Tuesday, January 29, 2008

Goldwater Institute: Taxazona?

Legislature should permanently repeal County Equalization Tax

By Byron Schlomach

Arizona's Senate Finance Committee could prevent a record property tax hike next year by making permanent the repeal of the County Equalization Tax (CET). That tax, if it goes back into effect, will cost Arizonans $225 million in new property taxes. Every Arizonan will pay, including homeowners, business owners, and renters through their rent payments.

Twenty-three states, including all of Arizona's neighbors, have lower property tax burdens than Arizona when taxes are compared to personal income. Still, some may think another $10 per month for the CET on a $250,000 house may not seem so bad.

Problem is, Arizona is already a high tax state when it comes to commercial property. Owners of distribution centers in Nevada, New Mexico, Utah, and California pay at least 40 percent less per square foot in property taxes than owners of similar properties in Arizona. So, while $10 per month may not seem like much, Arizona is competing for business with nearby lower tax states.

Letting the equalization tax go back into effect is a sure way to encourage businesses fleeing California to leapfrog us for other states or to persuade businesses already here that it's not profitable to stay.

Byron Schlomach is the director of the Center for Economic Prosperity at the Goldwater Institute.

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