House Republicans tout business tax cuts - East Valley Tribune: East Valley Local News

House Republicans tout business tax cuts

Font Size:
Default font size
Larger font size

Posted: Tuesday, January 5, 2010 5:38 pm | Updated: 3:24 am, Sat Oct 8, 2011.

House Republicans want a package of tax cuts for business they say will stimulate job growth, including one that would increase property taxes of homeowners.

House Republicans unveil plan to create jobs

The plan unveiled Tuesday would:

Slash the corporate income tax rate paid by the state's largest companies from its current level of slightly less than 7 percent to just 4.5 percent.

Cut individual income tax rates - the levy imposed on most small- and medium-sized businesses - by 10 percent;

Permanently repeal the statewide property tax.

Reduce the basis used to determine how much property taxes businesses will owe to other levels of government like cities, counties and schools.

It is that last provision which would cause a shift.

Businesses currently are assessed for tax purposes at 22 percent of the value of their land, buildings and equipment. It had been as high as 25 percent; already approved laws have that dropping in two years to 20 percent.

The proposal would take that "assessment ratio'' down to 15 percent by 2016.

But the maneuver would force state and local governments, which are entitled to raise a set amount of money each year, to raise their tax rates, the figure which, multiplied by each property owner's assessed value, computes out to the taxes owed. And homeowners, whose assessment ratio would stay at 10 percent, would end up with higher tax bills.

Despite that, House Speaker Kirk Adams, R-Mesa, said he thinks he can sell the plan to voters anyway.

"The citizens of Arizona understand more now than ever the importance of jobs because there isn't a person in the state who has not been affected by job loss or knows someone whose lost their job or lost a significant portion of their income,'' he said.

"Arizonans get the importance of job growth and job creation,'' Adams continued. "And I think they'll accept this plan because of that.''

But House Minority Whip Chad Campbell, D-Phoenix, said that will never sell with homeowners who already are struggling to pay their current property tax bills.

And the move comes even as two different groups are gathering signatures to put measures on the November ballot to lower property taxes even more than they are now.

Campbell said Democrats might be more inclined to support another part of the package which provides targeted tax breaks which would be available to firms that actually produce new jobs -- jobs that pay at least 25 percent more than the median wage and which fund at least half of each worker's health insurance. These plans would actually rebate companies part of the taxes they generate.

Adams, in detailing the plan, acknowledged the state's current $1.5 billion deficit. He said that is why the tax cuts would be phased in over four years beginning in 2012, presumably when the economy has at least partly recovered.

But he refused to provide details right now of exactly how House Republicans plan to address the deficit in the meantime.

Senate President Bob Burns, R-Peoria, said there is merit in goal of House Republicans to make Arizona "a more business-friendly place.'' But he said the move may be premature.

"You've got to stop the bleeding of the state right now,'' he said.

"That's got to be the No. 1 priority,'' Burns continued. "And these other things are OK but we've got to focus on getting this budget squared away.''

Adams, however, said the deficit makes this the best time to reform and reduce business taxes: when people are focused on creating jobs.

He said one reason the state is in its financial hole is the lack of diversity in the economy, with so much of it dependent on population growth and the construction that comes with that. These proposals, he said, were designed by economist Elliott Pollack as the best way to generate a lot of high-paying jobs, and quickly.

"We think it's important that you talk about job creation,'' Adams said. "We know we are never going to fix the basic structural deficit we face in this state unless we get our economy moving again.''

Arizona's corporate income tax rate is among the highest in the region. Adams said that's a major deterrent to major employers like Boeing, on whose lawn he had Tuesday's press conference, to expand its operations here.

Adams said only a small percentage of companies actually pay that corporate rate, though.

Most firms are set up under a section of the Internal Revenue Code where they book no profits, with the earnings instead flowing through directly to the owners. And the owners pay taxes at the lower individual income tax rates which now top out at 4.5 percent.

But Adams said these large corporations are the real drivers of the state economy, creating jobs in smaller firms who become their suppliers.

He said that creating more of these "base'' jobs will mean more people employed in good-paying jobs. And they, in turn, will pay more income taxes to the state, helping Arizona out of its financial troubles.

Campbell, however, said that logic is flawed.

He said the state has enacted a series of tax cuts over the years, including the reduced business assessment ratios and a 10 percent reduction in individual income taxes in 2006. Yet Arizona has lost more jobs since the recession began than any state other than Michigan.

Campbell also said there is no guarantee that the state will no longer be operating in red ink by 2012 when the tax breaks are supposed to kick in. He said

  • Discuss

Facebook on Facebook

Twitter on Twitter

Google+ on Google+


Subscribe to via RSS

RSS Feeds

Your Az Jobs