Voracious Corporate Greed And Their GQP Lickspittle Lackeys In The Arizona Legislature

Every GQP-controlled Arizona legislature since Republican Gov. J. Fife Symington III has cut corporate income taxes. Even Democratic Gov. Jnet Napolitano went along with this sop to corporations to smooth her reelection effort in 2006. The biggest corporate tax cuts came under Republican Gov. Jan Brewer and just last year under Republican Gov. Doug Ducey. That is over 30 years of corporate tax cuts.

During this period of time, critical investments like public education funding and water infrastructure improvements during the worst megadrought in 1,200 years have been neglected and treated with denial by Republican legislators. (Those bills are now coming due).

Republicans are the lickspittle lackeys of corporations and serve only the interests of their voracious corporate greed. For Republicans, the only answer to every public policy question is “more tax cuts for corporations.” We live under a corporatocracy in Arizona. It is a modern-day feudal system in which our corporate overlords control everything and we are all but serfs who serve their interests.

One of the very first acts of this new GQP-controlled legislature is to once again propose cutting corporate taxes and ignoring funding Arizonas critical needs.

Howard Fischer reports, Republicans propose cutting Arizona’s corporate income tax:

Republican lawmakers are moving to cut income tax rates for Arizona corporations by nearly half, a move legislative budget analysts say eventually could cut state revenues by nearly $670 million a year.

The party-line vote Wednesday by the House Ways and Means Committee came over objections from all the Democrats on the panel who questioned both the wisdom and the need to take the tax rate from its current 4.9% to 2.5% by 2026. And that follows a series of cuts a decade ago that dropped the rate from nearly 7%.

“There are better places we can invest more than half a billion dollars than on corporate welfare,’’ said House Minority Leader Andres Cano.

“We could give our teachers a $10,000 raise, taking them from 44th in the nation to 19th,’’ the Tucson Democrat said. “We could send relief to Arizona renters and homeowners by quadrupling the state’s current investment in the Housing Trust Fund.’’

But Rep. David Livingston, R-Peoria, the author of HB 2003, pointed out that even legislative budget staffers concede the estimates of lost revenues are “highly speculative.’’

Some of that is because corporations have great flexibility in how and when they compute and pay their taxes. That had led to a volatility over the years.

In 2013, when the corporate rate was close to 7%, collections were $662 million. They hit $368 million when the rate reached 4.9% but rose to $847 million by 2021, even at the lower rate.

What the measure also is, Livingston said, is a matter of equity.

The 4.9% rate applies to what are known as “C-corps,’’ called that because that’s how they’re organized under that chapter of the Internal Revenue Code. The profits of these corporations are directly taxed, as are the distributions to shareholders.

By contrast, “S-corps’’ pay no corporate taxes, with the profits or losses passed on to individual shareholders who report them on their personal returns. And the individual tax rate in Arizona is 2.5%

But not every company can organize that way, with federal law limiting them to companies with 100 or fewer shareholders, all of whom have to be U.S. citizens or residents.

David Lujan, CEO of the Children’s Action Alliance, questioned the need for further corporate tax relief.

He cited figures from the state Department of Revenue that 79% of corporations pay only the $50 a year minimum state tax. That’s because many are able to reduce their reported profits because of various tax credits the state makes available, credits these companies can bank for up to 12 years if they had no tax liability.

In fact, Lujan said, those corporations currently have more than $1 billion in “banked’’ credits that they will be able to use in future years if they ever do have taxable income.

“We think a better economic strategy would be to focus on investing in our workforce,’’ he told lawmakers.

Lujan said many factors go into why companies move choose to locate or expand. And he said one of the biggest factors is not the tax rate but the ability to find qualified workers.

“This bill we believe will make it even more difficult to invest in strengthening our workforce,’’ Lujan said. “It’ll make it more difficult to invest in higher education and job training and K-12 education.’’

Livingston questioned that claim.

“We invested record amount of dollars into K-12 last year and in the previous year,’’ [B.S.] he said. And Livingston said strong state revenues also allowed the state to pay down much of its debt, meaning more dollars are available for not just education but other needs like transportation.

And he said there’s another reason to approve his bill.

“If we cut taxes, there’s an ability — not a guarantee, but an ability — to pay people more or cut (the cost of) products,’’ Livingston said.

Note: Corporations do not pass on tax savings to their employees in wages, they pass them on to corporate shareholders, the owners of the corporations, in dividends. Just as increased productivity of workers has also not been passed on to workers in higher wages. Economic Policy Institute, The Productivity–Pay Gap (excerpt):

What broke the link between pay and productivity?

Starting in the late 1970s policymakers began dismantling all the policy bulwarks helping to ensure that typical workers’ wages grew with productivity. Excess unemployment was tolerated to keep any chance of inflation in check. Raises in the federal minimum wage became smaller and rarer. Labor law failed to keep pace with growing employer hostility toward unions. Tax rates on top incomes were lowered. And anti-worker deregulatory pushes—from the deregulation of the trucking and airline industriesto the retreat of anti-trust policy to the dismantling of financial regulations and more—succeeded again and again.

In essence, policy choices made to suppress wage growth prevented potential pay growth fueled by rising productivity from translating into actual pay growth for most workers. The result of this policy shift was the sharp divergence between productivity and typical workers’ pay shown in this graph.

From 1979 to 2020, net productivity rose 61.8%, while the hourly pay of typical workers grew far slower—increasing only 17.5% over four decades (after adjusting for inflation).

A closer look at the trend lines reveals another important piece of information. After 1979, productivity grew at a significantly slower pace relative to previous decades. But because pay growth for typical workers decelerated even more markedly, a large wedge between productivity and pay emerged. The growing gap amid slowing productivity growth tells us that the same set of policies that suppressed pay growth for the vast majority of workers over the last 40 years were also associated with a slowdown in overall economic growth. In short, economic growth became both slower and more radically unequal.

Howard Fischer continues:

Rep. Neal Carter, R-Queen Creek, had a similar argument.

“The payor, the person remitting the receipt, is a corporation,’’ he said. “But the incidence of the tax, the person actually bearing the burden of it, are consumers and employees.’’

This is the worn out line about how taxes are ultimately passed on to consumers. But many corporations are not paying much, if anything in taxes now, so this is a but a myth.

But Rep. Seth Blattman, D-Mesa, said this is about more than just lost revenue for the state.

He pointed out that cities and towns receive 18% of individual and corporate income tax collections, computed from what was paid two years prior. And legislative budget staffers figure that by 2029 the combined loss to local communities will exceed $120 million.

Rep. Justin Heap, R-Mesa, however, said he was “skeptical’’ that cities actually will end up losing revenues.

“The cities that I have talked to in Arizona are competing to try to get these tech jobs,’’ he said, the kind of jobs he believes a lower corporate tax rate would attract. “They want these high-paying jobs in because that increases revenue of the city, it brings in more money for their economies, and it helps them.’’

Justin Heap is no rocket scientist. Without an educated workforce, quality infrastructure, and a desirable (quality of life/social) environment, businesses are not going to relocate here. Taxes are often the last consideration because, as previously noted, many corporations pay little or no taxes now. Factors for Relocating a Business.

Who would want to relocate to a state without sustainable water supplies and general hostility towards public education and quality of life/social issues (“anti-woke”) environment? Arizona has a well-deserved reputation as being the hotbed of fringe anti-government seditious insurrectionists led by a bunch of yahoo MAGA/QAnon GQP cultists in thrall to Donald Trump. See Laurie Roberts at The Republic, Election deniers will be running the asylum at the Capitol.

Being a national embarrassment is not a selling point to corporations looking to relocate. If this continues, I woud expect to see an exodus of people fleeing this state for more desirable living conditions.