into businesses? One way is to cut taxes.

If you want to know why a Taxpayer Bill of Rights (TABOR) is a good idea for Arizona, see this Goldwater Institute report released yesterday. In it, you'll find out how TABOR maintains a fiscally responsible limit on the state budget, could have put $4.5 billion back in Arizonans pockets, creates predictable and sustainable budget projections, and shifts power away from budget-siphoning special interests towards voters.

Arizona governor Janet Napolitano headed to California yesterday to sell Arizona as a great place to do business.  Top on her list was convincing Intel that a number of potential tax changes will be advantageous to that company as it considers expanding its Arizona operations.

Unfortunately, targeted tax breaks are neither a sure thing nor are they necessarily a bright idea.  The tax incentives she's touting, including industry-specific tax breaks and condition-specific R&D tax credits, have not yet been considered by the legislature, let alone approved. 

The flat income tax proposal authored by state Representative Steve Court (HB 2636) to replace the current Arizona income tax altogether has started a much needed discussion about tax policy.

The proposal rests on an important insight: the need to have a broad base of taxation with a low, single tax rate that avoids distorting the economy by exempting some activities, but not others from taxation.

Under the state constitution, Arizona’s elected officials have the responsibility to protect individual rights and promote limited government. The Goldwater Institute presents 100 Ideas for 100 Days so policymakers at every level of government can enter 2011 with a bundle of suggestions to increase the state’s prosperity and expand freedom.

EXECUTIVE SUMMARY

The annual Goldwater Institute Legislative Report Card scores Arizona lawmakers on their support of principles of limited constitutional government. Each piece of legislation is assessed in four categories for whether it expands or contracts liberty.

Education bills that give parents more choice, make public schools more accountable, expand the teaching pool through relaxed certification requirements, and encourage local control are scored a +1.

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