Arizona Policy Choices

Balancing Acts: Tax Cuts and Public Policy in Arizona

The Price of a Civilized Society

"Taxes are what we pay for civilized society."

Oliver Wendell Holmes, Jr.

Carol Kamin, Executive Director
Children's Action Alliance

During the 1990s, without significant public debate, Arizona eliminated more than $1 billion per year in taxes one fifth of our tax base. Although tax cuts are often politically satisfying, the extent of our cuts, which are among the biggest multiple-year tax cuts in the nation, have been too extreme.1 Furthermore, they are dangerously shortsighted and threaten the well-being of tens of thousands of Arizonans, particularly children.

In the political arena, pointing out problems with the depth of Arizona's tax cuts invites the marginalizing and simplistic label of "tax-and-spend liberal" a sound bite that immediately cuts off reasoned discussion. However, in the real-life arena, Arizonans want to get beyond labels to what really matters to them. Has their quality of life improved? What did the tax cuts buy for them and their kids?

Arizona's tax cuts did not buy economic growth. Experts agree that the economic impact of state tax cuts is minor when compared with the influence of swings in the national economy. Hawaii, South Dakota, and Vermont raised taxes in 1996, and their economies continued to grow as fast or faster than the national median.2 Colorado kept taxes stable and had the best record in the nation in unemployment trends.3 Utah, with no significant tax cuts, had the highest growth in wages.4

Arizona's tax cuts have not lifted the well-being of our low income, working families. In fact, the biggest benefits of our tax cuts have accrued to higher income families, business owners, and shareholders many of whom don't even live in Arizona. Indeed, tens of thousands of Arizona's parents work as hard as they can, yet still earn less than $17,000 per year.5 These families don't buy much and don't earn enough to owe state income taxes, so income tax cuts and business tax cuts do them little or no good. They can't afford to own a car, their children lack health care coverage, and they make do with low-quality child care or no child care at all at tremendous cost to them and to us all.

Arizona's tax cuts have not lifted the well-being of our low income, working families.

Arizona's tax cuts won't buy us a secure future. No matter how much we brag about Arizona's growth, we cannot repeal the business cycle. We should have learned a lesson from our last economic downturn. Vibrant growth comes crashing down when there are no plans for the future. We've been like a homeowner who has neglected a leaky roof. We've avoided spending some money in the short run, but we are poorly prepared to deal with the inevitable storm. And the problems we have deferred the foundation we have neglected will only worsen and erupt into expensive crises that we will lack the resources to resolve.

Finally, and most importantly, Arizona's tax cuts have not bought us healthy, safe children. Scores of uninvestigated reports of child abuse and neglect have left thousands of children at unconscionable risk. Too many of our children, who go to underfunded schools in dilapidated and dangerous buildings, are being denied the opportunity to reach their full potential. Almost 200,000 children of working families have no health care coverage at tremendous long-term cost.6 Thousands of children are waiting for mental health services they desperately need. Juvenile offenders are back on the street before they get the help they need to stay out of trouble.

Indeed, despite our economic growth, Arizona continues to rank near the bottom of all states when it comes to our national ranking on indicators of child well-being a crucial measurement if we truly care about our future.7 In our rush to cut taxes, we have forgotten that children are the major reason we plan for that future.

The bottom line is that after we add up all of the tax cuts, the quality of life for far too many families in communities all across our state has gotten no better and, in many instances, has actually gotten worse. And that is what matters. We pay taxes to do together what we cannot do alone to maintain a "civilized society." Few Arizonans believe that in a civilized society a child's opportunity for achievement should be limited to what his or her own private family resources can buy.

Do people like having more money in their wallets? Of course. Are these few dollars worth neglecting our infrastructure and hurting our children? No. The cost to our future is much too high.


  1. Elizabeth I. Davis and Donald J. Boyd, "Tax Cuts Slowed Healthy Revenue Growth in 1996," State Fiscal Brief (January 1997). Steven D. Gold and Elizabeth I. Davis, "Tax Cuts Slow Revenue Growth," State Revenue Report (November 1995). Elizabeth I. Davis and Donald J. Boyer, "Second 'April Surprise' Pushes FY '97 State Revenues Even Higher," State Revenue Report (August 1997).
  2. Davis and Boyd, "Second 'April Surpise' Pushes FY '97 State Revenues Even Higher." Elizabeth I. Davis and Donald J. Boyd, "State Budgetary Assumptions for 1997 and 1998: States Predict Continued Moderate Growth," State Fiscal Brief (April 1997).
  3. Davis and Boyd, "State Budgetary Assumptions," "Tax Cuts Slowed Healthy Revenue Growth in 1996," and "Second 'April Surprise' Pushes FY '97 State Revenues Even Higher"; and Gold and Davis, "Tax Cuts Slow Revenue Growth."
  4. Ibid.
  5. Edward Lazere, The Poverty Despite Work Handbook, (Washington, D.C.: Center on Budget and Policy Priorities, 1997).
  6. Children with No Health Insurance: The Widening of the Gap in Ariozna, (Phoenix: Children's Action Alliance, 1997)
  7. KIDSCOUNT Data Book 1997, (Baltimore: The Annie E. Casey Foundation, 1997).


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Morrison Institute for Public Policy