The Ugly Truth About Proposition 126

Proposition 126 is not a tax cut. It is not pro-business. It is not good for Arizona.

Arizonans will have the choice Nov. 6 on whether to pass Prop 126, a ballot measure to amend the state constitution to permanently exempt the service industry from sales taxes. What may sound like a generous proposal to cut taxes is, in reality, an unfair handout to privilege some businesses over others.

  • Prop 126 benefits the service industry while narrowing the tax base, making it more likely that, when push comes to shove, marginal income-tax rates will be raised on everyday Arizonans. Indeed, if the state ever needed to raise revenue, it would be cut off from a significant sector of the economy, forcing it to turn to raising much higher taxes on everyone else.

After all, Prop 126 is not a tax cut. It is a roadblock to keeping tax rates low across the board. It would hamstring our state’s lawmakers, making it much more difficult for them to craft flexible, uniform and fair tax policy.

  • What’s more, Prop 126 is not “pro-business” — it is pro-some businesses, and not others. There are several other ways Arizona could make it easier for businesses to thrive. Doling out special benefits to some while sticking others with the bill is unfair. It’s also bad policy.

While Prop 126 would affect all 7 million-plus Arizonans, it would help only some. During a time when our state’s economy is dynamic and rapidly growing, we need a tax policy flexible enough to keep our taxes low and treat Arizonans fairly.

We won’t get that with Prop 126. On Nov. 6, Arizonans should send this amendment packing.