The Arizona Free Enterprise Club

The Arizona Free Enterprise Club announced today the 2018 Free Market Champion Award recipients.  The Free Market Champion Award is given to members of the Legislature that demonstrate leadership and a commitment to free market, pro-growth policies in Arizona.  This year’s award includes a picture and quote from world renowned economist and intellectual defender of property rights, Frederic Bastiat.  The quote on the award reads, “Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.”

The two recipients of the Free Market Champion Award are:

• Senator Steve Smith (District 11)
• Representative Javan Mesnard (District 17)

“The Free Enterprise Club is proud to honor these two legislators for their hard work and consistent support of economic freedom and prosperity at our state capitol,” President Scot Mussi said.  “They truly made a difference for Arizona taxpayers and businesses.”

It seems every day more information emerges about the devastating impact the Washington DC financed ‘Invest in Ed’ initiative would have on Arizona taxpayers and small business owners.

Recently it was revealed that the proposed measure would repeal the automatic indexing of Arizona’s tax brackets – triggering a permanent and ever-growing tax increase on low and middle-income people and families.  This tax hike contradicts months of promises by the supporters of the measure that it would only raise taxes on the “rich.”

Now it has been confirmed that Arizona would have the 4^th Highest Small Business Tax Rate in the Country if this initiative is passed in November.

Jared Walczack, Senior Policy analyst at the Tax Foundation, confirmed to the Arizona Free Enterprise Club that a near doubling of Arizona’s income tax would vault Arizona to 4^th highest small business tax rate in the nation. “In most states, as with Arizona, the tax on pass-through income is just the personal income tax. If Arizona jumped to nine percent, it would now be fourth (in the country), behind California, Oregon and Minnesota for the highest rate.”

Arizona currently has the 38^th highest small business tax in the country, a ranking that makes our state attractive to entrepreneurs and small business owners.

Recent changes made by federal tax reform will only magnify the tax hit. Under the Tax Cuts and Jobs Act passed in 2017, the State and Local Tax Deduction was capped, limiting how much a small business may deduct in Arizona income taxes. “Given the recent cap placed on the SALT deduction, the tax cost of such high rates (on small businesses) is higher than ever.” Walczack said.

Exacerbating the tax hit is the fact that the new higher tax rates would not apply to corporations. Publicly traded companies and Fortune 500 businesses will be taxed at half the rate (4.9%) than most small businesses, an unfair advantage that will grow over time.

Arizona taxpayers should reject this radical upheaval of our income tax system, and preserve the attractive tax climate in our state for small businesses.