PHOENIX—In a special session that began today, the Arizona Legislature is considering a proposal for a one-cent sales tax increase that would be sent to voters in May. The $1 billion annual tax increase has been championed by Governor Jan Brewer as a way to fix the state’s $4.5 billion budget deficit.
But a study commissioned by the Goldwater Institute and performed by the Beacon Hill Institute in Boston shows that a $1 billion dollar sales tax increase would cost 14,400 private sector jobs. That is roughly the equivalent of every worker at PetsMart, Circle K, Harkins Theaters, Starbucks and UPS in Arizona losing their job.
In addition, raising the sales tax by 18 percent would cut the state’s real economic output by $1.2 billion. Arizonans would see their total after-tax income, already hit hard by recession, fall by an average of $300 per household.
“The Beacon Hill Institute has an excellent reputation for modeling the real effects of tax changes,” said Dr. Byron Schlomach, director of the Goldwater Institute’s Center for Economic Prosperity. “These numbers show that a tax increase will hurt our economic recovery by putting more Arizonans out of work. Families could use that $300 to buy a month’s worth of groceries, pay an electric bill, or make a car payment.”
To see the study by Beacon Hill, click here.
The Goldwater Institute is an independent government watchdog supported by people who are committed to expanding free enterprise and liberty.