by admin | Mar 24, 2020 | Misc, News and Updates
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
moved
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
try.
by admin | Mar 11, 2020 | Corporate Welfare, News and Updates
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.
by admin | Mar 3, 2020 | News and Updates, Tax
In an
attempt to capitalize on the Red4ED strikes in 2018, education advocates and
teacher unions organized efforts to put a $700
Million income tax increase on the ballot.
Dubbed
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
confusing.
But they
are back. And this time they have
redrafted their measure to try to head off the arguments used in 2018 to defeat
the proposal.
Instead
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.
Proponents
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.
Luckily
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.
It also
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.
Furthermore,
the state does not need to raise additional taxes to continue to invest
in education. Arizona has an over
$1Billion surplus (as they did in 2019) and have in fact already
raised several taxes. Given the
tremendous gains our
K-12 system is making in academic benchmarks, Arizona citizens should
be more than skeptical of proposals to hike taxes at this point.
Without
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
certain.
by admin | Feb 26, 2020 | Free Market, News and Updates
In 2018 Arizona
Public Service spent over $30 million dollars fighting liberal billionaire (and
Democrat Presidential Candidate) Tom Steyer and his effort to impose
California-style green energy mandates on Arizona ratepayers.
They weren’t the only ones
fighting against this radical measure. Organizations and individuals from
around the state banded together to fight Prop 127 and the permanent economic
harm it would inflict on homeowners and business owners.
After learning about how Steyer’s
renewable energy plan would lead to skyrocketing utility bills, voters
overwhelmingly rejected
Proposition 127 by a 2 to 1 margin (32-68 percent). The message was
clear: RATEPAYERS DO NOT WANT ENERGY MANDATES.
Fewer than 18 months later it
appears that both Steyer and APS have decided to ignore the will of the voters.
Late last month APS announced they are rolling out, with full
support of the environmental left and Tom Steyer, the “Arizona
Green New Deal”. Under their proposal, APS will shift to 100 percent carbon
free generation by 2050, regardless of cost, reliability or whether their
customers support the concept.
Just to explain how radical this
plan is, the Arizona Green New Deal is more extreme than the 25 percent
renewable energy mandate Steyer pitched to voters in 2018. Only this time
voters won’t get an opportunity to reject the deal since APS can implement it unilaterally
and their monopoly rate base has nowhere else to go.
APS will attempt to explain their
flip flop by saying that this is only “aspirational” and that it helps protect
and promote nuclear power in Arizona. This is utter nonsense. Make no
mistake: unless this plan is stopped it will be adopted by the Arizona
Corporation Commission and will become a mandate.
And if the Palo Verde Generating
Station is really under threat from the likes of Tom Steyer or other
anti-nuclear environmentalists, then the better approach is to pass and promote
laws to preserve the energy source. The fix should NEVER BE to saddle their
captive ratepayers with all the risk of their Green New Deal, especially given
the lousy
track record of government selecting which
companies/industries in the renewable energy industry to support.
While ratepayers will be saddled
with no options and escalating utility bills, APS will be immune from the
negative impacts. As a regulated corporate utility, they are constitutionally
guaranteed a rate of return, which will be provided by the Arizona Corporation
Commission in generous profitable increments over the next 30 years.
If this is the path that existing
monopoly utility providers want to pursue, then ratepayers deserve the right to
opt out. For years there has been discussions on enacting utility
competition in Arizona and giving customers the option to
choose their own energy provider. Now is the time to press forward on this
issue. If APS wants to impose higher costs through their Green New Deal, then
they should be required to compete with other utilities offering alternative
plans.
Additionally, ratepayers need to
have legal protections to ensure that cheap, reliable energy takes precedent
over unpopular partisan politics. Since the current structure is not putting
ratepayers first, systemic reforms are necessary.
The Club urges both the
Corporation Commission and the Legislature to honor the will of the voters and
take action against the Arizona Green New Deal. Don’t let bullies like Tom
Steyer dictate energy policy in our state.
by admin | Feb 13, 2020 | Uncategorized
Last week the Arizona Free Enterprise Club
released our report detailing the poor performance of the Low Income Housing
Tax Credit Program (full report can be viewed HERE).
The information in the study should provide more than enough evidence for
lawmakers to reject HB 2732, legislation that would give away millions in subsidies
to investors and developers to fund a housing program rampant with fraud.
The reports author, Everett Stamm, has
followed up by writing an op-ed explaining why Arizona would be better served
to look at other solutions to address housing affordability rather than funding
a risky program with a track record of failure.
Lack
of Oversight and Spiraling Costs Hinder Low Income Housing Tax Credit Program
Americans are increasingly unable to cope
with the ever-increasing costs of housing. Rising costs in Arizona,
and across our nation,
should be of interest to policymakers. One program that’s being used is the
Low-Income Housing Tax Credit program. This program has been one of the largest
suppliers of affordable housing throughout the past 30 years, but has had
consistent struggles with increasing operational costs and questions over
accountability and transparency. I’ve published a
report with the Arizona Free Enterprise Club analyzing these concerns and
recommending solutions for policymakers to consider.
What is the Low-Income Housing Tax
Credit Program?
The Low-Income Housing Tax Credit (LIHTC)
program operates by offering federal tax credits to developers who construct
new, rehabilitated, or refinanced rental housing that meets affordability
requirements set by the U.S. Department of Housing and Urban Development. This
program uses federal tax credits but is administered by the relevant State
Housing Finance Authority. In Arizona, this would be the Arizona Department
of Housing.
Each state is granted the larger of $3.1
million or $2.70 per capita to distribute in a competitive allocation process.
The competitive allocation process awards projects tax credits to new
construction at approximately 70% of the cost of the project. There is also a
non-competitive process for rehabilitation projects already being financed
through federal bonds, awarding tax credits at approximately 30% of the project
cost. Only the 70% tax credits come out of the amount allocated to the
state.
Rising Construction Costs
Looking through national level data, we
found the LIHTC program had around a 10% year-over-year cost increase in the
amount of tax credits required to build one unit of affordable housing
(adjusted for inflation). Additionally, our report investigates compares LIHTC-financed
housing to equivalent privately financed housing in Arizona and Washington
state. We found housing construction financed with the LIHTC program correlates
with significant increases in cost per square foot in Washington and increases
in both cost per square foot and cost per unit in Arizona.
Lack of Oversight and Accountability
The LIHTC program provides a considerable
amount of discretion to State Housing Finance Authorities during the
competitive allocation process. The United States Government Accountability
Office (GAO) published a report
in 2018 summarizing these concerns. Their report criticized the lack of
standardization, and sometimes complete absence, of cost management measures
set by state HFAs and the high
risk of fraud due to lack of oversight. Notably, the report found only 2
out of 57 LIHTC allocating agencies had limits on the development cost per unit
and only 6 out of 57 LIHTC allocating agencies limited the amount of tax
credits that could be issued per unit in a project. Additionally, just last year
a group of lenders entered into a settlement with the US Department of Justice
after an investigation revealed market manipulation by investors and developers
utilizing the LIHTC program.
Solutions
Our report discusses the concerns over cost
and accountability of the LIHTC program in much greater depth, including
suggestions on alternative ideas such as tenant-based
programs to address the issue of housing affordability. The full report can be viewed HERE
as well as other reports by the Arizona Free Enterprise Club at www.azfree.org.
Everett Stamm resides in Washington DC
and is author of the report ‘Analysis of the Low-Income Housing Tax Credit
Program in Washington and Arizona’
Recent Comments