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Lisa Askey: Arizona can't handle a tax hike now
Arizona Opinion

Lisa Askey: Arizona can't handle a tax hike now

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The following is the opinion and analysis of the writer:

It’s been a tough year and a half for Arizona. We rank seventh in the nation for number of COVID-19 deaths per capita, and our economy remains fragile. The state unemployment rate in July was stuck at 6.6%, nearly the same as January. It’s worse than the pre-pandemic rate and the current national average.

That’s why it’s such good news that a bipartisan compromise on infrastructure, brokered in large part by our own Sens. Kyrsten Sinema and Mark Kelly, just passed in the Senate. The measure promises funding for a range of projects, including road, bridge and pipe repairs, that boost our economy — without the crippling tax hikes that’d stifle job creation.

But just as Arizona’s congressional delegation helps us take one step forward, their more liberal colleagues would have us take two steps back. These members aim to advance a gargantuan new spending bill that includes a laundry list of “human infrastructure” priorities.

As a means of paying for the measure, they have proposed raising the corporate tax rate from 21 to 28% and making the international tax regime more onerous. This would strike U.S. businesses hard, right when we need them to be growth engines.

When the government takes a bigger bite out of business profits, that means companies have less money to invest in things like new facilities, research and development, benefits and hiring. It means fewer jobs to go around. And companies support not just their own employees, but whole communities through the ripple effects of local spending. We sacrifice some of that support when we increase corporate taxes.

For instance, small businesses will often function as suppliers for corporations. In our state alone, there are nearly 600,000 small businesses, most with under 100 employees each. Collectively, they employ more than a million Arizonans. Faced with higher corporate tax rates — whether directly or indirectly — they would struggle to keep their doors open.

That’s precisely why lowering the corporate rate to 21%, back in 2017, was a boon. Median household income grew by 6.8% within two years. By the fall of 2019, the unemployment rate had fallen to 3.5%, a half-century record. Minority unemployment reached all-time lows. In short, before COVID-19 hit in winter 2020, the American economy was thriving, with higher revenues filling government coffers even at the lower rate.

Current uncertainty about the future makes this an especially dicey time to raise taxes. The recession pummeled whole sectors of the Arizona economy. The hardest-hit among them, like leisure and hospitality and in-person services, have yet to recover. There’s no predicting how these and other industries will ultimately emerge from the pandemic.

Lower-income workers and minority communities were hardest hit by this recession. Nearly half of America’s Black-owned businesses closed in the early months of the pandemic, and even as of May, Black and Latino unemployment rates remained above the national average, at 9.1% and 7.3% respectively. If we fail to mend the economy, these communities will feel the impact most harshly.

Sens. Sinema and Kelly have been key voices in the traditional infrastructure negotiations. Meanwhile, Reps. Tom O’Halleran and Greg Stanton can prove their commitment to protecting jobs and supporting businesses. This moment presents an opportunity for Arizona’s representatives to lead.

They can urge their colleagues in Congress and President Biden to not undermine the pro-growth policies in the bipartisan infrastructure package by moving ahead with harmful new tax increases.

Arizona has the potential to regain the robust economic health we long enjoyed — especially with the benefit of federal investments in 21st-century infrastructure. But raising taxes now would just put our recovery at risk.

Lisa Askey owns a marketing company based in Chandler.


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