The First Rule of Holes Revisited

Posted by AzBlueMeanie:

Oh, geezuz… I have previously explained how 20 years of GOP tax cuts have created a structural revenue deficit hole in Arizona that cannot be filled by "magical" belief in faith based supply-side "trickle down" GOP economics. This entirely disproved and discredited economic theory does not work and has never worked. The First Rule of Holes: "The first rule of holes: when you're in one, stop digging." – Molly Ivins.

Yet last year our Tea-Publican legislature passed in a Special Session what was laughingly labeled a "jobs bill" — it was, in fact a corporate welfare tax-giveaway plan. The GOP's double dose of poison to kill Arizona:

Senate Bill 1001 is filled with tax breaks and incentives for businesses large and small. The legislative budget office estimated its cost at $538 million by 2018 [worsening Arizona's structural revenue deficit], when all the tax cuts are phased in.

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Brewer's advisors acknowledged that there is no guarantee the changes would yield enough new investment and jobs to offset the anticipated revenue loss.

These corporate welfare tax cuts are delayed until May 2013 when the temporary sales tax will expire. These prospective tax cuts have not created one job, making the "jobs bill" label a sick joke. When the corporate welfare tax cuts do take effect, it will dig the structural revenue deficit hole even deeper.

But wait, it gets worse. Yesterday our Tea-Publican legislature debated three bills designed to give the so-called "job creators" of the investor class a huge tax break — reducing or even eliminating the capital gains tax — again based upon the "magical" belief in faith based supply-side "trickle down" GOP economics.

And once again it was the "geniuses" (the man's T-shirt in the photo reads "I have nothing to declare except my genius") of the Goldwater Institute promoting this entirely disproved and discredited economic theory that does not work and has never worked.

The Arizona Capitol Times (subscription required) reports Bills to lower capital gains tax moving forward:

Three bills to eliminate or reduce the capital gains tax cleared a House committee today, despite objections from Democrats that a reduction would be too costly for the state.

The measures passed the House Ways and Means Committee along party lines. HB2133, sponsored by Rep. Justin Olson, R-Mesa, would exempt gains from taxes on capital investments made after Jan. 1, 2012.

Meanwhile, Rep. Carl Seel’s HB2488 would phase out the tax, exempting a third of capital gains from taxes starting in 2013, two-thirds in 2014, and finally eliminating the tax in 2015.

The measure with the most collaboration was Rep. J.D. Mesnard’s HB2597, which would increase the percentage of capital gains that could be exempt from taxation, rather than repeal the tax altogether. Mesnard, a Republican from Chandler, said he had been working with Gov. Jan Brewer and groups like the Arizona Chamber of Commerce and Industry on the bill.

Supporters argued that lowering or eliminating the capital gains tax would encourage investment and spur economic growth in the state.

"Lobbyist" Stephen Slivinski, senior "economist" for the Goldwater Institute, testified on behalf of the bills. Anyone who promotes the "magical" belief in the entirely disproved and discredited faith based supply-side "trickle down" GOP economic theory is not worthy of being taken seriously as an economist. The committee may as well have taken testimony from kindergartners about magical rainbows and unicorns.

Rep. Ruben Gallego, D-Phoenix, asked Slivinski which states have the greatest flow of venture capital. When he answered that California and Massachusetts do, which he attributed to the number of universities and technology sectors in those states, Gallego pointed out that both of those states have higher capital gains tax rates than Arizona.

Rep. Steve Farley, D-Tucson, argued that any reduction in the capital gains tax would be too costly for the state and the lost revenue would lead to cuts elsewhere in the budget, like education funding. He added that the wealthy stood to benefit more from the reduction than the working class.

“We’re taking money away from kids and foreclosed homeowners, and giving it to millionaires,” he said. “It’s not capital we need, it’s consumer demand.”

Exactly!

As you would expect from our ideological extremist Tea-Publican legislature, all three bills passed the committee along party lines, with all six Republicans voting for it and the two Democrats present voting against it.

These "geniuses" are still digging the revenue deficit hole deeper.

Of course, this is part of the plan of their lord and master, Grover Norquist, to "drown government in the bath tub."

UPDATE: More good points from Rep. Steve Farley.  Panel approves measure to reduce, eliminate state tax on capital gains – East Valley Tribune:

Rep. Steve Farley, D-Tucson, said the problem is that the state cannot afford the loss of revenues, at least not right now.

He said legislative budget analysts, looking at a similar bill last year, said that even phasing out the levy, when fully implemented, would cut tax collections by more than $420 million a year.

"That's almost our entire surplus for this year alone,'' Farley said.

He said that also ignores that the state has a surplus because voters approved a temporary hike in what they pay in state sales taxes, because people kicked out of their homes in foreclosures cannot deduct mortgage interest payments on their tax forms, and the Legislature cut funding for schools.

"So we're taking the money away from kids, from foreclosed homeowners and we're giving it, in effect, to millionaires,'' Farley said.

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Farley said the flaw in the argument is that the legislation does not limit the lower tax rates on money invested in Arizona companies.

"The capital gains tax is (on) any type of capital that has a gain,'' he said.

"And that includes jewelry, that includes yachts, it includes Swiss chalets, it includes anything that you may buy as an investment,'' Farley continued. "None of that is going to help the Arizona economy.''