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.
When engineers need to know the precise strength of a structure, they test it by adding tiny amounts of weight to an actual example or a model. Eventually, the structure fails. That last gram of weight--the one that makes the difference between an intact structure and a pile of rubble--is pretty significant, at least to the structure.
Despite a drop in residential real estate values, Arizona was among the top ten states in new, owner-occupied housing starts in 2007.
The construction industry has recently played a disproportionate role in Arizona's economy. As shown below, the construction industry's share of Arizona's economy was 50 percent bigger than construction's share of the U.S. economy in 2006.
If incoming lawmakers are going to hear from professors and pundits that the state's budget woes were caused by tax cuts and can be solved by tax hikes, then they ought to hear what actual taxpayers have to say about it as well.
The Arizona Free Enterprise Club, a pro-growth advocacy group, yesterday launched a "No New Taxes" petition in response to a growing discussion about a possible tax increase to balance the budget.
Harry Truman once said of tough decisions, "the buck stops here." Some Arizona lawmakers, though, appear to prefer that the buck stop "over there" as they consider referring a tax increase to the ballot rather than making the call themselves.
It's understandable. They're truly in a tough spot dealing with the massive fiscal irresponsibility of the Napolitano years. Now legislators who promised not to raise taxes are wavering and would like some cover.
Fair and equitable taxation is key to economic freedom and prosperity. Rules that favor a few special interests create an un-level playing field and put other businesses at a disadvantage.
The Government Property Lease Excise Tax (GPLET) is a case in point. It allows cities to take title to land and buildings and then lease them back to a private company for a nominal fee. These businesses then pay a fraction--often one tenth--of what their property taxes would otherwise be.
There are 21 states with lower corporate income tax rates than Arizona. Before you stop and say "but corporations should pay their fair share too" realize that corporations are only a middleman for Uncle Sam. Corporate taxes are paid by private individuals in the form of higher prices, lower returns on investments, and fewer jobs or less pay. Corporate taxes make Arizonans poorer and the state less competitive to attract new business investments and create new jobs.
It's easy to be confused when it comes to the state budget and the competing plans for closing next year's deficit.
On the one hand, Governor Brewer says there is a $4 billion deficit going into 2010. On the other hand, the Legislature says it's a $3 billion deficit. The Legislature's plan claims to trim the budget by $630 million, while the Governor claims $930 million in reductions. Yet, it's consistently reported in the news that the Legislature is cutting more than the Governor.
Every Presidential election year, candidates roll out tax plans aimed at wooing voters. This year, one of the debates is whether the Bush tax cuts should be made permanent.
The 2003 tax cuts simplified income tax brackets and slightly lowered rates. Consequently, the income taxes penalty on work, investment, and innovation was reduced. Eliminating these cuts would be poor economic policy, poor tax policy, and poor social policy.
If it's appropriate during this economic downturn for Governor Brewer to talk about taxes, it seems especially appropriate to talk about creating a tax system that encourages economic growth. This is the focus of a recent study released by the Goldwater Institute titled "How to Restructure Arizona's Tax Code: A Smarter, Flatter Tax Plan to Create Jobs."
Whether personal, organizational, or governmental, when dealing with finances, it's often a good idea to back up and look at the big picture. Accordingly, the figure below shows Arizona's General Fund expenditures and revenues from 1993 through 2008 (the latest year available).