Ronald Reagan boldly promised that his supply side-trickle-down economic tax cuts would stimulate long-term economic growth and pay for themselves.
They did not and the national debt skyrocketed.
George W. Bush promised the same.
So did Donald Trump.
Everyone knows what happened there.
Republican Arizona Governor Doug Ducey and his pals in the State Legislature have gone further on this fiscal trickle-down kamikaze course with their flat tax legislation and the siphoning of public funds to their rich friends to pay for their children’s private school tuition. The only thing that is giving the state a surplus and keeping us from economic disaster is the new revenues provided by new residents flocking to the state and new industries flocking to blue and purple-leaning cities thanks in large part to legislation passed by the Democratic Congress and the Biden/Harris Administration.
When the demographics of this state stabilize and there are no new revenue streams from arriving residents, this state will head for the fiscal cliff.
That is why it is essential that the tax cut economic proposals of Kari Lake are an ill-conceived and economic risk for Arizona.
As the Mayors of Goodyear and Glendale commented in the Roberts and Resnik articles, the Lake plan would be disastrous for local services like law enforcement which rely on those revenues. The fiscal stability of small towns in the rural parts of the state, which heavily rely on the sales tax revenues from food shopping could be adversely affected.
Lake says this tax cut will be paid for, temporarily, by the state budget surplus which she stated was five billion dollars. The problem with that is the budget surplus is actually just under three billion dollars and how will cities and towns pay for essential services after the temporary transition phase Lake proposes.
Finally, like most Republican trickle-down tax proposals, it would also not really help middle-class and working-class individuals and families. For example, the average person would receive only $28.00 in rental tax relief per month.
Arizona State Economist Dennis Hoffman, when presented with the general outlines of the Lake plan (without the recently released details) said the idea, coupled with the Ducey tax cuts would be inflationary and drive prices up.
Hoffman had more praise for Democratic Gubernatorial Katie Hobb’s targeted tax cut proposals like the state child tax credit for qualifying families, saying:
“If it frees up one of the members of the household, who’s not working but has labor force skills, and would like to participate in the labor force… that can help combat inflation.
On the income side, he said, it’s a modest amount of money that might benefit lower-income people in a state where upper-income earners have benefitted the most from tax cuts.”
Before attending the Phoenix Pride Parade today, Secretary Hobbs, per a press release from her campaign, extolled the benefits of her economic plan in an interview with CNN’s Dana Bash.
“The fact is I have a real plan to address rising costs for Arizonans [and] put money back in the pockets of working families. And experts have looked at both my plans and Kari Lake’s plans, and my plan is the plan that will actually address inflation and put people back to work. The same expert described Kari Lake’s plan as putting jet fuel on the fire of inflation.”
The fact also is that the people do better economically when Democrats are in charge. Republican economic policies may provide a short-term fiscal sugar rush but like that physical condition, it always comes crashing down.
That is what will happen when the Ducey plan is fully enacted and if the Lake one is allowed to take shape.
Voters would do well to choose the candidate whose economic prescriptions are based on sound fiscal facts and realities.
The Lake Plan does not.
The Hobbs Plan does.