Glenn Hamer, the president of the Arizona Chamber of Commerce and Industry is a loud, vocal opponent of Proposition 208, the Invest in Education ballot initiative.
He’s not alone. More than 55 major business organizations have joined him. From the Arizona Farm Bureau and Arizona Trucking Association to the Arizona Manufacturers Council and the state chapter of the National Federation for Independent Business.
Another 50-plus elected officials have come out publicly against the initiative. Governor Doug Ducey, Arizona State Senate President Karen Fann, Speaker of the House Rusty Bowers, Yuma Mayor Doug Nicholls, and Goodyear Mayor Georgia Lord, to name a few.
“We’re a ‘hell, no’ for this job killing initiative,” said Hamer. “It threatens to destroy Arizona’s reputation as a pro-business, pro-job creation state.
“This proposition would shatter that by making us the ninth highest small business tax state in the United States of America.”
Hitting the virtual “pavement”
Hamer, whose organization represents about 4,500 employers statewide, has been pounding the virtual “pavement” for several months to get out their message — and the facts — to the public about why this tax initiative is so harmful.
Prop. 208 targets top earners in the state and is intended to fund education. If passed, the marginal income tax rate would almost double for individuals who earn $250,000 or more, and couples earning $500,000 or more, from 4.5 to 8.0 percent.
But Hamer said tens of thousands of small businesses would be affected as well. That’s why so many groups are opposing it.
Q and A: Glenn Hamer, president and CEO, Arizona Chamber of Commerce
What does an education funding initiative have to do with small business?
This would be the largest tax increase in Arizona history. Fifty percent of those impacted by this massive tax hike will be small businesses. This tax would put Arizona in the top-10 list of states with the highest small business tax — up there with California, New York and New Jersey.
And by the way, these small businesses employ 58 percent of Arizonans that work in the private sector. They are small companies, sole proprietors, LLCs and others who file their income taxes as “pass through” entities under the individual tax code. They do not file under the corporate tax code.
This proposition’s ultimate goal is to generate $1 billion for education. That means a quarter to a half-a-billion dollars will be carried by a lot of these small businesses and a lot of workers who are going to lose their jobs.
And the last time I looked, we were still in a pandemic. We know that nationally, 1 out of 7 businesses are gone. Gone for good. And we know many more are teetering on the brink.
At this critical moment, pro-growth policies are what will help businesses recover and get the unemployed back to work. At the same time, we need the small business employers that are doing well to continue growing. We need them to keep employees on the payroll. We don’t want to do anything — anything — to make their job more difficult right now.
What about big corporations? Will they be subject to the tax?
No. It doesn’t affect the Fortune 500. So they collectively will not pay a penny of this.
It’s an important distinction. Small businesses pay their taxes on the individual portion of the tax code. Proposition 208 raises the top rate by 77.7 percent, which means small businesses will pay a top rate of 8 percent, much higher than the corporate rate of 4.9 percent. We would be the only state in the country to basically double the tax on small businesses, and at a time when so many are struggling.
What are economists’ projections if Prop. 208 succeeds?
Numerous economists and commentators have pointed out that high-tax states tend to underperform economically, sometimes dramatically so. An analysis of Proposition 208 by economists Dr. Art Laffer, Stephen Moore and Erwin Antoni compared the economic health of seven states with no income tax against the nine states with the highest income tax rates. Those seven states outperform the high tax states when it comes to population growth, employment growth, personal income growth and GDP.
In our own neighborhood, we’d stick out like a sore thumb. Our neighbors Utah, Colorado and New Mexico all have top income tax rates under 5 percent but our current 4.5 percent rate is the lowest. Nevada doesn’t have a state income tax. If Proposition 208 passes we’d rocket up to a top rate of 8 percent.
You and other organizations have stated the high tax initiative would also affect jobs. How many jobs are at risk?
As far as jobs, there has been debate about how many it would impact. The question is, will it be tens of thousands of jobs or hundreds of thousands of jobs? We’re already down 125,000 jobs from the pandemic.
If 208 passes, the estimates range from 10,000 to 230,000 jobs will be lost over the next decade. Whatever the number, why take a risk in an economy that has been performing well and, because of that, allowed us to increase investments in our K-12 education system?
Teacher salaries are a concern for many Arizonans. Won’t this provide higher salaries for teachers?
There is no guarantee of how much will actually go to teachers. There’s little to no accountability for spending in the initiative language. For instance, it mentions raises for “educators.” That encompasses workers in the cafeteria and bus drivers. These are honorable jobs but there is nothing to show that giving bus drivers a raise will improve student performance in the classroom.
What is your response to criticism that the business community has failed to support education funding?
It’s a phony baloney sandwich. Business groups have long supported funding initiatives to increase education funding and improve academic outcomes. We strongly supported Governor Ducey’s 20 percent by 2020 plan for teacher raises. And the fact is we’re investing a billion extra dollars into our K-12 system and we’ve been able to do that because of our healthy economy.
We support more dollars for teachers, but we’re not going to support something that’s going to cause great pain to the economy during a pandemic.
To read testimonials from other business and elected leaders who oppose the measure, go to: No on 208.
Here are major business groups in Arizona calling for a “no” vote:
National Federation for Independent Business
Associated General Contractors Arizona Chapter
Arizona Cattle Feeders Association
Yavapai County Contractors Association
Arizona Automotive Wholesalers Association
Arizona Automobile Dealers Association
Arizona Bankers Association
Arizona Lodging and Tourism Association
Wine and Spirits Wholesalers Association of Arizona
Beer and Wine Distributors of Arizona
Commercial Real-estate Executives for Economic Development
Free Enterprise Club
Greater Phoenix Leadership
Americans for Prosperity
Arizona Association of REALTORS
Arizona Builders Alliance
Arizona Cattle Growers Association
Arizona Chamber of Commerce
Arizona Farm Bureau
Arizona Farm and Ranch Group
Arizona Manufacturers Council
Arizona Rock Products Association
Arizona Tax Research Association
Arizona Trucking Association
Homebuilders Association of Central Arizona
Arizona Multihousing Association
Arizona Cotton Growers Association
NAIOP | Commercial Real Estate Development Association
Southern Arizona Home Builders Association
Southern Arizona Leadership Council
United Dairymen of Arizona
To see a complete list of business groups, elected officials and others who oppose the initiative, go to: No on 208.