Proposition 116 would stimulate state economy
One lesson Arizona learned — or we hope, at least, that it has learned — is that our economy needs to be more diversified in order to better weather economic downturns like the Great Recession.
In our state's case, much of the economy was being driven by housing and construction when the economic collapse occurred. When the bottom dropped out of those sectors, our state was devastated. The realization came that we needed to encourage other business activities in the future.
We now come to Proposition 116, which will appear on the November ballot for voters to consider.
The measure was placed on the ballot by the Arizona Legislature and although it is not necessarily billed as a business development tool, that is what it promises to be if the voters approve it.
Prop 116 will alter how equipment used by businesses in Arizona is taxed. Currently any equipment owned by a company is factored into property taxes for them, in addition to their land and buildings. Currently, about $68,000 worth of that equipment value is exempted from taxes, but this proposition would increase that exemption to as much as $2.4 million.
There are good reasons to do this.
First, it encourages companies to do business in our state, including smaller companies that produce a majority of the jobs. It is an attractive benefit for someone looking to locate here. It also encourages those already here to stay here. About 93 percent of the businesses in our state would benefit.
Second, it encourages manufacturing companies, which tend to be dependent on large amounts of equipment. Restoring manufacturing activity is a priority not only for our state, but for the nation in general. The exemption will give Arizona a leg up in attracting manufacturers.
Third, the new exemption applies only to equipment bought after the proposition goes into effect. That is an incentive for businesses to buy new equipment, which could stimulate the state's economy.
There might be some shift of property taxes to homeowners but it is estimated to be very small, and the potential benefits to our economy are huge.
A strong economy is good for all of us, and this proposition deserves our support.