PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

State Policy Spotlight: Arizona is Good for Small Business, and Improving

By at 21 June, 2019, 4:06 pm

by Raymond J. Keating-

Small Business Policy Index 2019: Arizona ranked 9th best among the 50 states.

 SBE Council’s “Small Business Policy Index 2019” ranks the 50 states according to 62 different policy measures, including a wide array of tax, regulatory and government spending and performance measurements.

 Small Business Tax Index 2019: Arizona ranked 11th among the 50 states.

SBE Council’s “Small Business Tax Index 2019” is included in the Policy Index report, ranking the states according to a wide array of tax measures, including income, capital gains, property, death, unemployment, and various consumption-based taxes like state gas and diesel levies.

Arizona offers a pretty darn positive environment for entrepreneurship, small business and investment. And it just got a little better.

According to SBE Council’s “Small Business Policy Index 2019: Ranking the States on Policy Measures and Costs Impacting Entrepreneurship and Small Business Growth,” which ranks the 50 states according to 62 different policy measures, including assorted tax, regulatory and government spending measures, Arizona came in number nine among the 50 states.

The state also earned a very respectable number 11 on the “Small Business Tax Index 2019,” which is a subset of the larger Policy Index, whereby the states are ranked just on tax measures.

As pointed out in the Index, Arizona’s plusses included no death tax; fairly low individual capital gains, corporate income, corporate capital gains and gas taxes; relatively low workers’ compensation costs; the second lowest level of state and local government employees; a relatively low level of state and local government spending; low levels of land-use and zoning regulation; being a right-to-work state; and scoring well in terms of education reform.

That’s great, but state lawmakers just made additional, small improvements. The state’s individual income tax structure was reduced from five rates to four, with rates also being reduced slightly. The top tax rate, for example, declines from 4.54 percent to 4.5 percent.

The standard deduction also matches the federal level now, and a child tax credit is made more generous.

While not perfect, this new Arizona tax measure is a positive development. More needs to be done in terms of, for example, fully conforming with the federal tax code in terms of expensing. And while this is a net tax cut for Arizona, part of the cut is offset by increased online sales tax collections.

So, a bigger tax cut would be welcome, but this certainly adds to an already-positive policy setting for entrepreneurship and growth.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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