Special Poll: Stop Punishing Investment to Spur Job Growth

Small-business owners point to a way out of Arizona’s recession

PHOENIX, Ariz., Dec. 14, 2011 – Small-business owners believe Arizona needs further legislative action to spur job creation and overwhelmingly favor lowering the property tax burden on new equipment and machinery to do so, according to a special poll released today by their leading representative association.

“Small business wants job creation to continue to be the highest priority for Gov. Jan Brewer and the Arizona Legislature next session,” said Farrell Quinlan, Arizona state director for the National Federation of Independent Business, America’s largest small-business association. “Lowering the cost for small businesses to create jobs through meaningful property-tax relief and the further lifting of the regulatory burden will help restore Arizona’s economy and put our citizens back to work.”

The NFIB survey found near unanimous support among small business owners with 93 percent agreeing our leaders should keep job creation a high priority. It also found 77 percent of small business owners favor significantly increasing the amount of a business’ equipment and machinery that is exempt from personal property taxation.

The survey based its personal property tax questions on a legislative referral being developed by Senate Majority Leader Andy Biggs (Gilbert) and other lawmakers, including House Ways and Means Committee Chairman Jack Harper (Surprise). The legislation, called the Small Business Job Creation Act, asks voters to increase the Arizona Constitution’s exemption for new equipment and machinery to an amount equal to the annual wages of 50 Arizona workers or approximately $2.3 million from the current $67,000.

The NFIB survey dramatically reveals that lowering the tax burden on a business’ equipment and machinery would lead to a burst of job creation from small businesses. When asked if Sen. Biggs’ proposal becomes law, 46 percent of small business owners said raising the personal property tax exemption would likely lead their businesses to hire new workers while 56 percent said such a move would likely result in more equipment and machinery purchases.

“Clearly Arizona’s economy has yet to recover and that’s born out in continued weak job creation numbers and Arizona’s unemployment rate remaining stuck at 9 percent,” said Quinlan. “Small businesses have historically led our state and nation out of recessions through creating new jobs and investing in the future. Small business’ message to our political leaders is unmistakable, job creation is the top issue and lowering small business’ cost of creating those jobs is a great place to start.”

The poll was conducted September 6 to October 21, 2011 with 496 respondents who are Arizona small business owners. The entire poll can be read by clicking here. Results from NFIB’s fuller, annual survey on other issues will be released in the coming weeks.

# # #

NFIB is the nation’s leading small business association with offices in Washington, D.C., and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small and independent business owners a voice in shaping the public policy issues that affect their business. NFIB’s powerful network of grassroots activists send their views directly to state and federal lawmakers through our unique member-only ballot, thus playing a critical role in supporting America’s free enterprise system. NFIB’s mission is to promote and protect the right of our members to own, operate and grow their businesses. More information is available online at www.NFIB.com/newsroom.

Small Business’ Top 10 Arizona Legislative Victories in 2011

By Farrell Quinlan

The 50th Arizona Legislature has boldly staked its claim to being the most pro-small business legislature in Arizona’s history. With issue after issue, legislators advanced measures to relieve the tax and regulatory burdens on the engines of our economic recovery, Arizona’s small businesses.  Even in instances where lawmakers mistakenly pursued bad policy, they did so with the right motive in mind—creating more jobs.

Here are 2011’s top ten legislative victories for the small business:

  1. Broad-based Business Property Tax Relief – Passage of then-House Speaker Kirk Adams’ “jobs bill” (HB 2001) included historic business property tax relief that when fully implemented will mean a 28 percent reduction in the business property tax assessment ratio over the preceding decade. Our business property tax burden was the fourth highest in the nation back in 2006 when we began to lower the Class 1 assessment ratio from 25 percent. When the 18 percent Class 1 ratio is realized in 2016, Arizona’s business property tax burden will have settled into the low- to mid-20’s ranking among the 50 states. Truly historic. Moreover, Governor Brewer’s courageous veto of SB 1041 upheld the principle of broad-based business property tax relief over the allure of constitutionally-dubious schemes that pick winners over losers in the tax code.
  2. Corporate Income Tax Rate Cut – The “jobs bill” was so monumental this session; it easily earns the top two positions on this list of small business victories. HB 2001 also slashes Arizona’s corporate income tax rate 30 percent to 4.9 percent when it’s fully phased in by 2017. We should not discount the enormously positive signal this sends to out-of-state enterprises looking to relocate to more business-friendly states. Our corporate income tax and business property tax rates are no longer in question due to our protracted budget crisis. Instead, Prop. 108’s protection against tax increases effectively locks in not only stable and predictable rates—it locks in significantly lower rates. That’s the best economic development tool we could create to spur the strong, broad-based economic recovery that we are all looking to achieve.
  3. Health Savings Account Incentives – House Majority Leader Steve Court’s HB 2556 creates income tax credits for small businesses for the premium paid on a high deductable health plan and for contributions to employees’ health savings accounts. 
  4. Local ‘Bounty Hunter’ Audit Ban – Sen. Steve Yarbrough’s SB 1165 reverses the emerging trend of cities contracting with ‘bounty hunter’ auditors on a contingent fee basis to audit businesses collecting sales tax receipts.
  5. City & County Regulatory Bill of Rights – Sen. Lori Klein’s SB 1598 establishes a Regulatory Bill of Rights to ensure fair and open regulation by local governments.
  6. Union Preference Prohibition – Rep. Michelle Ugenti’s HB 2644 prohibits state entities, counties, cities and towns from accepting federal money for a construction project if accepting it requires them to give a preference to union labor.
  7. Employer Protections & Labor Relations – Sen. Frank Antenori’s SB 1363 restricts unlawful picketing, trespassing and defamation by labor unions against a business.
  8. Tax Closing Agreements Reform – Rep. Jack Harper’s HB 2202 enhances the criteria for declaring an ‘affected class’ for the purposes of determining whether an extensive misunderstanding or misapplication of Arizona tax laws has occurred—thereby allowing for the abatement of past tax liability, interest and penalties.
  9. IRS Conformity Policy – Rep. Harper’s HB 2332 waives any interest or penalties for unpaid tax liability due when the state fails to conform to revised definitions in the Internal Revenue Code in time for the taxpayer to accurately file their annual tax return.
  10. Civil Appeal Bond Limits – Sen. Al Melvin’s SB 1212 provides some relief for businesses in civil lawsuits by limiting the amount of the bond that must be posted against a judgment during the appeals process.

Though this list could go on listing other wins in areas like workers’ compensation reform and returning solvency to our unemployment insurance trust fund, it should be noted that the 2011 session included its share of disappointments.

Sen. Antenori’s SB 1322 would have required most municipal services in Phoenix and Tucson that cost more than $500,000 to go through an open and competitive bidding process. Sen. Nancy Barto’s SB 1593 would have allowed healthcare insurers from any of the 50 states to issue their policies in Arizona under the same coverage terms as in their home state. Unfortunately, both were vetoed by Governor Brewer. The Legislature also failed to act on a referendum to increase the exemption amount on the business personal property tax, a job-killing tax that punishes small businesses for reinvesting in machinery and equipment to grow their businesses.

Still, these setbacks cannot diminish the 50th Arizona Legislature’s overwhelmingly positive record on small business issues. The 7,500 Arizona members of the National Federation of Independent Business thank Governor Brewer and our lawmakers for this session’s impressive achievements on behalf of small business and look forward to building on them next year.

 – Farrell Quinlan is state director for the National Federation of Independent Business in Arizona (www.nfib.com/az). 

Click here to access the NFIB/Arizona Voting Record to see how your lawmakers voted on these and other bills.