Close loopholes, and money will be available for state - East Valley Tribune: Opinion

Close loopholes, and money will be available for state

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Ann-Eve Pedersen is president of the Arizona Education Network, a parent-founded, nonpartisan, non-profit organization that advocates for public education

Posted: Thursday, April 14, 2011 4:27 pm | Updated: 7:19 am, Fri Apr 15, 2011.

The East Valley Tribune’s Sunday editorial praised the governor and the legislature for passing a balanced budget, saying that the education community and others don’t seem to understand Economics 101: You can’t spend money you don’t have.

Here’s a piece of Economics 101 that is being overlooked: Plenty of money is available; it just is not being collected by the state.

Arizona would have more than enough money to fund education and core services if our politicians would close some of the $10 billion in tax loopholes written into state tax code.

Gov. Brewer and her majority party legislators stubbornly reject the suggestion to close just a few of these tax loopholes that could easily prevent year-after-year cuts to education and health care.

Why do spa users not pay taxes for their manicures, pedicures and tinted hair? Even Fifi’s new doggie hairdo is exempt from taxation. Just closing loopholes for luxury services for humans and their pets, along with adopting a standard liquor tax rate, would generate more than $438 million in revenue for the state, according to state tax analysts.

That would go a long way toward saving our state’s schools, community colleges and universities — not to mention saving the lives of transplant patients who died for lack of state health care.

If you doubt these loopholes exist, look up the annual tax expenditure report on the state Department of Revenue’s website:

The lengthy report details the $10 billion in tax loopholes in Arizona. If you read the report, you will see that these have been gifts through the years to special-interest groups: agriculture, mining, liquor and many other industries.

Recently, our state’s business community successfully lobbied for yet another tax break — $538 million in corporate tax cuts.

It is now time for the business community and others to stop using their political clout for their own gain and start using it to save the state. They’ll actually save their own hides in the process.

The $1.3 billion cut from education funding over the past three years approved by the governor and her majority party legislators will make it impossible to produce the skilled workers Arizona needs to keep and recruit good-paying jobs.

If you don’t believe education advocates on that point, then listen to the former head of one of America’s top high-tech businesses.

Former Intel CEO Craig Barrett warned Brewer and legislators before the latest round of cuts that undermining the state’s education system is bad for the state’s business climate.

Barrett said that if Intel were relocating now, Arizona would not even be in the top 10 states considered because of its lack of investment in education.

“Quality education is extremely important to a place like Intel,” Barrett said. “(The) education cutbacks don’t bode well for that.” To attract “those high-paying jobs — the jobs that pay two to three times the average — look for your educational infrastructure to be the key,” he said.

If you don’t believe Barrett, then listen to Glenn Hamer, the head of the Arizona Chamber of Commerce and Industry, who warns about keeping the companies we have — let alone recruiting new ones — if Arizona continues to divest in education funding.

“We have a number of companies that have said, you could have the best tax and regulatory system in the country, but if your university system collapses, we’ll send you a postcard from Alabama,” Hamer said in a recent TV interview.

Why do Brewer and legislators act as if they have no other choice than to cut education funding, when they have $10 billion in choices to select from? It’s largely due to the anti-government, anti-tax ideology practiced by majority party legislators who have pledged to “starve the beast” of government spending.

But perhaps that’s a lesson best saved for Economics 201.

For now, it’s back to all you need to know about Economics 101: We should be closing loopholes, not schools.

• Ann-Eve Pedersen is president of the Arizona Education Network, a parent-founded, nonpartisan, non-profit organization that advocates for public education

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