Should we repeal the equalization tax?

Raising property tax is worst possible choice
The Arizona Republic
Monday, March 30, 2009
Kevin McCarthy

The economic crisis facing Arizona is extraordinary. Arizona's unemployment is up to 7 percent, and 155,000 Arizonans lost their jobs in the past year. This economic collapse has led to a record state budget deficit.

The question policymakers face now is how to close the deficit. The governor has put tax increases on the table. If we accept that premise, it is vitally important to recognize that all tax increases are not created equal and that each has different impacts on the private economy.

One proposed tax increase calls for the return of the state equalization property tax. To offset rising property taxes, this rate was eliminated over the past three years but is scheduled to return this year unless the Legislature takes action to stop it.

If we have any chance of reversing declining state revenue, our fiscal-policy decisions must be focused on job creation. Raising property taxes, already some of the highest in the country, is the worst possible choice and would certainly dampen investment in Arizona and kill more jobs.

By simply failing to act, policymakers will guarantee the largest property-tax increase in state history. Their inability to act shouldn't be confused with leadership.

Surely, employers and taxpayers deserve a more thoughtful resolution to this crisis.

Kevin McCarthy is president of the Arizona Tax Research Association, a tax-watchdog group.