Sent to media contacts throughout Arizona and State Senators
For immediate releaseReport found here: http://www.public.asu.edu/~wellsda/research
Arizona Legislature Poised to March to Madness by Cutting Revenues $900 million says ASU faculty study
Dave Wells, a faculty member at Arizona State University, has released a research study “Corporate Tax Games: March to Madness or Economic Growth?”
With the legislature having completed work on the fiscal year 2011 budget, pending voter approvals in May and November, HB2250 “Arizona’s Job Recovery Act” a major tax reduction bill that passed the Arizona State House in January is expected to be heard in the State Senate.
While it is purported to be a jobs bill, it slashes taxes for corporations while also expanding income tax cuts. If HB2250 is such wise policy, it should be empirically demonstrated, not mere ideological assertions. In other words, Wells explores whether we are seeing a March to Madness or Economic Growth?
It seems reasonable to presume from this research that states that have adopted these policies do better than those states which fail to follow these policies. This report takes measures of business climates and business tax rankings relative to an objective macroeconomic growth measure and compares it to how well these same indices perform against the states ranked by the men’s college basketball RPI (Rankings Percentage Index), a.k.a. March Madness—something which has nothing to do with economic growth.
Wells says, “Unfortunately, the business climate and tax rankings don’t correlate with economic growth. Eight measures are better predictors of where the University of Kentucky ranks compares to the University of Arizona than how states perform economically. That’s madness, if it’s your guide to public policy.”
Two measures showed significant positive correlations with economic growth. NAEP 8th grade reading and math scores have a good positive correlation with economic growth outcomes. Even better is the High School Graduation rate.
Wells concludes, “If passed, HB2250 would be a March to Madness, adding another $900 million to a sizeable $2.5 billion structural deficit, while undercutting the educational supports which have been empirically demonstrated to correlate with economic growth.”
The full study can be found at http://www.public.asu.edu/~wellsda/research. The views do not represent the university.