by admin | Feb 23, 2017 | News and Updates, Uncategorized
We see a lot of bad ideas down at the legislature. A lot. But every once in a while, one comes along that is so awful even we are mildly surprised by it.
Behold HB2492.
Special property tax giveaways for some business but not others? Payroll tax handouts for large employers to subsidize new hires? Refundable tax credits that allow businesses to claim a refund even though they have no tax liability?
Wrap all these into one big monstrous giveaway and you have HB2492.
For starters, some of the large corporations that will benefit from this bill already do not pay Arizona corporate income taxes. A decade ago the legislature removed the cap on the Research & Development tax credit, which resulted in some companies to claim an unlimited amount of tax credits to offset their corporate tax liability.
But unlimited R&D credits are only part of the benefit. If these credits exceed the companies’ actual income liability in a given year, they are able to carry-forward their credits for up to 15 taxable years. Essentially, it is quite possible that these companies will never again have to pay corporate income taxes in Arizona.
Now HB2492 takes these subsidies to a new level. HB2492 would allow corporations to take their unused R&D credits and convert them into refundable credits to offset any sales tax incurred for infrastructure and other capital expenditures they make in the state. If it seems strange to link two completely unrelated activities (R&D and private infrastructure spending), you’d be right. Perhaps muddying the waters is what it takes to hide a subsidy of this magnitude.
Since the current R&D tax credit program has been so popular, several corporations have accumulated an astronomical amount of unused credits to cash in on this deal. The latest report from the Joint Legislative Budget Committee shows that companies currently hold $1 Billion in carry-forward R&D tax credits. If HB 2492 passes, taxpayers will be writing subsidy checks to corporations for a long, long time.
Just as the Arizona legislature has been wise to reject risky public finance schemes such as Tax Increment Financing (TIF), they have also successfully never crossed the threshold of allowing refundable tax credits of this magnitude. The best tax system for economic growth is one in which taxes are as low as possible, but shared among the broadest base. Carving some taxpayers out of the pie, not only makes the pie smaller, but raises taxes for everyone left in the pie.
The legislation passed out of House Ways & Means last week by a vote of 5-4, for the sake of Arizona taxpayers let’s hope it doesn’t proceed any further.
by admin | May 26, 2016 | Uncategorized
Today the Arizona Free Enterprise Club released a legal analysis on the proposed ‘Clean Elections’ initiative, a ballot measure that would dramatically increase the amount of taxpayer funding politicians would receive to run their campaigns.
The analysis shows that this poorly drafted initiative contains multiple defects, most significant of which is the fact that the initiative attempts to change and amend state statutes that no longer exist. Since the proposed changes are not based on existing law, the initiative is defective and will be kept off the ballot.
“After careful review, it is clear that the proponents of taxpayer money for politicians were sloppy and failed to draft their initiative based on current law.” Club President Scot Mussi said. “The campaign finance reform amendments that rewrote state statute were passed back in March. Clean Election supporters have known this for months, yet they didn’t modify their language to take this into account.”
Even if the proponents collect enough signatures to qualify for the November ballot, there is extensive case law that initiatives cannot amend non-existent statutes and that this is grounds for kicking it off the ballot.
Mussi continued, “Even if they are successful in their signature gathering efforts, the petitions will likely be rejected, either by the state or by a challenge in court.”
The deadline to submit a new initiative application and submit signatures is July 7th. The analysis can be viewed by clicking here.
by admin | Aug 16, 2015 | Uncategorized
Protecting employees from coerced union membership (and with it, forced union dues) has always been a top priority for the Free Enterprise Club, which is why we are proud to once again participate in National Employee Freedom Week (NEFW). NEFW is a grassroots campaign of 97 groups educating citizens and voters about workplace rights—specifically, their right to leave their union and opt-out of paying a portion of their union dues.
A new survey released by the coalition demonstrates that over 39 percent of union households nationwide aren’t aware that they can opt-out of union membership and of paying at least a portion of their union dues without losing their job or any other penalty.
This isn’t surprising: Unions would prefer that their members not to know about their rights, and to counter, some unions restrict opt-outs to certain windows each year – sometimes as short as two weeks a year.
Unions have been losing support among everyday workers, and the latest numbers from the Bureau of Labor Statistics bear this out. According to data released in January, the union membership rate has continued its steady decline to 11.1 percent, down from 12.4 percent in 2008 when President Obama won his first presidential election.
Additionally, it’s not only employees that have been voting with their feet, but employers as well. Over the last several years, businesses and corporate headquarters have been relocating to right to work state at a rapid rate, and with it taking their jobs and economic growth with them. An extensive analysis done by economists Steve Moore and Arthur Laffer showed unequivocally that two factors—the income tax and right to work laws–are the key determining factors between high growth states vs. low growth states.
While union membership has been plummeting, political spending by union bosses remains stronger than ever. During the 2012 election cycle, big labor spent a whopping $1.7 billion on political activity. Where did the money go? According to the Center for Responsive Politics, 92 percent went to Democrats. Conversely, approximately 40% of union members voted for Romney in the Presidential election.
Here in Arizona, while we are a right to work state, we continue to lack adequate taxpayer and employee protections against union overreach. Two such examples include the failure to pass paycheck protection laws and our lack of more robust collective bargaining limitations to protect both taxpayers and union members from abuse.
Thankfully, just last week the Goldwater Institute won a landmark case that will limit the abuse of a practice known as ‘Union Release Time’, a benefit that allowed union members to engage in political activity and negotiate new union contracts at taxpayer expense.
Of course, some union employees may decide that they’re getting their money’s worth, and that’s okay. But many union members have had enough, and the NEFW coalition is in place to show them the way out. No one should feel compelled to pay thousands in union dues as a condition of employment. Now, as more employees are learning, they don’t have to.
by admin | Aug 11, 2015 | Uncategorized
The city of Tempe faces a myriad of important issues – education, public safety and economic development to name just a few. But recently the Tempe City Council has decided that there is an even higher priority for taxpayers’ hard-earned money: Giving it to political campaigns.
Yes, the Tempe City Council is looking to place on the ballot a Charter Amendment that would create a publicly financed election system in Tempe as soon as next year – virtually identical to the Clean Elections system in place statewide.
As a general rule of thumb, whenever incumbents rewrite the rules of the game, it is never in their challengers’ favor. Government-funded elections are no different. Incumbents enjoy enormous advantages over challengers, not least of which is free exposure – or earned media – through various media appearances as a public official. In contrast, challengers need to spend a lot of resources just to introduce themselves to voters, not to mention outline their platform and draw contrasts.
Then there is the matter of how to pay for it all. Knowing full well that a new tax or more deficit spending for taxpayer-funded campaigns would never fly with voters, Tempe politicians are attempting to quietly add a new court fee, on top of countless other surcharges, that people who commit minor traffic violations have to pay. So much so that a simple speeding ticket could soon cost you as much as $250, partly because you are being forced to give money to a politician’s campaign – whether you support them or not.
A speeding ticket is – by definition – an unexpected expense, one most people can ill afford as it is. In fact, go into any courtroom in Arizona, and it’s clear that many of the people who would be paying these fees for government-run elections are already poor. Now politicians in Tempe want to soak them a little more to bolster their own re-election.
Furthermore, once again, no one watches the watchers. The Arizona Clean Elections Commission, faced with dwindling support and fewer participating candidates each year, has taken to extraordinary abuses of power in an attempt to remain relevant. These include trying to actually fine non-participating candidates and committees in a gross overreach of authority, as well as override federal law, the US Supreme Court, the authority of the Legislature and Secretary of State, and the US Constitution, in order to abolish protections on political speech by disclosing the donor lists of non-profit advocacy organizations.
Fortunately voters will have a say in whether this goes forward, likely in March 2016 when its on the municipal ballot. Will the proposal to tax the poor to pay for taxpayer-funded campaigns – overseen by an unelected, unaccountable commission – actually become law? If you live in Tempe, that will be up to you.
by admin | Jul 24, 2015 | Uncategorized
Yesterday it was announced that the City of Glendale and the Arizona Coyotes have reached an agreement that substantially reduces the payments being made to the team. The new deal is a victory for city, the Coyotes and most importantly, Glendale taxpayers.
For those not familiar with the dispute, Glendale entered into an agreement in 2013 with the owners of the Coyotes that would pay the team $15 Million dollars each year for 15 years to “manage” Gila River Arena. This is in addition to the $9 Million the city pays each year in debt service for the construction costs of the arena.
That is a lot of money for hockey, and taxpayers have been paying the price. Since the agreement went into effect in 2013, Glendale has approved 3 property tax increases and also dropped the sunset on the “temporary” sales tax increase. At 2.9%, Glendale has one of the highest sales tax rates in the region:
Without a substantial change to the management agreement, high taxes and cuts in city services were going to be a fact of life for Glendale. That is why the widely criticized decision by 5 members of the city council to cancel the management agreement last month was a bold yet necessary move. It didn’t matter that the city had a very good legal case to terminate the agreement, the public relations deck was stacked against the council. Yet they did not blink from the scrutiny and held firm in trying to protect Glendale taxpayers.
As a result, the city was able to renegotiate a new agreement with the Coyotes that cuts the management fee by more than half, reduces the length of the contract to two years and makes what was a clearly a one-sided agreement a bit more equitable.
And while it is questionable as to why any fee should be paid to manage the arena (most similar management deals involve little to no fees), it was not a sure thing that the city would prevail on their conflict of interest claim. It is better to get some relief than risk getting nothing.
Glendale is not out of the woods. Even with the millions saved under the new agreement, the city is still bleeding red ink on other questionable ventures such as Camelback Ranch. Additionally, the council should not ignore Glendale’s sky high tax rates and see if some much needed reductions can be made.
There is still a lot of work to be done, but today’s agreement goes a long way in getting Glendale back on the right path.
by admin | Jul 16, 2015 | Uncategorized
The Arizona Free Enterprise Club today has released its comprehensive analysis of the Phoenix Transportation Plan, also known as Proposition 104. The initiative proposes to nearly double the transit sales tax to fund a multi-billion dollar transportation plan over the next 35 years.
Written by the renowned transportation expert Randal O’Toole, the paper conducts an in-depth review of the proposed transit plan and also investigates many of the claims made about the benefits of light rail in the Phoenix Metro area. The paper can be viewed online by clicking here.
Some of the key findings in the paper include:
- The oft-repeated claim that light rail has generated $7 Billion dollars in economic development is simply untrue. In fact, many of the projects included in this claim have never been built (like the Sycamore Station development) or involve projects that have nothing to do with light rail (such as the $600 million Convention Center Expansion, which was funded largely by state tax dollars).
- The main beneficiaries of the transit plan appear to be contractors and developers who have projects near rail stations. The tax revenue from the plan combined with the generous subsidies offered to select developments ensures that this plan will benefit a few contractors and developers at the expense of others.
- The plan is unbalanced and ignores vehicle street improvements. Despite the fact that only 3% of the population uses transit (less than 1% use light rail), 95% of the funding in the plan goes toward expanded bus and rail service. Only 3% goes toward vehicle street improvements.
- Transit ridership actually fell after the light rail opened. From when light rail opened in 2009 through 2014, any gains in light rail ridership were offset by the loss of more than one bus rider. Ridership is still 1.2 million less per year than it was in 2009.
- The transit plan as proposed will increase traffic congestion, energy usage and greenhouse gas emissions. In fact, the transit plan will use more energy and emit more pollution per passenger mile than the average SUV.
“Randal O’Toole does an excellent job in his analysis of debunking many of the claims made by supporters the Phoenix Transportation plan,” Free Enterprise Club President Scot Mussi said.
“Additionally, when considering the near doubling of the transit sales tax and the lack of accountability with how the money would be spent, this amounts to being a very bad investment for Phoenix taxpayers.”
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