by admin | Apr 14, 2022 | Corporate Welfare, News and Updates
It is no secret that the Club is critical of special interest tax credit programs that distort our tax code and pick winners and losers in the market. Though a few of these tax credits have been enacted by the legislature over the years, there is one program on the books that has grown into the billions and has successfully evaded any real scrutiny: the Research and Development tax credit program.
The Research and Development tax credit program piggybacks off the federal program and operates under the premise that it will increase the amount of investment corporations make in Arizona on research and development. The program is very generous, allowing corporations to claim a 24% credit on the first $2.5M in qualifying expenses and an additional 15% up and above the $2.5M. If a corporation effectively eliminates their tax liability, they are allowed to carry forward the excess credits for up to 10 years. For businesses with fewer than 150 employees, the pot is even sweeter, as they are allowed to claim a refund of up to 75% of the excess credits and cash out up to $5M every year in what is called a “refundable” tax credit. In other words, direct taxpayer subsidies for select businesses.
Because of the sheer size of the R&D tax credit program and the fact that the credits are not capped, the bank of unused tax credits being carried forward has grown to almost $2B! For perspective, the state only generates around $850M in corporate taxes a year – this clearly demonstrates that there is simply not enough corporate income tax liability (taxes being paid) to draw down the available credits. As these unused credits have grown, there has been more pressure from corporate lobbies that currently have zero corporate income tax liability to find creative ways to simply cash the credits out.
This year’s attempt has taken shape in SB1643, which expands the existing program for “small” firms receiving refundable credits from $5M to $10M a year and creates a new program that allows up to $50M a year in unused credits by larger companies to be converted (i.e. made refundable) for reinvestment. This is a massive expansion in the refundability of the program and lays the groundwork for all $2 billion to be given away in subsidies to big business.
Considering how the program has ballooned, lawmakers would be far better served to examine the structure and necessity of the corporate income tax entirely, instead of creating complicated credit schemes.
SB1643 is bad policy and bad politics
Under the provisions of the bill, corporate entities can apply their unused credits at a rate of $0.60 per dollar for qualifying expenses which include everything from “sustainability” projects, updating R&D facilities, “workforce development projects,” tuition reimbursement for employees, and capital expenditures supported by federal matching dollars, or national grant programs.
In other words, large companies will get taxpayer money to fund various liberal endeavors, including efforts to combat climate change, empower HR departments’ woke workforce initiatives, and promote the out-of-control spending of the federal government.
This isn’t just conjecture—many of these corporations have implemented these activities in the workplace, and SB1643 simply forces taxpayers to now subsidize these woke initiatives.
And while republican lawmakers tell their constituents that they oppose taxpayer subsidies, oppose CRT, and dislike green new deal policies, a majority of Republican Senators voted for SB1643 as did a majority of House Republicans in the Appropriations committee. Their opposition is schizophrenic, to say the least.
Now we are moving into budget season at the legislature, and it is becoming more and more likely that this corporate welfare R&D package will be rammed into the budget. The only question now is when that occurs, who will stand up against this woke taxpayer giveaway, and who will be for it.
Tell Your Senators to Vote NO on Corporate Welfare Bill SB1643!
SB1643 would allow $50M a year in tax credits for R&D companies and increase the “refundability” from $5 M to $10 M a year. There are currently over $1 BILLION in backlogged R&D tax credits because the state programs have generously allowed these companies to entirely zero out their tax liability!!
SB1643 is a straight $10M/year appropriation to these companies subsidized by TAXPAYERS. This is CORPORATE WELFARE and it’s WRONG!!
Send a message to Arizona Senators right now and tell them to vote NO on SB1643!
by admin | Apr 7, 2022 | News and Updates, Tax
“Punish the rich” tax proposals never seem to go out of style—at least for the Democrats. In the 2020 Democratic presidential primaries, it was all the rage for Senators Elizabeth Warren and Bernie Sanders. But after they both failed in their White House bids, they decided to double down on their wealth tax with an ill-conceived proposal on Capitol Hill in early 2021.
So far nothing has come of that. But enter President Biden.
At the end of March, Biden unveiled his Billionaire Minimum Income Tax proposal, and it’s every bit the disaster that you would imagine it to be. The plan would tax the appreciation of financial and business assets worth more than $100 million. (That’s not exactly a billion in net worth, but math has never been a strength for the Democratic party.)
So, how would it work?
Biden’s proposal would require taxpayers who are worth more than $100 million to pay a minimum of 20% on their capital gains each year, whether they sold the assets for a profit or continue to hold them. This would put a tax on unrealized gains, completely overhauling the current tax code which only taxes gains after they are realized (e.g. when someone gains a profit from selling a stock).
The idea is quickly gaining ground with most Democrats who believe that it could create hundreds of billions of dollars in new revenue over a decade. Of course, that’s just a small drop in the bucket for Biden’s $5.8 trillion budget proposal, which means, guess what? They’re still going to come after your dollars, middle class.
But don’t tell that to Arizona State University law professor Erin Scharff. She’d rather peddle this garbage on behalf of the president and push Congress to make these $100-million billionaires “pay their fair share.”
Unfortunately, Ms. Scharff doesn’t understand that most wealthy people will still figure out ways to avoid paying the tax—even if it is implemented. And if they do end up paying it, the results would likely add more damage to our economy.
But if Ms. Scharff can’t wrap her head around that, you would think that as a law professor, she could at least recognize that Biden’s Billionaire Minimum Income Tax—much like many of his plans—is likely illegal. Other similar taxes that have targeted wealth have been reviewed in the past, and this one likely runs afoul of the “direct tax” clause in the U.S. Constitution.
It’s pathetic that an ASU law professor is pushing a tax plan that is on extremely shaky legal ground, but this is the state of “higher education” in America.
Regardless of its legality, there is no doubt that—just like the original income tax—this new billionaire tax plan won’t just be a tax on the rich. As history has shown us time and time again, the appetite for more revenue never subsides in Washington, D.C. You can guarantee that this plan will eventually apply to everyone—no matter your income or your wealth. And that just goes to show you how this proposal by Biden—and pushed by this law professor—is completely out of touch with the issues affecting taxpayers. Inflation is out of control and supply chains are still a wreck, but for Democrats and ivory tower law professors, those issues are secondary to their ideological desires to redistribute wealth.
Help Protect Freedom in Arizona by Joining Our Grassroots Network
Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!
Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.
by admin | Mar 31, 2022 | Misc, News and Updates
For years now, we’ve heard the same old talking points from the left when it comes to our state’s schools. It always goes a little something like this:
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- Education is underfunded in Arizona…
- Teachers aren’t paid enough…
- We need to raise taxes to pay our teachers more…
Do these lines sound familiar? They should. Anytime a new proposition is rolled out to voters, teachers’ unions and other liberals push this same narrative. We heard it when they campaigned for Prop 208 a couple years ago. And despite the fact that the Arizona Supreme Court struck down Prop 208 because Arizona is already funding schools at historic levels, we continue to hear it from Red4Ed and others as they target the state’s $1.8 billion tax cuts.
That’s what makes the latest news out of Mesa Public Schools (MPS) even more outrageous. Earlier this week, AZ Free News reported that MPS won’t explain where more than $32.3 million of their federal emergency funds slated for COVID expenses went. The investigation came after reports that MPS teachers were asking parents to donate basic school supplies they were running out of because the district wouldn’t cover them.
But instead of having a clear explanation for the money that was buried under expenses listed as “other,” “indirect costs,” and “etc.,” MPS officials repeatedly dodged the question and mentioned that no records exist for those categories.
So, while their teachers are begging parents for reams of paper to finish out the school year, MPS is content to let them struggle for the sake of all these “other” expenses that are apparently too important to disclose. And all the while, Red4Ed continues to push the underfunding myth.
But maybe, just maybe the problem with education funding and teachers’ salaries isn’t a question of how much money districts have, but how districts are, you know, spending that money. Because it feels like $32.3 million in hidden expenses could go a long way toward fixing the issue. And this is just in one school district. What could this say about the rest of the school districts in our state?
Naturally, Arizona’s corporate media decided to sit this one out. They spill gallons of ink writing about charter schools and how they spend their cash. But when it comes to holding their beloved public schools accountable, they show no interest. After all, corporate media largely ignored the Higley Unified School District scandal when former superintendent Dr. Denise Birdwell was indicted on 18 felony counts related to procurement fraud, misuse of public monies, fraudulent schemes and practices, and more. And they were late to the party to report on the secret dossier on parents in the Scottsdale Unified School District back in November.
Would we expect anything else with this new situation in Mesa? Of course not. Because local news anchors don’t exactly win awards from teachers’ unions when they call into question their spending habits.
If corporate media is content to ignore this story again, at least we have some good independent media in Arizona willing to call it out. Now, our public school districts need to be held accountable when it comes to spending your hard-earned tax dollars. And if MPS won’t disclose where that $32.3 million is going, then it’s time for the State of Arizona to conduct an audit and find out how that money is being spent.
Help Protect Freedom in Arizona by Joining Our Grassroots Network
Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!
Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.
by admin | Mar 24, 2022 | Elections, News and Updates
Arizona voters received a big win yesterday. The State Senate passed HB2492 less than a month after the House did the same. And now this critical bill heads to Governor Ducey’s desk to be signed into state law.
This is a big win toward restoring the integrity of Arizona’s elections. HB2492 will safeguard our state’s voter rolls and ensure only U.S. citizens are voting in our elections. You would think this sort of legislation is something everyone could get behind. But apparently, the Democrats have a vested interest in allowing non-citizens to vote in our elections.
That’s why they’ve been spreading lies about HB2492 for months.
At first, Democrats tried to argue that the bill is unconstitutional. But it isn’t. So, they changed tactics and began saying that it will require all voters, or at least millions, to reregister. This is also untrue.
But that didn’t stop the Arizona Democratic Legislative Campaign Committee (ADLCC) from comparing HB2492 to a bill introduced in Oklahoma. Of course, there’s a problem with this so-called “evidence.” The Oklahoma bill would require every voter to reregister:
“Effective December 31, 2023, to be eligible to vote in any state or federal election, all eligible voters shall be required to reregister to vote.”
But the ADLCC won’t be able to point to a provision like that in HB2492. You know why? Because it doesn’t exist.
Their real problem with the bill is that it unwinds over a decade of stealth legal attacks on Arizona’s ability to ensure only lawful U.S. citizens can vote. HB accomplishes this by:
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- Taking Arizona back to the practice of rejecting state voter registration applications that do not include proof of citizenship.
- Requiring counties to check multiple databases for evidence of citizenship when an individual submits a federal application without proof.
- Requiring counties to reject those federal applications if they find evidence that the individual is, in fact, not a U.S. citizen.
Additionally, HB2492 makes proof of citizenship a requirement to vote early by mail in any election and to vote in Presidential elections. Clearly, the left knows how impactful this bill will be. But instead of stating the obvious, as some do (that this will make it harder for illegals to participate in our elections), they make outlandish claims with no basis in reality.
HB 2492 isn’t the only election integrity bill that the left has been spreading lies about. They used these same tactics against the Arizonans for Voter ID Act—a reaction to lawmakers successfully placing it on the ballot for the November election.
For example, they were making the absurd claim that it will lead to thousands of mail-in ballots being rejected because counties don’t have the proper information to check the ID of each voter. The truth is that the overwhelming majority of individuals currently on the Active Early Voter list already have the identification information required by the initiative in their registration file, and there is ample time for the counties to complete voter education drives—as they should. Not to mention the existing five-day cure period during which a voter can correct or supply any missing information.
Thankfully, we are very confident voters are seeing through the misinformation campaigns. In fact, despite constant lies and fearmongering about commonsense election reforms, support among voters has actually increased. Yesterday, Arizona’s Republican lawmakers proved that they are listening. Now, it’s up to Governor Ducey to follow in their footsteps by signing HB2492 into law.
Tell Governor Ducey to sign HB2492 into law!
HB2492 is necessary to safeguard our voter rolls, ensure only qualified applicants are registered and voting in our elections, and assert our constitutional power to determine voter qualifications. Stand for election integrity today.
Tell Governor Ducey to protect our voter rolls and sign HB2492 into law!
by admin | Mar 17, 2022 | News and Updates, Tax
The State of Arizona has great reason to celebrate. In a case that the Club joined as a plaintiff, Maricopa County Superior Court Judge John Hannah ruled against Prop 208, determining that the money raised from the tax would exceed the constitutional spending limit for education. This decision followed the Arizona Supreme Court’s ruling last August that Prop 208 was unconstitutional. And now, it officially puts the nail in the coffin of the largest tax hike in Arizona history.
This is great news for taxpayers throughout our state, except if you’re House Democrat Minority Leader Reginald Bolding apparently. But while Prop 208 may be dead, the fight is not quite over yet.
For years, teachers’ unions and out-of-state special interest groups led by the National Education Association (NEA) and Stand for Children have been trying to push this $1 billion tax hike on the backs of Arizona’s small businesses. And they’ve spent over $40 million trying to make that happen. That’s right. Over $40 million with nothing to show for it.
But Red4Ed and the rest of the backers of Prop 208 won’t give up. After the Supreme Court struck down their unconstitutional tax hike, they moved to target the $1.8 billion tax cut that would establish a flat tax and provide a tax cut for all Arizonans. Back in October, Invest in Arizona, a political committee sponsored by the Arizona Education Association and Stand for Children, submitted a referendum to put the historic tax cuts on the ballot for voters to decide its fate. Thankfully, the Invest in Arizona ballot referendum to overturn SB1783, which was passed to give tax relief to small business owners in our state, failed signature review.
And while they want you to believe that the referendum was a “citizen led grassroots effort,” their campaign finance report tells us otherwise. The NEA and Stand for Children dumped in more than $4.5 million to flood the streets with paid circulators to gather signatures for the referendum. (That’s in addition to the $40 million we mentioned earlier). And when they realized that it was tough to get people to sign a referendum that would give them a tax cut, the circulators started lying to voters, telling prospective signers that the referendum would somehow stop K-12 funding cuts.
With Arizona sitting pretty with a $4 billion dollar surplus, it is absurd that these out-of-state special interests would be spending millions to block tax relief for Arizonans. But we also think their referendum is unconstitutional and lacks the requisite number of signatures to qualify for the ballot.
The bills being targeted by Invest in Arizona directly provide for the support and maintenance of our state. And the Arizona Constitution is clear that issues related to the support and maintenance of the state government cannot be referred to the ballot. It was also clear after our signature review of the referendum that over half their signatures were invalid or were gathered fraudulently by the circulator mercenaries that they hired.
That’s why the Club filed a lawsuit against Invest in Arizona’s tax cut referendums. While we’re still waiting for a decision from the Maricopa County Superior Court, there’s a good chance that this will wind up at the Arizona Supreme Court just like Prop 208. And let’s hope they rule the same way.
Arizona is already spending a record amount of money on K-12 education. And the tax cuts Republicans delivered back in July still allowed for hundreds of millions in new funding for K-12 schools and universities. Now, it’s time to ensure that the people of Arizona get what they really need: tax cuts that put more of their hard-earned money back into their pockets.
Help Protect Freedom in Arizona by Joining Our Grassroots Network
Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!
Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.
by admin | Mar 10, 2022 | News and Updates, Tax
We tried to warn them. But Pinal County officials decided to move forward with their illegal and unconstitutional transportation tax anyway. Thankfully, on Tuesday, the Arizona Supreme Court issued a tremendous victory for Pinal County taxpayers and the rule of law.
And while it’s disappointing that taxpayers were forced to pay thousands of dollars to defend this illegal tax scheme in court, the Pinal County Board of Supervisors will now have to end the collection of this tax and issue refunds to aggrieved taxpayers.
A tax on retail sales below $10,000
This all started in 2016 when Pinal County officials began turning the political wheels to send a $640 million tax increase to voters to fund a wide array of transportation projects throughout the region. But after unveiling the plan, the effort quickly spurred opposition from retailers, home builders, auto dealers, and multiple taxpayer watchdog groups.
You would think that county officials would have taken this as a sign that the community didn’t support their proposal. But no. Instead, they developed a new plan to try to buy off their political opponents.
In order to eliminate opposition to their scheme from certain businesses, county officials added a special carve-out for purchases that exceeded $10,000 from paying the new tax. Interesting move, isn’t it?
But this meant that the new tax would apply only to retail sales below $10,000—making the day-to-day purchases of lower-income citizens more heavily taxed than more expensive items.
It also meant pushing a tax scheme that likely violated state law. County officials were aware that capping the tax at $10,000 wasn’t authorized by statute, which is why Pinal County introduced HB2156, legislation that was quickly killed by lawmakers.
A violation of Arizona law
Arizona’s tax laws are already some of the most confusing in the country, and Pinal County’s transportation tax only made that worse. If counties could be allowed to create new tax classifications in addition to the ones already established under state law, Arizona’s tax laws would become even more confusing with different taxes at different rates.
This is not what state lawmakers intended. County officials cannot be allowed to make their own rules. After all, this is the sort of thinking that pushes businesses out of our state and keeps new businesses from springing up inside our state. That’s why the Goldwater Institute challenged the Pinal County transportation tax in court. And the Club supported the effort every step of the way. Even the Arizona Department of Revenue sided with taxpayers on this one!
But Pinal County still tried to claim that it could subdivide the tax in this way because the law allows counties to set a “variable rate” in a tax, and that it was setting the “rate” of some sales at zero. Thankfully, the Arizona Supreme Court saw right through that argument, explaining that “In this case, Pinal County’s two-tiered tax rate structure—which established a positive tax rate and a tax rate of zero percent—sets fixed tax rates that never vary and are never subject to change.”
This is a big win for taxpayers in Pinal County and across Arizona. In the midst of a worsening economy, rising inflation, and near-record gas prices, our government should be seeking every way possible to put more money back into the pockets of its citizens. And if other counties are considering similar schemes, now a clear message has been sent.
Help Protect Freedom in Arizona by Joining Our Grassroots Network
Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!
Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.
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