Tuesday, March 1, 2011

Arizona Economy on Slight Rebound

Posted By on Tue, Mar 1, 2011 at 3:20 PM

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The state’s finances are slowly moving in the right direction. Tax collections have been on an upswing, as compared to the same month one year ago, for six straight months. It might not seem like much, but that represents a reversal of years of declining comparative revenues.

The sales-tax numbers look especially promising. In January of this year, retails sales were up 4 percent, so we’re shopping again. Restaurant and bar collections jumped by more than 10 percent, so we’re going out. Even the contracting tax collections saw up 4 percent bump, although it’s still lagging for the fiscal year. Overall, the state collected $9.2 million over the budget estimate.

The income-tax collections are also coming in ahead of forecast, but the report notes that wages and salaries don’t show much sign of growth, so the numbers might mean that Arizonans are having too much money taken out of their paychecks. (Cue the Tea Party outrage.)

The Range would just like to take a moment to point out that this economic performance undercuts the primary GOP economic theory, which is that higher taxes always inhibit economic growth—or, as we’ve heard it said, “Nobody ever taxed their way to prosperity.” In the last couple of years, Arizonans have increased their sales taxes by a penny per dollar and seen the return of a minor statewide property tax. If every tax increase is bad, those economic tremors should have sent the state’s economy into a tailspin.

Instead, the economy is bouncing back, albeit slowly.

There’s plenty that could still wreck it. Big government cuts still loom, both at the state and the federal level, which will result in job losses. And the state has already guaranteed future corporate tax cuts that will once again throw the budget out of whack. (Speaking of those corporate taxes: Year to date, corporate tax revenues are up 80 percent over the previous year and are $19 million above the forecast. So you can see how today’s oppressive rates are really holding back corporate profits and growth.)

If you're especially wonky, you can look over the report here.

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