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The Goldwater Institute’s outstanding investigative reporter Mark Flatten has produced one of the most important pieces of Arizona journalism in many years called Shifting The Burden: Cities Waive Property Taxes for Favored Businesses.  In it he methodically and devastatingly deconstructs the complicated “government property lease excise tax” or GPLET scheme that insiders close to Gov. Jan Brewer and other top Arizona politicians use to shift hundreds of millions of dollars from small businesses and homeowners to their special interest friends.  The topic is a bit dense but any taxpayer who has asked why their property tax liability keeps going up should work through it so they can understand how the powerful and their lobbyists like Brewer’s man Chuck Coughlin game the system to the misfortune of average guy and gal.

Shifting The Burden: Cities Waive Property Taxes for Favored Businesses

By Mark Flatten
Goldwater Institute Special Investigation
February 18, 2010

Special deals between cities and hand-picked developers have exempted more than $2 billion in development projects from property taxes in Arizona, shifting the tax burden to surrounding property owners and creating a competitive disadvantage for other businesses, an investigation by the Goldwater Institute has found.

Those high-rise office buildings and sprawling retail centers would generate more than $30 million annually in property taxes if they were not exempted through lease agreements with the cities. As a result of those deals, the owner of a $200,000 home near Sky Harbor International Airport in Phoenix pays about $183 in additional property taxes every year. A similar home in downtown Phoenix is charged an extra $90 annually, according to state legislative studies.

The unpaid property taxes are supposed to be replaced by the Government Property Lease Excise Tax or GPLET. However, the Institute’s investigation found GPLET payments amount to a fraction of what would be paid in property taxes.

Virtually every high-rise office tower that has been built in downtown Phoenix in the last decade is covered under a GPLET lease. The tax exemption also has been granted to a now-shuttered dog racing track in Phoenix, a tattoo studio in Clifton and regional shopping malls in the East Valley. In coming years, additional projects worth billions of dollars will be covered under GPLET leases.

Last year efforts by state lawmakers to curb the lucrative breaks in the law were blocked by Mesa officials and the developer planning to use the exemption for a $1 billion resort on the eastern outskirts of the city. But, State Representative Rick Murphy has introduced a bill again this year to curb these agreements.

A recent Arizona Supreme Court decision also puts the property tax exemption in jeopardy. The court ruled that sales tax rebates for a shopping center in Phoenix amounted to an unconstitutional gift of taxpayer money to the developer. Promises of future job growth or other tax revenues are not enough to justify special sales tax breaks, the court ruled. Those are the same arguments that are used to justify GPLET agreements.

Read Shifting the Burden here

Sidebar: Scottsdale’s SkySong Avoids Property Taxes Without GPLET lease

Investigation Analysis by Clint Bolick


  1. It not so different from how Lagos, Nigeria’s electrical system works: government officials and electricity-poachers get it free. But the electric company has to cover its costs so it divides the bill for all of it amongst the actual payers who don’t poach and aren’t big enough fish to get a free pass. The phone system is the same, so the payers who are dutifully paying their bills and not cheating get socked for every non-payer.

    So, the good customers finally drop the phone service. Becomes prohibitively expensive. So instead of hitting the big-wigs for their fair share, the bill is divided up again on the back of the remaining paying customers, eventually driving MORE good customers out – a business model that creates a shrinking base.

    Both the electrical system and telephone system are in a perpetual state of near-total collapse.

    Actions have consequences. If the sweet-heart deals are financed off other businesses, a number will up and leave or close their doors. Plenty of businesses will check out the Arizona business environment, then choose elesewhere.

  2. Excellent post!

  3. Let's be correct here says

    Mark Flatten turned in his “Journalist” card when he went to work for the Goldwater Institute. He’s a paid shill and a propagandist. Which is fine but let us all be honest here. Unless you can tell me with a straight face that The GI would have put out a report if the facts showed something otherwise.

  4. When the “Real estate-development” complex runs the state, you know whose self interest they are looking out for and it isn’t the widow or overtaxed small business woman.

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