Last chance to defeat the corporate welfare tax giveaway plan

Posted by AzBlueMeanie:

The Accidental Governor and the GOP insane clown posse leadership have been retooling House Speaker Kirk Adams' corporate welfare tax giveaway plan (that he laughingly refers to as a jobs creation bill) in the GOP's "Gimmicks-R-Us" shop so that Republicans can vote to cut corporate taxes while shifting the corporate tax burden to individual taxpayers, all the while digging Arizona's structural tax revenue deficit even deeper in coming years. Yes, it's Grover Norquist's drowning government in the bathtub scenario.

The latest incarnation of Adams' bill is scheduled for a committee hearing on Monday. This is your last chance to defeat this corporate welfare tax giveaway plan. Call your state legislators and tell them to "kill this bill" (strike-everything ammendment). (I note the Arizona Daily Star's creative headline writer is back again.) New biz tax package trims revenue loss:

A scaled-back version of proposed tax cuts for businesses still would cost the state nearly $650 million a year when fully implemented – and $60 million in just its first year.

That's the analysis of the staff of the Joint Legislative Budget Committee that reviewed the new language for HB 2250, which is set for a hearing Monday by the Senate Finance Committee.

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[E]ven with the reductions, the timing and price tag put the budget in a bind, coming as lawmakers struggled to plug a $2.6 billion hole in the budget for the coming fiscal year.

Even that plan doesn't balance the books. It [presumes voters will agree] in November to take $325 million from a fund for early childhood development and another $123 million that had been earmarked for purchase of state trust land to keep it off limits to developers.

It also is built on the presumption voters will agree to hike the state sales tax by a penny, to 6.6 percent, at a special election May 18. That levy, which would last three years, would generate about $918 million in its first year.

The potential political problem with the business tax cuts are they would slash state revenues by more than $60 million in the 2011-12 fiscal year and nearly $81 million the following budget year.

Those are the final two years of higher sales taxes, assuming voters approve.

Democrats, including gubernatorial hopeful Terry Goddard, already have seized on the overlap, charging lawmakers want to hike taxes on consumers even as they give tax breaks to businesses.

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Adams said this plan is substantially different from what the House approved earlier because it scuttles plans to cut individual income taxes, slicing $300 million a year off the final bill.

The timing also changes. For example, the plan still seeks to eliminate the state property tax. But it would start the four-year phase-out in 2014 rather than next year. [County governments will shift the corporate tax burden to residential homeowners.]

It also would slash corporate income taxes by 28 percent over five years. While the timing itself hasn't changed, the schedule has: The costs for the first two years would be just $27 million, versus $113 million under the original plan.

That would be made up, though, with bigger cuts in later years, with the ultimate price tag still ending up in the $200 million a year range.

The measure also would reduce the share businesses have to pay of locally approved bonds and overrides. While that has no effect on state revenues, it would shift the burden to owners of residential property.

House Speaker Kirk Adams is still drinking the Kool-Aid from G.I. and Americans for Prosperity about faith based GOP supply-side "trickle down" economics, an economic theory which has been entirely disproved and discredited over the past decade.

An earlier analysis of HB2250 by the Arizona Budget Coalition H.B. 2250 – Tax Cuts to Grow Arizona's Deficit.pdf made these salient points which remain true:

JLBC projects that by FY 2013, general fund revenues will remain $1.71 billion – 18% ‐‐ below FY 2007 levels. Similarly, the Governor’s budget office projects that the number of Arizona jobs will not recover to FY 2007 levels until FY 2014. The provisions of this bill will only add to the deficit.

Since 1989, the legislature has passed tax cuts every year except one (2003). These cuts have resulted in a revenue loss of more than $1.5 billion in FY 12.5 Considering inflation and population growth, revenue in the current fiscal year is nearly $2.6 billion less than it would have been had the long series of tax cuts not taken place.

An analysis by the Center on Budget and Policy Priorities found no positive link between large tax cuts made in the 1990s and later economic success. In fact, the big tax‐cutting states generally faced larger deficits, more downgrading of their credit ratings, and lower job growth than other states that were more cautious about tax cuts.

Many of the provisions of H.B. 2250 have already been done. For instance, Arizona’s corporate income tax rate has been cut 4 times since 1990 and the individual income tax has been cut 7 times.