by admin | Jan 14, 2021 | News and Updates, Tax
They said it wouldn’t happen. They said that Proposition 208 wouldn’t affect the Arizona economy or small businesses. But here we are, just two weeks into the new year, and small businesses are already seeing the effects of a disastrous income tax increase.
How could this be?
After all, Andrea Nemecek, the state director for #INVESTinED, declared that Proposition 208 would NOT tax small businesses. Not that it was unlikely. Not that it may not. She stated that Prop 208 would NOT tax small businesses.
This proclamation was included in her ballot argument submitted on behalf of the YES campaign to the Arizona 2020 General Election Publicity Pamphlet. And it was the very first argument that appeared in the voter guide. Just look at Question 4 on page 137.
4. How much does this tax small businesses?
Answer: Zero. $0.00. Nothing. This initiative ONLY applies to personal income, not business income. This is worth repeating: There are no business-tax increases. This surcharge only applies to personal income.
But Ms. Nemecek wasn’t alone. Every major funder, advocate, and organization behind Prop 208 pushed this same deceitful narrative. Take David Lujan, for example. Mr. Lujan is the director of the Arizona Center for Economic Progress, a co-author of Prop 208. Back in September, he told the Phoenix New Times, “The argument that our opponents make is that this is going to tax small business owners. And that’s completely false.”
This talking point was repeated far and wide, including by #INVESTinED, who tweeted the same exact quote.
So, if this were true. If it is “false” that small business is taxed under Prop 208, then Ms. Nemecek, Mr. Lujan, and the out-of-state special interests that bankrolled this massive tax hike should explain why small businesses are already leaving the state due to Prop 208.
Just look at Landmark Recovery, a business headquartered in Scottsdale. Its owner, Matthew Boyle, told ABC15 last month that his business is packing up and heading to Nashville, Tennessee. Why are they leaving? Because Prop 208 will crush his small business.
Another local favorite, My Sister’s Closet, has filed a lawsuit against Prop 208 because of the damage it will cause her small business.
More businesses are sure to follow. And who can blame them?
It’s bad enough that many of these businesses are still trying to recover from the effects of COVID-19. Now, they’re being hammered by a tax they were told didn’t affect them.
So, who stands to be most affected by Prop 208? The people of Arizona.
A report from the Goldwater Institute estimates a minimum of 124,000 jobs lost within 10 years of Prop 208 going into effect along with $2.4 billion lost in state and local tax revenue.
But #INVESTinED got what they wanted. Prop 208 passed. And now the people of Arizona are stuck dealing with the fall out of a campaign that was less about education and more about deception.
You Can Make a Difference
If we don’t act soon, Arizona will soon look like other high tax states in rapid decline. Find out what you can do to undo the damage being caused by Proposition 208.
by admin | Oct 7, 2020 | Elections, News and Updates
Phoenix—Today the Arizona Free Enterprise Club released our latest survey results for Proposition 208, a statewide ballot measure that would nearly double the state income tax to increase funding for public education. The Data Orbital poll shows that support for the measure continues to drop, with only 47% saying that they would vote yes for the tax hike.
“The dwindling support for Prop 208 shows that people are not interested in hammering small businesses in the middle of a pandemic with the largest tax hike in Arizona history,” said Scot Mussi, President of the Arizona Free Enterprise Club. “Arizona voters may want more money for schools, but they are not interested in destroying our economy in the process.”
The findings in the Data Orbital poll are similar to other results released in the last week showing Prop 208 struggling to be above 50%. This is a precipitous fall for a measure that supporters touted had 66% support just one month ago.
“Backers of the measure thought that they could sell a ‘soak the rich’ measure to voters, and it’s proving to be a bad miscalculation on their part,” said Scot Mussi. “Now they are stuck trying to persuade skeptical voters to be a yes on a tax hike, which is a very difficult position to be in.”
The Data Orbital poll included 550 likely Arizona voters and was conducted from October 3 – 5, 2020. The margin of error is 4.18%.
by admin | Sep 29, 2020 | Elections, News and Updates
Earlier this Summer campaign finance reports revealed that Proposition 208, the Largest Tax Increase in Arizona History, was being bankrolled by the liberal Oregon-based Stand for Children. This out of state special interest group pumped more than $4 Million into the effort, accounting for 90 percent of the funding for the ‘Yes’ campaign.
It was a staggering financial sum, and it turns out that they leveraged money from U.S. taxpayers to make it happen. News broke that the Stand for Children Network was a major beneficiary of the PPP program, raking in millions under the guise as a “distressed” small business.
Stand for Children has tried to deny these claims, claiming that the Stand for Children Leadership Center that received these funds is a separate entity from Stand for Children Inc. that provided the funding to the ballot measure. This defense is dubious, however, given the extensive commingling of resources between Stand for Children Inc. and Stand for Children Leadership Center:
- These entities share the same address—2121 SW Broadway, in liberal Portland, Oregon.
- The staff members for both entities are identical. In fact, clicking on the webpage of the staff of the allegedly distinct Stand for Children Leadership Center takes you to the staff webpage of Stand for Children.
- Stand for Children Leadership Center has directly provided funding to Stand for Children Inc. in the past, giving $830,000 to their C4 affiliate in August, 2019.
In addition, the PPP loan was approved on April 28, 2020. One week later, Stand for Children made a $300,000 contribution to the tax hike campaign. Later that month, another $600,000 was given, and then another $350,000 on June 12.
The cozy relationship between the (c)(3) receiving PPP funds from taxpayers and their affiliated, pro tax hike group is troubling enough. Yet even if they are separate entities, it just means that Stand for Children Inc was sitting on millions in cash, and instead of using that money to pay for the same staff they share with their affiliated (c)(3), they instead decided have their C3 partner acquire PPP loans so that they could fund a tax hike initiative in Arizona.
The CARES Act PPP program was created by Congress at the beginning of the pandemic to assist struggling business owners maintain their payroll, avoid layoffs, and hire back employees. It was never intended to be used to underwrite political operations.
There have been several reports about companies abusing the PPP program, but this outrageous behavior has to be near the top. Even more jarring is that the same program that was set up ostensibly to help Arizona small businesses ended up being used to hammer them with a 78% tax increase.
We call upon our congressional delegation to act against this abuse and investigate their PPP application. If the PPP money has gone to fund Prop 208 they should be required to pay back EVERY DIME they received, plus interest and penalties.
And if there was any justice, Stand for Children should be forced to apologize to Arizona voters, taxpayers, and small business owners for using their tax dollars to put this radical measure on the ballot.
by admin | Aug 31, 2020 | Elections, News and Updates
In a few months the Arizona
residents will have the opportunity to vote on Proposition 208, a measure funded by out of state labor unions and special interest groups to
impose a $1 Billion income tax increase on small businesses and entrepreneurs
in the middle of a pandemic. Not surprisingly, employers around the state
are speaking out against the measure, as Prop 208 would kill thousands of jobs, punish small
business owners and destroy our fragile economic recovery.
While the economic impacts may be devastating, what may be
more infuriating to Arizona families is that Prop 208 does NOTHING to assist
frustrated parents and students currently dealing with Covid-19 school closures and disrupted
learning schedules. The revenue
generated from this 78% tax increase would come with little accountability or
oversight, leaving it up to school districts and administrators to spend the
money how they see fit.
Prop 208
Crafted to Benefit Unions and Provide Pay Raises to Administrators
The backers of this massive tax increase do
not care about families or small businesses in Arizona. If they did, they would not have crafted a
measure full of loopholes that allow funding to be siphoned off by district
administrators and away from teachers and classrooms. The initiative redefines teacher to include
non-classroom administrative staff and changes existing law so that money is no
longer earmarked for teachers and classroom spending.
Of the $1 Billion anticipated to be collected
if Prop 208 passes, not one dime will support parents as they battle to
educate their children, not one dime is guaranteed to support teachers,
and not one dime addresses improvements needed to overcome current environmental
learning challenges.
Sadly, this lack of funding accountability in
Prop 208 is by design. The backers of this measure know most people support
K-12 and want to see improvements in the system. They are hoping that voters will
not take a closer look at the fine print.
Measure
will Derail AZ’s Economic Recovery by Punishing Job Creators and Small
Businesses
According to the Tax
Foundation, Prop 208 would give Arizona
one of the highest small business tax rates in the country. Under
Prop 208, AZ small businesses will be taxed at a top rate of 8 percent (a 78
percent increase), giving us a higher income tax rate than Nevada, Utah,
Colorado, New Mexico, and Texas. Employers and entrepreneurs will flee to these
lower tax states, turning the Grand Canyon State into the
mini-California of the Southwest.
Sadly, the small businesses who have survived
so far are just starting to dig themselves out of the wreckage of the Covid-19
shutdown. It is undeniable that small businesses were hit hardest by the
economic downturn, as most mom and pop shops were forced to close while big
corporations (who are exempt from this tax increase) were allowed
to stay open. Now just as they are seeing the light at the end of the tunnel,
out-of-state labor unions and special interest groups want to hammer them with
a massive tax hike at the ballot. They do not deserve this treatment.
Tone Deaf Measure Ignores Parents and Children
in Desperate Need for Help
A cursory reading of Prop 208 shows that the
backers of this tone-deaf initiative care little about Arizona families. Currently the biggest crisis facing parents
and students are the district-wide school closures and substandard
online/distant learning conditions that have been forced upon them. They need
help, yet the “solution” being offered up by the unions and special interest groups bankrolling this initiative is to dump more
money into the system with no strings attached.
The only worthwhile investment in K-12 that should be considered right now is to
provide direct aid to families to explore alternative educational opportunities
and to help parents escape dysfunctional learning environments that are
inflicting permanent damage on their kids.
Instead, Prop 208 soaks hardworking Arizona taxpayers with a massive tax
hike that will likely result in nothing more than pay raises for school administrators
in the middle of a pandemic.
Arizona voters should not be fooled – Prop 208 is bad for families, businesses,
and our education system!
by admin | Jun 12, 2023 | News and Updates, Tax
The Prop 400 package put together by the Maricopa Association of Governments (MAG) is in serious trouble at the legislature, and Katie Hobbs and the transit lobby knows it. So, in a desperate attempt to rescue their defective plan, they have phoned a friend to see if a little legacy media pressure will improve their flagging fortunes at the Capitol.
In recent weeks, the AZ Republic has unleashed a torrent of articles and opinion pieces attempting to scare the legislature into sending their transit slush fund package up to Hobbs’ desk. Most of their writings have been nothing more than recycled talking points from MAG and transit industry lobbyists attacking conservative lawmakers and critics (like the Club) for opposing a plan that slashes freeway funding and increases traffic congestion in the region.
A couple weeks ago it was in the form of an editorial that claimed to disprove our Prop 400 criticism by “relitigating” the merits of bus and light rail and proving its value in the region. And now over the weekend, their opinion writers couldn’t race out fast enough to promote the press release issued by Katie Hobbs and the transit lobby that the legislature needs to adopt a fake “compromise” MAG plan.
In short, their efforts to “relitigate” the merits of transit or to declare that there is any type of “compromise” only demonstrate how radical their position really is.
Here are just a few examples of how the Republic has veered from journalism to being nothing more than a lobbying arm of the transit lobby:
There Is a Compromise? With Whom?
Over the weekend a choreographed social media blitz was launched by Katie Hobbs and MAG, with their allies at the Republic eagerly playing along. They claimed that Republicans are refusing to move a “compromise plan” that made over 30 concessions, including reductions in light rail spending.
It sounded great, except for one problem: their compromise plan is no different than the plan vetoed by Governor Ducey last year.
That “big concession” about taking light rail out of the plan? What a farce. Light rail expansion isn’t going away, their plan just shifts bus expenditures from municipalities to the regional tax, which then frees up city money to pay for the rail.
These type of cheap accounting tricks are not surprising to those that have been engaged in the Prop 400 debate at the legislature. MAG and the transit lobby have been adamant for over a year that they won’t negotiate, and that their Momentum Plan cannot be altered. Don’t believe us, just watch one of the MAG transportation meetings from the last couple of months where they have restated this position on several occasions.
And given that intransigent position, it is easy to see why they ran to the Republic to reframe the narrative by peddling their bogus compromise.
Does the Republic Know That Transit Ridership in Metro Phoenix Has Collapsed?
On several occasions the Republic has bragged about transit ridership in the region, even boasting about “32 million annual rides on public transportation.”
One wonders if they even know what that figure represents, because that averages out to only 40,000 people a day using transit in the region, in a metropolitan area of 5 million residents. One 4-lane arterial road will carry more people on a given day than ride a bus or take the light rail.
Also conveniently missing from the Republic editorial is that transit ridership has been in decline for over a decade and fell off a cliff during the pandemic (ridership is still half of what it was pre-pandemic). There are now fewer people riding transit today than were riding in 2005, before 33% of the Prop 400 tax was diverted to transit. Voters were promised twenty years ago that spending billions on light and bus would increase transit use, yet the opposite has occurred, all while the region grew in population by over 1.5 million residents.
Other Cities Waste Billions on Transit Too!
The Republic has also taken the time to point out that “other top 10 metropolitan areas in the country all support buses and rail…in equal or greater magnitude.”
This analysis of course leaves out two important details:
- Virtually every metropolitan area with a large transit system is on the verge of bankruptcy and is seeking massive taxpayer bailouts. Valley Metro is facing a similar fiscal cliff, which is why a large portion of the MAG plan is dedicated to making their bankrupt system solvent.
- The only transit systems not going bankrupt have either imposed performance metrics or are using private operators that are interested in making a profit. Right now fares being collected by Valley Metro are covering only 7% of the cost to operate our buses and light rail. In 2005, they promised voters that fare recovery would be at least 30%. Promises made, promises NOT kept.
Prop 400 Funds Roadway Repairs and Maintenance? Spoiler Alert: It Doesn’t
Another argument promoted by the Republic editorial board is that “a big chunk of Prop 400 proceeds—42% of the projected $14.9 Billion—are to repair and maintain our freeways and roads.” They proceed to state that the entire debate over 400 is “an indictment not of local or regional planning but of the legislature…if the obstructionists at the Capitol truly want to fix potholes and service freeways and streets, then they put their own house in order and raise the gas tax.”
This criticism would be scathing if any of it were true. All of the funding for maintaining and repairing our freeways comes from the state HURF monies and federal dollars. Every dime of that funding is legally required to occur irrespective of Prop 400 moving forward or not.
It’s understandable for someone that is unfamiliar with Prop 400 to make this mistake. But the Republic should know how 400 works, specifically that the proposed tax is slated to only be used toward new freeway and roadway projects.
Clearly they don’t, especially since they proceed to argue that major freeway projects like expanding the I-17 and I-10 should be paid for by the state through a gas tax increase. Really? The only reason the tax exists is to build freeways! MAG’s proposed 400 plan slashes freeway funding by 30%, and the Republic thinks that is a big win for motorists.
MAG Will Only Have Themselves to Blame if 400 Is Not Extended.
Republicans at the legislature aren’t interested in the funding gimmicks or fake concessions promoted by MAG, which is why no agreement has been reached. And now we are nearing the end of the legislative session, which means MAG is running out of time if they want a Prop 400 plan passed at the Capitol.
If they are really interested in seeing something get done, the transit lobby needs to accept that significant changes need to be made to their plan, and no amount of editorials from the Republic is going to change that reality.
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