Arizona Chamber of Commerce and Industry

Let's make Arizona business-friendly

In his column last Sunday, "Despite need, now is not time for Arizona tax cuts," Bob Robb made the case that now is not the time for the Legislature to pass a comprehensive job-creation and tax-reform package.

While I usually agree with Robb's views on the Arizona and national economy, this is one of those rare instances in which I believe Robb got it wrong.

Arizona has shed more jobs than any state in the nation, even Michigan. Three hundred thousand jobs have left our state since the beginning of the economic downturn, or 10 percent of our workforce. The numbers make clear that the status quo isn't working. A new approach is needed.

Companies today aren't limited to setting up shop in their own backyard. They can build a new factory down the street or around the globe. The competition over new jobs is fierce, and Arizona is battling with China as much as California to land them.

Arizona needs to do something to entice companies to give our state a hard look. That means putting in place a tax system that makes Arizona more business-friendly.

While Robb argues there's nothing fundamentally wrong with Arizona's tax code, our lost jobs and lack of competitiveness with other states says otherwise.

When it comes to a business property tax, Arizona ranks as the worst or nearly the worst across all categories in a nine-state western region. A high business property tax creates a disincentive for companies to expand their operations in the state and it hamstrings additional hiring. Among states with a corporate income tax, Arizona ranks somewhere in the middle. But our northern neighbors Colorado and Utah offer far better rates than Arizona, as does New Mexico for profits less than $1 million.

The tax package that has already passed the state House, however, would put the state in a far more competitive position to attract employers and corporate headquarters. This is the type of legislation Arizona needs if we're going to create an environment in which business can thrive.

The legislation would not create additional short-term challenges for our cash-strapped state, but would provide future, phased-in relief designed to encourage job creation. The plan was carefully prepared, with respected economist Elliot Pollack crafting the analysis that serves as the basis for many of the items in the proposal.

The Legislature has sent to voters a referendum for a May 18 special election to raise the state sales tax by 1 cent per dollar, a move the Arizona Chamber of Commerce and Industry supports. We must institute short-term fixes to protect services critical to job creation such as our state university system, which is key to both job retention and recruitment.

But our support for a sales-tax increase comes with a call to the Legislature and governor to address Arizona's fiscal crisis comprehensively. That means that sending a tax hike to voters is not enough to expect the state to turn around. We need long-term tax reforms focused on attracting highly sought-after jobs.

Unless we act now to address the jobs deficit, the financial health of our state risks permanent harm.