Today’s video is about HB2409, small business investment tax credit extension. This is also known as the Angel Investor Tax Credit. In the big scheme of tax giveaways in the state of Arizona, this one is sort of small potatoes dollar wise, but I still have issues. It is an extension if $2.5 million per year tax credit for 10 years. The angel tax credits are for “qualified investors,” people who are licensed, trained, and smart enough to play the stock market and make otherwise risky investments wisely because of their expertise. ￼[My layman’s definition.] ￼
I have attended several Bioscience Roadmap events where they showcase research and new discoveries from the universities that are … just …about… ready for market. What they need is venture capital to get the new drug discovery or the next medical device from our universities to production to market.
I am very familiar with this topic because ever since I started my own small business in 1986, I have been writing about or working in public health and medical research. In fact, the first Bioscience Roadmap event that I attended featured Dr. Gene Gerner, Dr. ￼Tom Grogan and the story of how their research at the Arizona Cancer Center blossomed into huge NCI research grants, new drugs, and successful UA spinoff businesses. I knew them, wrote about their research, and photographed them when I worked in the communication office at the cancer center.￼
My point is that I value scientific research and believe that research jobs (and related jobs that come with big grants) are some of the best jobs in our state. One of the reasons that I don’t support the angel investment tax credit is that I found out that only 30% of the funds go to businesses that spinoff from our research universities.￼ Also, there is a $10 million ceiling to qualify as a “small start-up business” (who is eligible to receive funds from angel investors). If your business has $9 million in assets, is it really as “small business start-up”? ￼
Continue reading More Transparency in Commerce Authority Tax Giveaway Deals Is Needed (video)
Throughout last week as we debated multiple tax giveaways, I repeatedly asked, “Is $1 billion in new tax giveaways too much?”
In debate on Thursday, Rep. Mitzi Epstein and I showcased the 18 Republican bills that give away potentially $1 billion and revealed how little the bill sponsors actually know about the revenue losses that their proposals will create. (I say “potentially” because seven tax giveaway bills have an unknown cost. We shouldn’t be passing bills when we don’t know the economic impact!)
On Thursday, we were debating Rep. Bret Roberts’ HB2752, which was projected to be a $64 million hit to the general fund in FY21, $71 million in FY22, and $110 million in FY23. There was a floor amendment that said it change the calculations for the tax break. Roberts refused to answer a my question regarding how the calculations had changed and whether the cost was going to go up or down from the projected figures. It doesn’t necessarily work out well for the Republicans when they refuse to answer questions. Since he refused, I asked Epstein about this. The upshot is that the amendment made Roberts’ bill even worse and pushed it into the unknown cost column, bringing that total to eight tax breaks with an unknown cost.
Continue reading #HB2752 Gives Away Future Revenue Automatically– Bad Idea! (video)
Crossover week– when hundreds of bad bills are pushed through both houses– is always difficult. In addition to four 12-hour days this past week, Democrats had the extra pressure of trying to stop the tax giveaway parade before it dances off the cliff with our state’s future.
I used to call these tax giveaways fiscally irresponsible, but with 18 tax breaks poised to pass the Arizona House and more coming our way from the Senate, we have crossed the line into insanity. Of the 18 tax giveaways, 11 have some cost estimate. Those 11 total close to $500,000 annually in new tax breaks starting next fiscal year; there are another 7 tax breaks with unknown costs. They’re not free; the Joint Legislative Budget Commission (JLBC) doesn’t know how to estimate their cost. You can read more detail about these bills these three articles here, here, and here. With so many unknowns, if they all pass, Arizona could be looking at $1 billion in new tax giveaways (AKA lost revenue) in next fiscal year or in the near future, since several of them automatically increase over time, and it takes a two-thirds majority to repeal any of them.
Continue reading Is $1 Billion in New Tax Giveaways Too Much? (video)
Several times during the tax cut debates on Wednesday, Feb. 11, in the House Ways and Means Committee, Chairman Ben Toma and other Republicans repeated the mantra that Arizona has a “budget surplus”. The only reason that we have funds that have not been allocated is because we have had decades of budget cuts and chronic underfunding of important programs like public education(!), the Housing Trust Fund, Temporary Assistance to Needy Families (TANF), and so forth. It’s not that there is no need in our state, and, so therefore, we have extra cash. We don’t have extra money.
Also, several times during the committee meeting, I reminded everybody that Arizona is worst in the nation for Adverse Childhood Experiences (ACEs). We are not only shortchanging our school children by underfunding education, we are shortchanging small children before they ever get to school. It is highly ironic that Arizona is the country’s #1 “pro-life” state and also #50 in ACEs, due to our stingy policies and poor treatment of￼￼ our children.
In my study of gaps and inequities in maternal and child health in Arizona, I took a comprehensive approach and looked through the lens of the social determinants of health. Two contributing factors to Adverse Childhood Experiences are housing insecurity and food insecurity.
Continue reading How Can the #1 ‘Pro-Life’ State Be #50 in Child Wellbeing? (video)
The alternative headline for this blog post could be: Are eight tax cuts in two weeks too many? I think so.
Last week, I said that the State of Arizona should change its motto from Ditat Deus (God Enriches) to Tax Cuts R Us.
Looking at this Wednesday’s Ways and Means Committee agenda with￼ four more tax giveaways on it, I stand by my assertion. Eight tax cuts in two weeks? That is fiscally irresponsible.
Today’s video is about HB 2732 (tax credits; affordable housing), but HB2404 (prime contracting; exemptions; certificates), HB2409 (small business investment credit; extension), and HB2629 (TPT; exemption; pacemakers) are also on the agenda. (On the pacemakers, the Dems are wondering why those aren’t already sales tax exempt, since they are medical devices.)
For the last few years, the Legislature has considered (but not passed) tax credits for developers who agree to build affordable housing. I have voted against this every year because there are better ways to make sure that people can afford a place to live– like paying a living wages, fully funding the Housing Trust Fund, and eliminating tax giveaways for luxury apartments.
HB 2732 is a bit less generous with the developers than previous versions of this bill, but this bill still takes millions from the general fund over the next ~20 years. This tax credit is capped at $8 million a year for 10 years. If we pass this, the first year cost would be $8 million, $16 million the second year, $24 million the third year, and up from there to $80 million in year 10.￼￼ The question is, will we be able to afford $80 million out of the general fund in 2031?￼ (After all, the Republicans have proposed eight tax cuts in the past two weeks! Is there plan to break the bank on the general fund? Their proposals are fiscally irresponsible.)
Continue reading What’s on the #AZHouse Ways & Means Agenda? More Tax Cuts! (video)
Instead of “Ditat Deus” (God Enriches), Arizona’s motto should be “Tax Cuts R Us.”
Today in the Ways and Means Committee, we heard three tax giveaway bills: HB229 (corporate welfare for utility companies); HB2355 and HB2356 (increases to the 25% charitable tax credit passed in 2019); and HB2358 (increases to the dependent tax credit).
HB2293 exempts the purchase of electric storage units from sales tax (AKA Transaction Privilege Tax or TPT) and from use tax. When I asked Rep. Tim Dunn, the sponsor of the bill, who benefits from this, he said the utility companies benefit from it, but consumers will see a financial benefit because their rates will go down. (Really? When has that ever happened?)
The industry lobbyist made many circular arguments trying to convince us that giving utilities a tax break was good for consumers. Currently, there are eight rate increase cases before the Arizona Corporation Commission (ACC), including rate increase requests from APS and other electric utilities. When I started talking about rate increases and the relationship to infrastructure investment by utility companies, Committee Chair Ben Toma said that I was off-topic. Dunn and the energy lobbyist were the ones that said giving APS, TEP and SRP a tax break was going to lower costs to consumers. I believe that I was totally on topic when I said that these things were likely to raise our rates in the long term, not lower them.
Continue reading Tax Cuts R Us… #WhatCouldGoWrong (video)