Entering the second week of forced closures and social distancing to mitigate the spread of Coronavirus, Arizona small business owners and employers are doing their best to cope with the economic shutdown. It appears most in Arizona are following the restrictions enacted by State and local government and, in some cases, sacrificing their lively hoods in the hopes that this will stop the spread and save lives.
Unfortunately, many employers and employees will not survive much longer under the current shutdown. Over 3.3 Million people have already filed for unemployment, a catastrophic figure that will continue to rise over the next couple of weeks. We are reaching the point that a serious discussion needs to occur on how and when we reopen our economy in a safe and practical way.
Despite what some have suggested, having a discussion on the dangers of a long-term economic shutdown is not immoral or some ploy by selfish corporations or the rich wanting people to die in the pursuit of money. The truth needs to be said: if a shutdown continues much longer the US economy will descend into a depression that will threaten every facet of our lives and bring immeasurable pain, suffering and death to countless Americans.
The damage will be permanent and
it will affect everyone. Thousands of businesses will be gone. Tens of Millions
unemployed, many of which that were living paycheck to paycheck. Life savings
wiped out. Supply chain disruptions and
rationing of basic goods and essential services. Widespread hunger and
homelessness. Increases in suicide
and social disorder as local and state governments buckle from a collapsing tax
And anyone that thinks that the Federal
government can step in and provide for the masses during a shutdown, think
again. For some perspective, Congress is close to
passing a $6 Trillion Dollar Coronavirus aid package, $4 Trillion
of which will be liquidity provided by the Federal Reserve. This is an obscene
amount of money, much larger than any spending bill passed in US history. Yet
that amount equals roughly
only 3 Months of US GDP. Suffice to say, if our economy remains in hibernation
for too long it will be the Federal Government in need of a bailout.
Some of our elected leaders appear to understand this, despite the insane pressure from various groups to ignore all economic consequences for their actions. Governor Ducey has taken reasonable steps to try to balance concerns between mitigating the epidemic and our economic survival. His executive order provided broad guidelines to allow some businesses to safely operate while working with Hospitals and medical professionals to ramp up for any potential outbreaks. His order also stopped local governments from setting up their own lockdown restrictions, a much needed intervention to prevent a patchwork of different social distancing standards throughout the state that would have been impossible for businesses to comply with.
Unfortunately, some politicians are
using the crisis to sow panic and fear throughout the state for political
purposes. The biggest offender is Senator Kyrsten Sinema. Earlier this week she
partnered with Chuck Schumer and Nancy Pelosi to block the Coronavirus relief
package in an attempt
to lard it up with unrelated liberal policies. Now there are
reports that she is holding
discussions with business leaders in the state and providing
them with apocalyptic scenarios about having to accept another great
Putting our country into a depression
is no way to handle any epidemic and will only make the situation worse. South
Korea has contained the outbreak and they did this without
any widespread lockdown. There is no reason that the US cannot do
President Trump is right. We need
thinking about when we start working again. A goal of Easter may be
ambitious, but that should be a date political leaders in Arizona strive for to
start opening up our economy. Arizona will prevail in this fight, but only if
we ensure that we don’t destroy the economy in the process.
Amid the chaos of the Covid19
pandemic, Arizona lawmakers have proceeded with conducting the state’s
business. Monday March 23rd,
the legislature officially passed an
$11.8 Billion budget as well as a targeted Coronavirus relief
package. They then adjourned until April
13th or until the President of the Senate and Speaker of the House
call them back to reconvene.
The “skinny budget” that passed
was a simple baseline budget with a small amount of growth baked into the
formulas in order to keep agencies operational.
There were no ornaments on this Christmas tree.
In fact, though it seems like everyday
a new bit of disheartening news breaks, the state’s unusually trim budget is
definitely a silver lining. This is
likely the most conservative budget passed by the legislature in a decade. Considering all the big government bills, special
interest tax credit programs, and local pork
projects that were moving through the system and were likely to be
packed into the budget – passing a skinny budget was a win for taxpayers.
In addition to finalizing the
budget, lawmakers also passed two bills to address specific issues with the
Coronavirus – closure of schools and unemployment benefits. The bill related to public
school closures included provisions to not require schools to
make up for normally required days, extending state-wide assessment deadlines
and requiring districts to continue to pay their employees through the crisis. The bill for unemployment
benefits was an emergency measure that allowed the state to establish
alternative unemployment insurance benefits for people specifically impacted by
The budget and these bills now
sit on the Governor’s desk and await his signature.
Meanwhile, the executive branch
has been coordinating with the Department of Health on policies to curb the
impacts of COVID-19. Here are some of the steps their
administration has taken sequentially:
– Governor issued Executive order
declaring a State of Emergency. The order
allowed ADHS to waive licensing requirements for healthcare officials, allowed
the state to access emergency funds and gave the state emergency procurement
authority. It also required insurance
providers to cover out of network providers for tests and treatment of
In conjunction with Kathy Hoffman the Superintendent of Public Instruction,
ordered the closure of all schools.
Issued new guidelines for restaurants, child care providers and nursing homes
for social distancing and recommended gatherings of more than 10 people be
cancelled or delayed.
Activated the National Guard to assist grocery stores and food banks.
Order expanding access to unemployment benefits to individuals
impacted by COVID-19. The Governor’s
office also extended the filing deadline for state income taxes to July 15th,
mirroring the extension at the federal level.
Extended the closure of all schools by another 2 weeks; through April 10th.
Order issued to preempt cities and towns ability to supersede the
Governor’s emergency protocols including closures of businesses. He also defined which entities and businesses
and government services would be considered “essential.”
– Executive Order
delaying evictions for renters specifically impacted by COVID-19.
telemedicine services and prohibited regulatory boards from
requiring in-person examinations prior to the issuance of prescriptions.
Many of the executive orders
issued represent vast deregulatory strides.
Issues that have been highly contested for years such as expansion of
telemedicine, allowing prescriptions to be issued without an in-person
examination, and the waiving of licensure for medical professionals outside of
the state are being swiftly implemented out of necessity. Despite the unfortunate circumstances that
have precipitated these changes, they are a benefit to the state and to
Arizonans. These regulatory roll backs
and a lean state budget are a few silver linings for which we can all be
Over the weekend Republicans and
Democrats in Washington were working toward an agreement on a Coronavirus
relief package to assist businesses and employees being hammered by the
economic shutdown. A bipartisan deal was close until at the last second Democrats
to block the legislation, followed by an announcement by House Speaker
Nancy Pelosi that she would be drafting her own package.
The reason for the opposition?
Democrats are trying to use the bill to pass their wish
list of radical reforms! Some of the demands from democrats include:
Mandated Climate Change Studies
Increased fuel emission standards for airlines
Diversity reporting for corporate boards
Expanded collective bargaining power for unions
Same day voter registration
All mail-in elections
Elimination of all debt at the post office
Retirement plans for community newspaper employees
Study on all climate change mitigation efforts by all businesses benefiting from the legislation
Looking at this absurd list of
demands from Pelosi and Schumer brings clarity to what House Majority Whip Rep.
James Clybern meant when
he said that the Coronavirus crisis, “is a tremendous opportunity to
restructure things to fit our vision.”
They don’t care that none of
these items help patients, hospitals or the regular person currently sitting at
home waiting for this to end. They see an opportunity to exploit the process
and will try to bully Trump and Republicans into accepting their demands.
Make no mistake, every democrat sees this as a political opportunity to implement the Bernie Sanders plan, including Senator Kyrsten Sinema. Earlier this week she joined the democrats in blocking the Coronavirus relief package and then tried to spin it to be about providing enough help to small business and the health care community. How exactly does eliminating the debt at the Post Office and mandated diversity on corporate boards keep small businesses open? How does implementing the Green New Deal help hospitals fight Coronavirus?
It was a shameful display and
exposed every Democrat in Washington. They may talk about the need to fight the
current crisis, but when it came time to act it turns out that expanding
union power clout is more important to them. Even Sen. Sinema was seduced
by this power grab and went along.
Republicans have rightfully excoriated
Democrats over their antics, and so far have not given in to their demands.
They must hold firm—the public will understand why they are rejecting the
liberal wish list and will hold them accountable. Not even the compliant media
will be able to save them—although they will
As usual, bad ideas at the legislature just
don’t seem to die. Lawmakers are considering legislation to expand the “Angel
Investment” Tax Credit Program, a scheme that would dole out millions to
wealthy investors to subsidize their risky venture capital investments in
Arizona. Even worse, these same investors and businesses will also be
exempt from paying any capital gains tax to the state.
Under the bill, employees at the Arizona Commerce Authority will select “qualified” investors (I.E. politically connected millionaires with relationships with the Arizona Commerce Authority) for a generous tax credit to hedge their potential losses in risky new start-up companies. And if the business venture does pan out, the investor can then sell and pay zero to the state in capital gains. Great deal for them, a bad deal for every other taxpayer in the state.
The argument made in defense of the program is that Arizona
needs the tax credit to attract more venture capital to Arizona, otherwise good
ideas won’t locate here. This of course is not true. Good business
ideas will attract capital because investors stand to gain millions of dollars
in profit to do so.
And if a business is unable to
attract the start-up capital it needs without the credit, it means the venture
is extremely risky and should be avoided. After all, we don’t stand to
benefit monetarily from the businesses’ success, why should we therefore
shoulder the losses of its failures? And if a business was to attract the
necessary start-up capital regardless of
the tax credit, why are taxpayers subsidizing a business activity which would
have occurred anyway?
Venture capital investing is inherently risky. Successful
speculations have the potential to enrich their investors immensely. The
Arizona Commerce Authority is not better equipped than the free market to
facilitate these types of transactions or properly gauge risk.
Taxpayers should not be in the business of subsidizing risky
venture capital investments by wealthy investors that stand to reap windfall
tax benefits. It’s a program that picks winners and losers among taxpayers,
among venture capital investors, and among aspiring entrepreneurs.
the “InvestInEd” measure, the initiative purported to target this massive tax
hike on the only the wealthiest of Arizonans. Ultimately proponent’s efforts
were tanked when the Arizona
Supreme Court ruled the ballot language was misleading and
are back. And this time they have
redrafted their measure to try to head off the arguments used in 2018 to defeat
of nearly doubling the tax rate at the top of Arizona’s income tax brackets, the new
measure imposes a 3.5 percent surcharge on taxable income above
$250,000 for a single person or $500,000 for married persons. The surcharge
would create a new top rate of 9 percent, giving Arizona one of the highest
income tax rates in the nation. And this won’t be a tax just on the
wealthy—small businesses that file as LLC and S-Corps would be affected by this
measure as well.
estimate $940 Million to be generated from the initiative, making it the
largest income tax increase in State history. That of course assumes that the
measure generates as much revenue as proponents anticipate. The truth is, their figures are not derived
from a dynamic model that takes into account market and behavior changes as a
result of the new tax scheme. The reality is that investors, job creators and
more affluent Arizona taxpayers won’t stick around long enough to pay this
ridiculous surcharge. They will find a
way to not pay it.
for Arizona’s economy and future, InvestInEd proponents face much stiffer
political headwinds than they had in 2018.
Far from the sea of
red storming the capitol two years ago which then fueled the
grassroots and volunteer efforts for InvestInEd 1.0, this year’s proposal was
launched with tepid
participation of around 100 people. And major political
figures, such as Governor Doug Ducey, remain staunchly opposed.
doesn’t help that recent K-12 funding increases have undermined any serious
discussion on the need of a tax increase. Far from the teacher pay narratives
spun by the unions, Arizona
actually ranks 16th in the country with the average teacher
making over $55,000 a year. The salary
increases are due to the legislature and Governor Ducey pumping over $1Billion
in new dollars into the K-12 system.
total synergy among the education crowd AND a generous injection of National
Education Association dollars to support the 2020 InvestInEd proposal,
prospects for it qualifying for the ballot, let alone passing, are anything but