by Matthew Holloway | Jan 16, 2025 | Economy, News
By Matthew Holloway |
The 2025 Free Enterprise Report from the Common Sense Institute Arizona (CSI) was released Monday and ranked the state of Arizona amongst the states in education as well as the new indexes of economic performance and economic momentum.
According to Katie Ratlief, Executive Director of CSI Arizona, “Arizona continues to lead the way in key areas like tax policy, state budgeting, and educational choice, proving the impact of data-driven, common-sense policies.”
“However,” she added, “challenges in housing, public safety, and homelessness are beginning to slow our momentum. While Arizona remains a top destination for growth, addressing critical issues like crime and the housing crisis will be essential to sustaining our competitiveness. Fortunately, the policies that fueled much of Arizona’s success are still in place, and with a renewed focus on data-driven solutions to address issues like crime and housing, Arizona can solidify its position as one of the most competitive states in the nation for years to come.”
The report details Arizona’s positioning in the emerging recovery of 2025, particularly highlighting the success of the state and its persistent momentum. In an overall measure, the state ranked 27th in “free enterprise competitiveness,” with CSI emphasizing advances in taxes, state budgeting, energy and education, but noting the heavy limitations imposed by housing shortages and rising costs.
In education, Arizona ranked second in the nation in share of students enrolled in school choice options, seemingly ratifying the state’s first-in-the-nation universal Empowerment Savings Account (ESA) program which now provides financial support to over 83,000 families.
The report noted, “Arizona today has the most open K-12 educational market in the country, and hosts a diverse network of District, Charter, and private school options. Since the pandemic, its home- and microschool space has expanded rapidly. Today, about a third of Arizona’s K-12 students are not enrolled in the traditional District school system.”
The report also highlighted Arizona’s Energy situation, noting in a post to X, “Arizona remains a top 20 state for energy competitiveness, boasting one of the most reliable electricity grids in the nation.”
CSI explains, “Thanks to maintaining the nation’s largest nuclear power plant and the moderate and deliberate pace of adoption of wind and solar energy sources (supplemented by robust investment in natural gas), the state’s electrical grid remains reliable and affordable.”
Finally, Arizona’s advantageous tax system was highlighted with the 2.5% flat income tax and property tax instant depreciation of business investments cited in particular for contributing to an extremely competitive tax and regulatory system. Arizona ranked 7th in the nation on the Taxes & Fees Competitiveness Index.
The report observed, “Arizona has significantly reduced its tax burden in recent years, most notably by adopting a 2.5% flat personal income tax rate. This reform cut the top marginal tax rate from 4.5% to 2.5%, simplifying the tax code and making Arizona one of the most competitive states for income taxation.”
Looking to the future, CSI pointed to the steps Arizona legislators have taken to insulate the state against capricious tax hikes, explaining “this tax structure is well protected. Rules requiring supermajorities for statewide tax increases by the State Legislature were extended in 2022 to initiatives and referendums that would have voters approve the tax increases.” The report continues, “Arizona’s competitive ranking for its tax structure is not only unlikely to get worse but may improve (even if further reform is more incremental) due simply to the relative erosion of the position of other states that lack these structural protections.”
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by AZ Free Enterprise Club | May 3, 2024 | Opinion
By the Arizona Free Enterprise Club |
A strong economy is a key piece of the foundation for any society. But while the Biden administration has been busy doing anything it can to destroy the economic climate in America over the past four years, Arizona is set up for success—not just for today, but for decades to come.
Last month, the American Legislative Exchange Council (ALEC) released its latest “Rich States, Poor States” report, and the Grand Canyon State received the number three ranking for economic outlook among all 50 states. Such a high rank is impressive enough on its own, but when you consider that our state was ranked 13 back in 2021, Arizona’s dramatic rise up the chart especially shines. So, how did we get here?
Pro-Growth Policies Have Led the Way
Arizona’s high ranking is a direct result of significant pro-growth income and property tax reform that have supercharged our economy. In just the last decade, we have cut taxes on capital gains and drastically reduced the property tax burden on small businesses. Then, in July 2021, the Free Enterprise Club helped lead the charge as the Republican-led legislature passed a 2.5% flat tax, delivering historic tax cuts for every single Arizona taxpayer. And if that wasn’t enough, Republicans also included tax relief for Arizona’s families in last year’s state budget to help with the growing cost of gas, groceries, housing, and energy under the Biden administration.
Each of these pro-growth policies have set up Arizona as a leader in the country with many other states looking to mirror these reforms, but if the left had gotten its way, we never would have been here.
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by AZ Free News | May 22, 2021 | News
A new survey showing that the vast majority of Arizonans support reducing the personal income tax rate was released this week by Americans for Prosperity-Arizona. Voters believe a tax reduction is important to spur economic growth and allow Arizonans to keep their own money, according to the survey.
According to the nonpartisan Tax Foundation, Arizona has one of the highest marginal income tax rates in the country. Arizona also has a nearly $4 billion surplus for the 2022 fiscal year.
Americans for Prosperity-Arizona (AFP-AZ) is supporting a plan that would reduce the state personal income tax rate to 2.5% for all taxpayers, except for the highest bracket who will pay 4.5%, beginning in 2023,
AFP says the topline results of the survey demonstrate the following:
• Nearly two-thirds of Arizona voters believe it is time to reduce the personal income tax to make it flatter and fairer.
• 66% of surveyed voters said it’s very important to allow Arizona families to keep more of their own money, in addition to 62% saying it’s very important to allow small businesses to pay less in taxes so they can use their own money to grow and create jobs.
• Ensuring Arizona remains competitive with nearby states who have no income tax was also another reason surveyed voters supported reducing the income tax rate, with 53% of surveyed individuals saying that’s a very important reason as they considered the proposal.
“While Washington is working to pass some of the largest tax hikes in history, our state leaders are taking a different approach by letting Arizonans keep more of what they earn. Government digging deeper into our pockets won’t help small businesses hire more workers or meet the needs of Arizona families,” says AFP-AZ State Director Stephen Shadegg.
“Arizonans support this this pro-growth plan that would cement our state as a leader on tax reform and ensure we remain competitive with nearby states who don’t have an income tax. We are connecting with Arizonans across the state to tell them about this plan and enable them to tell their legislators they need to act now. We look forward to igniting Arizona’s economic recovery by making our tax system simpler, fairer, and flatter,” concluded Shadegg.
by AZ Free Enterprise Club | Jan 12, 2021 | News
By the AZ Free Enterprise Club |
PHOENIX – On Monday, Governor Doug Ducey, in his State of the State address, called for the need to “think big” on lowering and reforming taxes.
“My goal has been to make Arizona the best place in America to live, work, and do business – by letting Arizonans keep more of their hard-earned money,” said Ducey, “and having come this far, as other states chase away opportunity with their new taxes, why on earth would we ever want to follow their failed and depressing example?”
“Arizona is now a high-tax state with one of the highest income tax rates, sales tax rates, and business property tax rates in the country,” said Arizona Free Enterprise Club President Scot Mussi. “Bold and swift action needs to be taken to right Arizona’s competitive disadvantage, and the Club is glad to see the governor leading on the issue.”
The Arizona Free Enterprise Club, a nonprofit organization devoted to reducing the income and property tax burden in Arizona, has joined other interested parties in a lawsuit against the latest tax hike embodied in Proposition 208 (Prop 208).
On November 30, 2020, attorneys at the Goldwater Institute, Snell & Wilmer, and Greenberg Traurig filed suit on behalf of a coalition of taxpayers, legislators, and small business groups such as the Arizona Free Enterprise Club, to challenge the legality of Prop 208 and to protect Arizona taxpayers against what they say is an “illegal and ill-conceived measure.”
According to the court background materials, “in the fall of 2020, a group of out-of-state unions and special interest groups placed an initiative on the Arizona ballot designed to raise taxes by nearly $1 billion. Although sold as a measure that would only raise taxes on the rich, in reality the tax falls on middle-class wage-earners, particularly owners of small businesses. In fact, half of the people subjected to the tax would be small business owners.”
Should Prop 208 survive legal challenges, critics claim it would “likely drive businesses out of the state and to slow business growth, resulting in the long term in some 124,000 fewer new jobs over the next decade, and a loss of $2.4 billion in state and local taxes.”
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