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The Daily Wildcat

The Daily Wildcat

 

Brewer’s economic plan shortsighted

There’s no question that our state is in a world of hurt. Arizona has been battling a huge budget deficit and high unemployment for the past few years. However, all the Legislature seems to care about is the interests of business.  

Last week, Gov. Jan Brewer unveiled her economic development plan for the next legislative session. This plan includes nothing but tax breaks for businesses and decreasing the roles of state regulators. Brewer said she wants to attract new businesses to Arizona that will create new jobs and spark more investment into the state. However, she plans to fund these tax breaks by continuing to make cuts to education and health-care spending. She forgets that businesses don’t just care about tax rates, but quality of life as well.

While well-intentioned, this plan is remarkably shortsighted.

With its current corporate tax rate of 6.968 percent, Arizona is about in the middle when compared to other states. Iowa’s corporate tax rate is at 12 percent for businesses making more than $250,000; California’s rate is at 8.84 percent for all businesses; and Texas, South Dakota, Nevada, Wyoming and Washington have no corporate taxes at all. Most states hover somewhere between 5 and 9 percent and most have progressive scales, where businesses that make more money pay higher taxes.  

If the goal is to make Arizona more competitive and appealing to out-of-state businesses, won’t it have to drastically reduce or even eliminate its corporate tax rate in order to do so? You would think so; after all, why wouldn’t a company choose to expand to Texas, where it doesn’t have to pay corporate taxes, instead of Arizona? Would a cut of the current rate to about 4 or 5 percent really help that much?  Probably not, as there will still be other states with lower or nonexistent rates.

So why don’t we just eliminate the corporate tax rate? The thing is, the state can’t afford it. With the current budget mess, the state needs more revenue, not a drastic reduction of the small amount it already receives. The Republicans in the Legislature claim they can offset the loss of revenue by trimming the fat out of the state budget, but that’s exactly what they’ve been doing for the past three years and there isn’t much left to cut.  

Businesses won’t come to Arizona simply because our corporate tax rate is lower. The Legislature and Brewer need to look at the bigger picture.  Why would a business come to a state that doesn’t take education seriously? Why would a business want to come to a state where the talent pool will be from horribly underfunded and underdeveloped schools? Would a corporate executive want to move to a state where his or her kids will receive a substandard education? No. Businesses are drawn to an area not just because of their tax rates, but also because they like the community as a whole.  

Brewer and the Legislature seem to think that the answer to all our problems is more tax cuts. They offer no solutions to anything except cutting funding for vital state programs (i.e. K-12 and higher education) and promising to make the state more appealing to businesses by offering tax cuts. It’s obvious the state needs more jobs, but simply cutting taxes and eliminating regulations won’t do it. Arizona needs to invest in its future by working to increase the standards of its schools. With a better-educated work force, the businesses will come. Cutting the corporate tax rate will only further hurt the state and encourage further cuts to education, health care and public safety. The governor’s desire to bring more jobs to the state is admirable, but this plan misses the mark.

— Andrew Shepherd is a political science senior. He can be reached at letters@wildcat.arizona.edu.

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