Proponents will say the question we are trying to answer is “Are these tax credits working?”
House Bill 2586 (corporate tax credits; annual reporting) won’t answer that question. If we want to do an analysis, let’s do that, but the information this bill will provide won’t come close to answering questions about the program’s effectiveness. It will create an incomplete picture of the programs and detract from the mission of these programs, and the economic benefits these companies provide to many working Arizonans.
This bill’s narrow objective risks painting an incomplete picture for the public. By seeking information on such a small slice of our state’s taxpayers and with such a narrow focus on these programs, there will be two certain outcomes:
- Taxpayer information will be exposed
- No meaningful conclusions will be made about the programs
The information won’t come close to answering any meaningful question on the true economic impact of these programs. Instead of learning what these companies contribute to Arizona through investments, purchasing, job creation and other metrics, this bill looks to force the Department of Revenue to expose incomplete information on a very small slice of our largest taxpayers. This is a department that prides itself on its public trust to maintain confidentiality of taxpayer information.
This bill seeks to subject that information to public scrutiny. It’s not asking for a thorough analysis. It’s simply “reveal and make your own decision.” And let’s note that this bill attempts to reveal information that we ask of no other taxpayer. If this is the path we are going to forge, let’s consider other programs equally, both tax deductions and tax credits.
On the other hand, there is information this bill doesn’t reveal.
It doesn’t reveal the decision-making process that a company uses when choosing to do business in Arizona. This bill doesn’t reveal the change in behavior that a company will make as a result of this requirement being on the books.
If we want to know the impact of the tax credit programs, it’s time to get real and get serious. Let’s start by not adopting this bill; instead let’s do a real analysis and a thorough review of the programs. Not one that singles out two or three programs that are working and set companies up for public criticism based on incomplete information.
I know this bill looks simple and the thought behind it is simple. And so will the company decisions be if you adopt it. Companies will still do Research and Development. They’ll continue to innovate. They’ll just do it elsewhere. Companies will still invest in hiring, but they’ll hire in other states. Companies will still make capital investments in facilities—outside of Arizona.
Can I say that these company decisions are certain? No. What I can say is that the decision you make today will impact the choices companies make in Arizona for new and continued investment.
So if we want a true measure of the impact of these programs, let’s do a thorough study. But let’s not impugn a small slice of our taxpayers who have chosen Arizona for significant investment. Instead let’s work to ensure future investment from current and new participants in the Arizona Comeback.