On Thursday, I mentioned that I had started writing for Phxated.com. While a lot of my posts will be of the ‘newsy’ variety, I will aim to write at least one opinion piece a week. Here’s my first:
Low Taxes = Low Prosperity
Taxes are the price we pay for a civilized society.
— Oliver Wendell Holmes, Jr. (Republican)Living in Phoenix is a continual lesson in lowering expectations. Just when you think that things are as bad as they can get, the bar gets lowered again. Earlier this week, Derek Neighbors of Gangplank fame expressed hope that perhaps Phoenix had finally hit bottom, and was willing to finally raise property taxes after a 14 year freeze to help pay for much-needed services.
Alas, Derek’s optimism was short-lived as common sense gave way to business as usual. On Tuesday,Phoenix City Council cowardly delayed the decision for two years in a unanimous vote. This leaves the difficult choice in the hands of the next mayor and council.
For the past quarter century, Arizona has pursued a low tax strategy. Since 1977, Arizona’s relative tax burden has dropped from 17th in the country to 41st. However, the promise that lower taxes will equal more investment has failed to materialize outside of the construction industry. In our haste for growth at all costs, we have left our post-war reputation as a high-amenity and high-tech state.
Instead, we’ve become a low-cost, low-income state ideal for retirees and low-wage companies but little else. Indeed over the past 25 years Arizonans’ real income has dropped from about 95% of the national average to less than 80%. The average Arizonan now earn 20% less than the average American.
Sure, nobody likes taxes. But everybody demands quality services. In particular, public services such as police, education, health care, roads, transit, parks and recreational facilities are key factors in attracting the high-tech companies and high skilled-professionals that Phoenix is desperate to lure. Guess what pays for them? Exactly.
This week, Phoenix City Council had an opportunity to begin to rectify this situation and give some substance to their desire to rebuild a vibrant, innovation based economy. Rather, they—once again—proved that the demands of the real estate industrial complex are more important than the need of the citizens.
I have always been of the persuasion that low taxes does = investment and prosperity. But you're absolutely right in that we need taxes to pay for services that make living and investment attractive and acceptable.
Steve, I’ve spent most of my life being against taxes, and still resent paying them. However, I have realized that there is a base level of funding that governments need to provide the services and infrastructure required to encourage private investment and encourage prosperity. While the exact level is up for debate, it would seem that Arizona has fallen below this level. No only do residents lag well behind the national level in prosperity as mentioned in the post, our investment levels are also embarrassingly low, especially in technology oriented sectors (approx 1/3 of the US average). Sure this is due to a variety of factors beyond the control of gov’t, but it is evident that the state’s low tax strategy has not resulted in increased investment (outside of real estate and big-box retail).
I have always been of the persuasion that low taxes does = investment and prosperity. But you’re absolutely right in that we need taxes to pay for services that make living and investment attractive and acceptable.