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Fiscal Note: Rental Cars - The New Tobacco
Wednesday, 17 February 2010

Forget for a moment whether the deal to keep the Cubs in Mesa is constitutional.
Given the sharp eye of Goldwater Institute’s Clint Bolick and the recent CityNorth
court decision he forced, it’s perplexing that deals like this continue to surface.
That aside, Wednesday’s Commerce Committee hearing was an illustrative yet
unconvincing display in favor of raising taxes on rental car companies and
slapping a surcharge on Cactus League tickets to finance a new Mesa stadium for
the Cubs.

Whether the Cubs need a new stadium is not the focus of this Fiscal Note.
Whether one industry should be compelled to subsidize it against their wishes is.
Rental cars are beginning to rival tobacco when it comes to public finance.
Because so few people smoke, politicians don’t fear raising tobacco taxes. It is
largely viewed as someone else’s tax to pay and an easy revenue source, since
either spending cuts or a tax increase on the general public takes a bit more
courage. But it’s usually bad public policy.

Rental cars seem to be the new piñata.

Proponents of the rental car tax believe that tourists will mostly foot the bill, so
socking it to them—like smokers—won’t irritate most voters. The facts are
stubborn, however. National studies show that upwards of 50 percent of rentals
are from in-state residents. A rental car executive testified at the hearing that it’s
closer to 60 percent of Arizona residents who rent cars, eroding the argument
that out-of-towners will carry the burden of the tax.

This bill mandates a tax on just one industry, but proponents argue that they’ll
stand to benefit since tourists will come to watch the Cubs and have to rent cars.
That argument isn’t working as the industry uniformly opposes the bill.

Lawmakers know best

Asked why rental car agencies should subsidize any part of a new stadium, one
lawmaker said that it’s such a small amount “no one will notice.” (Pssst, the
rental car companies noticed.)

Asked if the proposed surcharge on ticket prices was too steep, another
lawmaker said that the amount is “not much of a burden.”

According to whom?

Rental car companies set up shop to rent cars and make a profit. They should not
be compelled by the state to subsidize every activity they might benefit from.
What’s next, taxing them to keep state parks and rest areas open?

Taxes should be neutral, broad based, transparent, and as low as possible. The
Cubs tax violates all of these principles.
Last Updated ( Thursday, 04 March 2010 )
 
Fiscal Note: Corporate Income Tax
Monday, 23 November 2009

As the $4 billion structural deficit continues to confound state policymakers and dominate policy discussions, the Arizona Free Enterprise Club encourages at least an equal emphasis on policies that will help the Arizona economy begin to rebound.  Our latest Fiscal Note reiterates the Club’s push for a reduction in the state’s corporate income tax rate.
 
Fiscal Note: Payday Loans
Wednesday, 18 November 2009
The current payday loan statute will sunset in July 2010 effectively killing the industry if action is not taken this legislative session.  The payday loan industry will seek to continue the framework under which they operate, with some additional regulations and modifications.  The Arizona Free Enterprise Club supports this effort.  Read our Fiscal Note for more information.
Last Updated ( Tuesday, 24 November 2009 )
 
Tax Reform Presentation for the Mesa Chamber of Commerce
Thursday, 22 October 2009
The Mesa Chamber of Commerce hosted a tax reform panel on Wednesday, October 21, featuring Speaker of the House Kirk Adams, Steve Voeller, president of the Arizona Free Enterprise Club, and Kevin McCarthy, president of the Arizona Tax Research Association.  Click here to view Steve Voeller's presentation.
Last Updated ( Thursday, 22 October 2009 )
 
Repealing the Death Tax Could Boost Economy
Wednesday, 16 September 2009
The American Family Business Foundation (AFBF) recently released a study on the economic impact of the death tax:  Changing Views of the Estate Tax: Implications for Legislative Options.  The study, conducted by economist Dr. Douglas Holtz-Eakin, a former Director of the Congressional Budget Office, explains how the death tax reduces overall employment in the U.S. by 1.5 million jobs.

The death tax is particularly bad for the Arizona economy.  According to the nonpartisan Tax Foundation, Arizona residents paid $393 million in federal estate taxes in 2007, ranking 19th highest in per capita collections.  Using the findings of the AFBF study, the Arizona Free Enterprise Club estimates the permanent repeal of the death tax could result in 28,000 new jobs in Arizona. 

The death tax is the most hated tax in America, with 67% supporting its full repeal, according to a recent Harris Interactive poll. 

To read the AFBF study click here .
Last Updated ( Wednesday, 16 September 2009 )
 
Why a corporate income tax cut now?
Friday, 07 August 2009

In February the Club released a position paper outlining the benefits of a corporate income tax .  The corresponding bill (SB1324) would have lowered the corporate income tax rate from 6.968% to the top personal income rate of 4.54%, a 35% decrease.  The tax package (HB2015) in the current budget deal would reduce the corporate income tax rate to 4.86%, a 30% decrease.  The Club remains dedicated to this tax cut because it will do more for long-term economic development and job creation than any of the tax credits and industrial policies passed in recent years.  It would immediately signal to corporations both in and out of Arizona that a more business friendly and competitive tax structure is imminent.

 

As it relates to jobs and wages, our friends from the Tax Foundation just released a new study: State Corporate Income Taxes Hurt Workers’ Wages:

A new Tax Foundation report shows that the burden of corporate income taxes is likely borne by workers—not investors. This finding throws more cold water on the notion that higher corporate income taxes would provide greater progressivity in the tax system.  In Tax Foundation Special Report No. 169, "The Corporate Income Tax and Workers' Wages: New Evidence from the 50 States," Senior Fellow Robert Carroll, Ph.D., finds that states with high corporate income taxes have likely depressed their workers' wages over the long term, while states with low corporate taxes have boosted worker productivity and real wages.

Read the Special Report .

 
 
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Arizona's total authorized spending for fiscal year 2010 will be approximately $29 billion. That means that Arizona spends taxpayer money at a rate of $920 a second.


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The mission of the Arizona Free Enterprise Club is to advance policies
that promote a strong and vibrant Arizona economy.