Wednesday, February 25, 2009

So how's that whole "lowering taxes creates jobs" thing working out?

On Monday evening, over 300 people met at ASU to speak to members of the Democratic caucus of the lege about the devastation caused by the Republican cuts to human services and education in Arizona. Cuts brought on by plummeting state revenue.

Coincidentally, earlier in the day, the House Ways and Means Committee considered further reducing revenue by passing HB2073, a proposal to repeal the state's equalization property tax, a source of revenue devoted to funding education. The committee passed the measure on a 5 - 3 party-line vote, with Reps voting to further cut revenue while the state is in a massive fiscal hole (Republican mantra - "There's no hole you can't make bigger").

Most of the big names in the Big Business Lobbyists - Arizona Chapter showed up to make certain their apologists on the committee (Reps. Andy Biggs, Debbie Lesko, Rick Murphy, Michelle Reagan, Steve Yarbrough) toed the party (and company!) line.

From the AZ Republic article linked above -

Joining the chamber in supporting House Bill 2073 were Pinnacle West Capital Corp., the National Federation of Independent Business, the National Association of Industrial and Office Properties and the Arizona Manufacturers Council. Representatives from the Arizona Tax Research Association and Americans for Tax Reform also supported the bill.
I listened to the recording of the meeting (available here; due to technical difficulties, no video is available). One of the most vocal supporters of HB2073 was Kevin McCarthy of the Arizona Tax Research Association. He (and Biggs, Yarbrough, and Murphy, his parrots on the committee) stressed that lowering taxes would create jobs.

{start tired cliche}

In fact, they shamelessly harped on that talking point many times, clinging to it as a drowning man clings to a life preserver.

{end tired cliche} :))

Anyway, their repeated pounding on that point made me wonder.

The equalization tax that they want to permanently repeal has been suspended for three years. Surely there's going to be some evidence by now of a direct correlation between "no equalization tax for education" and "increased employment."


A quick search of the website of federal Bureau of Labor Statistics provides an answer to that question. (Arizona summary page here.)

In December of 2006, immediately prior to the suspension of the equalization tax, there were
2,888,648 people employed in Arizona;

In December of 2008, that number had risen to 2,945,861, an increase of 57,213.

That proves McCarthy's point, and the point of every Rep in the lege, right?

Not so much.

What that simple comparison doesn't show is that over the same period, the employable workforce also increased, by 159,806. In other words 64% of new workers haven't found jobs, and that statistic bears out in the changes in the state's unemployment rate.

In December 2006, the unemployment rate in AZ was 3.9%; in December 2008, it was 6.9%.

Let's be clear - since the equalization tax was suspended, Arizona's unemployment rate has increased 77%.

Another figure that illustrates just how bad the economy has gotten since the suspension of the equalization tax is the increase in Mass Layoff Events (50+ people laid off from one employer) -

In December 2006, there were 4 MLEs in AZ; by December 2008, that number had risen to 13.

Additionally, last month, there were 24 Mass Layoffs in Arizona.

And there will be still more in February (I know this because my company just had one at the beginning of the month, and is almost certain to have another by the end of spring. If not sooner.)

I know that regular commenter Thane or perhaps somebody from ATRA will point out that I provided no evidence directly linking the suspension of the equalization tax and the increase in the state's unemployment rate.

To that I will respond "Perhaps not, but neither have you provided a evidence of a direct link between defunding public education and increased job opportunities."



Donna said...

No one has ever successfully challenged my assertion that biggest factor in the growth of Arizona in the past 40 years was central air conditioning. You can cut taxes until the cows come home but you're still not going to get many people to migrate out here if you can't provide them with ambient comfort in August.

Tiredofthecrap said...

What!? 40 years ago yes but what does that have to do with today? Last time I checked we could easily get AC.

Can someone show me how raising taxes creates jobs?

I think you fail to point out that the time period you sighted just happened to coincide with a down turn across the U.S. and the housing collapse.