I was interested in the tax cut plan unveiled on January 5 by House Speaker Kirk Adams because it contains some elements that I have been proposing to stimulate our economy. However, it misses some important features that would sustain growth for our future.
As proposed in the plan, tax benefits for businesses remain important to attract new employment opportunities; this could encompass growth in existing Arizona companies as well as businesses that would relocate to Arizona. I also agree that there should be a focus on research and high-tech industries, as I have stated previously. The gain in employment of residents, coupled with employee taxes and, more importantly, spending, should offset the tax benefits given the company.
However, I take issue with the portion of the plan that calls for reductions in personal income and property taxes, especially if done at the same time. To significantly reduce state revenues before we balance the budget is too risky and short-sighted. Even though the plan, if passed, would not start phasing in until 2011, it would commit us to cuts regardless of the state of the recovery. I believe we need to support the business incentives, but no other further cuts to the revenue stream at this time.
Another piece lacking from this plan: any acknowledgment that a critical factor in attracting businesses to relocate to Arizona is the support of public education in our state. Companies are concerned about the available skilled labor source as well as the quality of life for their managers and their families who would be moving here. Increasing support of public education is an investment that also should be part of the incentive plan.
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