Tax breaks for big firms gets OK - East Valley Tribune: Business

Tax breaks for big firms gets OK

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Posted: Friday, February 25, 2005 5:23 am | Updated: 7:49 am, Fri Oct 7, 2011.

Hoping to attract — or at least retain — jobs, a Senate panel agreed Thursday to let two dozen of Arizona’s top corporations pay little or no state income taxes.

The 5-3 vote by the Senate Finance Committee came after a top official from Intel all but said the company won’t build new operations in Chandler without the tax break. Ray Rossi, the company’s director of external tax affairs, said the current system financially penalizes corporations like his that operate a large amount of expensive machinery.

Rossi also refused to commit that if lawmakers make the change, Intel would expand in Arizona — or even promise not to move existing operations elsewhere.

"It is very difficult given business conditions to agree,’’ he said. "We can’t predict business conditions.’’

That annoyed Sen. Ken Cheuvront, D-Phoenix. "You’re asking us to give you a free ride,’’ he said.

A Honeywell lobbyist warned that her company also would not grow here unless lawmakers make a radical change in the corporate income tax structure.

And Barry Broome, president of the Greater Phoenix Economic Council, alerted lawmakers that the current tax system will continue to make Arizona less and less attractive as other states agree to the changes these businesses are demanding.

Intel and Honeywell are not the only companies that would be affected. Other large multistate manufacturers with few sales in the state, like Raytheon Missile Systems in Tucson, also would be able to all but wipe out their corporate tax liability.

The net cost to the state, according to the Department of Revenue, could hit $150 million annually. But Broome said the potential loss of jobs would have an even greater impact.

Rossi acknowledged that Intel already gets a break in its property taxes paid to local governments and schools: It is assessed at a rate equal to only 20 percent paid by other companies. But Rossi said if it weren’t for that break, the company wouldn’t be operating in Chandler at all.

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