What is a corporate bailout?

In the midst of ripping the state budget passed by the legislature and signed by Gov. Brewer, House Minority Leader Chad Campbell (D-Phoenix) also blasted the Jobs bill, which will, among other things, cut the corporate income tax from nearly 7 percent down to 4.9 percent.

Mr. Campbell:

“The truth is that Adams and Pearce tout a so-called jobs bill. But that’s also completely false. It’s actually a corporate-bailout package that gives away corporate tax breaks to giant, out-of-state retailers that won’t use it to create a single job here in Arizona; rather, rich CEOs likely will keep it to themselves.”

Since Ken Cheuvront left the legislature in 2010, the Democrats have had no sensible voice when it comes to sound tax policy. Mr. Campbell makes occasional attempts to be sensible when he argues for a more neutral (flatter) tax code, but he quite often seems to enjoy the rhetoric rather than the substance. For example, Mr. Campbell claims to despise corporate tax “loopholes” and targeted tax credits, but his solutions usually involve ending certain exclusions that total a few million dollars (think country club memberships), exemptions and credits (primarily tuition tax credits) in exchange for an overall tax increase (he once proposed a $3 billion tax increase with Rep. Bill Konopnicki (R-Safford)).

His broadside against the Jobs bill sounded just a little too much like a Keith Olbermann rant. Yes, there were corporate subsidies in the Jobs bill (which we opposed), but because of the wording in Mr. Campbell’s charge, the tax credits weren’t the primary target of his consternation. The targeted credits were, in fact, geared toward new jobs, which doesn’t make it good policy, but it does make it tough to claim that they go to “out-of-state retailers that won’t use it to create a single job here in Arizona.” In fact, “retailers” (what does he have against retailers?) isn’t even mentioned in the bill; the bill, given it’s reliance on capital investment, is geared toward manufacturers.

It appears Mr. Campbell’s beef is with the corporate income rate cuts. Populists can say what they want about broad-based tax rate cuts, but corporate bailouts they aren’t. Speaking of the rate cuts, it’s unclear – probably even for populists – how a rich CEO would pocket a corporate tax cut. But what if he could? After all, an owner of a small business – like Mr. Campbell – can pocket a tax cut, so why not a rich CEO?

Mr. Campbell’s attack on corporate tax breaks would have been more accurate had it been directed at SB1041 (aka Invest Arizona), which was an actual corporate tax break. Would he have joined all the Democrats who voted for this subsidy (if it’s any indication, Mr. Campbell voted for targeted tax breaks for renewable energy manufacturers) that Gov. Brewer ultimately – and rightly – vetoed? Who knows? Mr. Campbell missed the vote.