Real Solutions for Tax Reform

On May 15th, the Center for the Study of Economic Liberty at Arizona State University and the Arizona Free Enterprise Club organized a highly informative breakfast forum, led by two brilliant economists: Stephen Moore and Stephen Slivinski.  The topic was one you will be hearing a lot more about in the coming months as Gov. Doug Ducey considers ways to reform government and drive the economy:  Reducing and potentially eliminating the state income tax.

As numerous studies and books have shown, the income tax stifles economic growth and disproportionately hurts small businesses – particularly “pass-through” entities like sole proprietorships, partnerships or LLCs.   Moreover, the tax code has become a lobbyist and special interest feeding frenzy, as special carve-outs and tax credits for everything from Hollywood studios to rooftop solar have become the norm.

Yet reforming our tax system to eliminate the income tax has always been derided by the left and the media as too radical, or worse.   They ignore the competitive advantage Arizona would gain over states like California, vying for companies and jobs to relocate.   Not to mention the economic boom that would result in lifting a heavy burden from the small businesses that provide jobs for 97% of the workforce.

But now that Gov. Ducey has shown real leadership in not only calling attention to the need for tax reform, but also publicly considering eliminating the income tax as an option, the issue has newfound importance and is getting a second look.

Towards this end, Mr. Slivinski has published a terrific policy report on exactly how Arizona can transition away from the income tax, towards a more economic friendly tax model – one that doesn’t subject the General Fund to huge swings in projected revenue.   He lists five options, from eliminating it immediately to an 8-year phase down – that discusses all the benefits, drawbacks and challenges in doing so.

I not only highly recommend it, I hope you forward it on to your representatives in the Legislature, and onto the Ducey Administration as well.

The full report can be found here.