Tax Issues Force Arizona’s Economic Outlook Ranking To Slip

arizona capitol

The American Legislative Exchange Council’s latest annual Rich States, Poor States report shows Arizona’s economic outlook ranking is slipping.

Of the 15 variables the report uses for its economic outlook ranking, Arizona received poor grades for its top marginal personal income tax rate (42), state minimum wage rate (44), and sales tax burden (45).

“While we slipped three places in the ranking, are no longer in the top ten, and are approaching what could be a crisis of competitiveness, hope still remains that we can correct course,” said Chad Heinrich, Arizona state director for the National Federation of Independent Business (NFIB).

“To help small businesses the State Legislature must focus on fixing the disparate tax treatment of commercial property, reforming Arizona’s individual income tax code with small businesses in mind, and making our unemployment insurance (UI) trust fund solvent without raising taxes on Main Street enterprises, the latter of which is not measured in the Rich States, Poor States report,” said Heinrich.

The NFIB poll released yesterday showed an increase in small business optimism over the previous month’s increase but keeping the small-business economy from soaring is the drag of record highs in unfilled job openings.

“Gov. Doug Ducey’s signing of liability protection legislation will help Arizona’s small businesses open with confidence as we return to pre-pandemic business operations, as will Arizona conforming with several small-business-focused tax provisions in the federal CARES Act. The two big questions Main Street entrepreneurs have are: Will they be hit with a double whammy if the legislature increases unemployment taxes while UI rates have also increased due to the pandemic and how deeply would a federal effort to raise the minimum-wage rate to $15 an hour affect their operations,” said Heinrich.