News and Updates

Phoenix, AZ – The Arizona Free Enterprise Club announced today the 2017 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 true defender of economic liberty, Milton Friedman.  The quote on the award reads, “A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”

The two recipients of the Free Market Champion Award are:

  • Senator Sylvia Allen (District 6)
  • Representative Anthony Kern (District 20)

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.”

Today the Arizona Free Enterprise Club released a comprehensive study of the Kansas tax reform experiment, reviewing many of the claims made by opponents of the 2012 tax cuts to determine their accuracy and applicability to income tax reform.

Titled “The Kansas Tax Reform Experiment: How Arizona Can Learn the Right Lessons from the Sunflower State,” the study finds that many of the claims made by detractors of the Kansas tax package are simply not true. State spending did not decline after the tax cuts were enacted, economic growth was faster when compared to similarly sized states and business growth accelerated in the state.

Rather, the budgetary problems encountered by Kansas were avoidable mistakes that Arizona can learn from if meaningful tax reform is to be implemented in the Grand Canyon State. Some of the lessons from the Kansas experiment include:

  • Spending restraint is key to any large tax cut—Contrary to the myth pushed by critics of the Kansas tax cuts, per capita spending was not slashed in the Sunflower State. In fact, overall spending increased in Kansas from 2013 to 2016. Any state considering large scale tax cuts should not plan to spend more.
  • Tax reform should include the elimination of targeted incentives and tax credits—When Governor Brownback originally proposed his tax plan, it included the elimination of carve-outs that would have simplified the tax code and recovered lost revenue. These reforms, however, were excluded from the final package, a major mistake that should not be made by other states considering reform.
  • Don’t overestimate revenue growth from tax cuts—A common mistake made by supporters of supply side tax cuts is to overestimate economic growth, and with it new tax revenue, that will immediately pay for the tax cuts. This is often not the case, and projected revenues associated with dynamic scoring should be approached conservatively.
  • Some changes in the tax code generate more economic growth than others—A key to successful tax reform is understanding that some taxes are more damaging to economic activity than others. This is especially true when considering job growth related to productivity taxes vs. consumption taxes. It is even possible that revenue neutral tax reform can generate additional economic growth if structured properly.

The paper also takes a look at the arguments made by progressive pundits to determine if the ‘blue state’ model of higher taxes and regulations has been more successful in the US than the low-income-tax ‘red state’ model. Our findings clearly show that red states such as Texas and Florida consistently outperform their high tax competitors such as Illinois, a fact consistently ignored by liberal detractors.

The Club’s policy paper can be viewed HERE.

It is hardly debatable that Phoenix’s decision to get into the hotel business nearly a decade ago has been a costly mistake for taxpayers.  Since opening, the city-owned Sheraton has sustained millions in operating losses and does not anticipate being a profitable enterprise anytime in the near future.

So, when the City announced it was going to sell the Sheraton, an opportunity was created for city hall to recoup its costs and make taxpayers as whole as possible. Unfortunately, Phoenix Leadership instead decided to use this opportunity to once again soak taxpayer for short term political gain.

Last week, Phoenix completed a deal to sell the Sheraton hotel to a developer for $255 million.  The City built the hotel for $350 million, and even after the sale still owes almost $50 million in debt.

If swallowing a $50 million-dollar loss wasn’t bad enough, Phoenix also gave away millions in subsidies to the developer. Inserted into the deal was a massive $97 million property tax incentive package and the City’s hotel replacement fund, worth approximately $11 million.  With all incentives factored in, the real sale price is closer to $144 million, less than half its original value.

All of this begs the question: Why now accept such a lousy deal when for years a majority of councilmembers and Mayor Greg Stanton fought the sale of the Sheraton?

The reason should anger taxpayers even more. To pay for the construction and operation of the Sheraton hotel, the city has used the sports facilities tax, a revenue stream that generates around $10 million a year. It is no secret that Mayor Stanton and others want to use this tax to build a new sports arena (perhaps for hockey or basketball), and needed to unload the Sheraton to make this happen.  It is outrageous that taxpayers should endure a $200 million-dollar loss on the Sheraton hotel just so a group of city insiders can use the revenue stream to invest in another project.

Furthermore, the property tax carveout included in the deal (GPLET) is currently under litigation.  The Goldwater Institute has sued for several major Constitutional violations with the property tax scheme, one being the “Gift Clause” which precludes municipalities from giving a private person or entity a financial benefit without receiving a benefit to the public at large.

While most of City Hall was on board with this scheme, it should be noted that not everyone went along with this insanity – Councilmen Jim Waring and Sal Dicicio voted against the transaction in an effort to protect taxpayers.  But as is most everything in the City of Phoenix politics – insanity reigns.

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