Arizona, Taxes and the Global Economy
Rep. Nancy Barto
 
The historic tax cuts (approx. $545 million) passed by the Arizona Legislature during the 2006 session – my first as a District 7 Representative, were not only our most significant success, but a major step in assuring Arizona’s economic health in the future.
 
Since Arizona is competing for businesses and jobs with not only every state in the union, but every country in the world, let’s look at another economy that compares well in several aspects with Arizona: Ireland’s population is less than, but comparable to Arizona, and like us – has focused on high technology manufacturing and is home to a large Intel site.
 
Ireland’s resurgent economy, now referred to as the “Celtic Tiger”, is the envy of Europe and much of the world. But up until the late 1980’s, the Irish economy was actually among the worst.  
 
What changed? In 1987, Ireland reached the consensus (Government, legislators, business & unions) to chart a completely different course. Corporate tax rates and public spending were slashed (From 1987 - 2003, corporate tax rates were reduced from 50% to 12.5%). Revenues exceeded pre-cut levels by 1989 and Ireland was off to the races.  Ireland’s GDP growth rate now doubles that of the EU and her per capita income – once 63% of the UK (1987), now exceeds it by over $3,000.
 
The Celtic Tiger is both an example and warning to Arizona. Once considered a relatively low tax state, our effective corporate property tax ratio is now 3.1, compared to the national average of 1.8 and fourth highest in the nation.
 
Now that we are on the right track, we need to address a corporate property tax rate which is 2.5 times that of personal property – and is an obstacle to business location, growth and jobs.
 
Death and estate taxes are sold as pillaging the “rich" when, in reality, they confiscate essential investment capital from the small businesses which generate 90% of Arizona jobs. The high paying employers of tomorrow must be encouraged to incubate in our midst – today, which is far preferable to luring them from afar with special deals.
 
Also – our personal property taxes are about to go through the roof based on increased valuations and I urge you to vote for Proposition 101 in November, a legislature-sponsored measure re-setting the limits municipalities can use to levy property taxes to 2005 numbers.  In addition, the legislature was successful in passing a 3-year suspension of the County Equalization Rate, a hidden state property tax collected by the counties, but this will not come close to compensating for the huge increases at hand.  
 
As we strive to make Arizona a competitive environment for global business, we must be diligent to fund essential infrastructure and excellent, innovative education. I am committed to this mission and look forward to continuing this important work in the Arizona House.