Arizona looks to poach California jobs, businesses after tax increases

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Barry Broome

Mike Sunnucks

Senior Reporter- Phoenix Business Journal

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Voter approval of California ballot measures increasing income taxes on the rich as well as state sales and business taxes is prompting another Arizona effort to poach jobs and companies from the Golden State.

The Greater Phoenix Economic Council is offering free airfare and hotel rooms to the first 50 California CEOs and high-tech and high-wage business owners who want to look at Arizona for new locations, re-locations or jobs.

California voters approved Proposition 30. It is a $6 billion temporary tax increase to help alleviate budget woes.

Prop. 30 takes California’s state sales tax from 7.25 percent to 7.5 percent.

It also raises income taxes for those making more than $250,000 per year. Californians making $1 million or more will pay a 13.3 percent state income tax rate -- up from 10.3 percent.

Income taxes also go up for those making $250,000, $300,000 and $500,000 or more. The measure was pushed by Gov. Jerry Brown, D-Calif.

GPEC hopes California’s tax hike will be Arizona’s gain.

“In Arizona, we need California to turn its economy around – we depend on it. Unfortunately, policies like Proposition 30 are driving the state’s best innovators away in droves,” said GPEC CEO Barry Broome said.

The tax increases are supposed to be temporary and expire in 2018.

Another measure, Proposition 39, eliminated some business tax loopholes.

Arizona has long benefited from being next to California’s large economy. Some California companies locate back-office, distribution and production operations in Arizona. Others have fled California’s higher taxes and stiffer regulations to Arizona and other states.

The Grand Canyon State won’t be alone in going after California jobs. Texas and Nevada — neither of which have state income taxes— will also look to snag businesses from Los Angeles, San Francisco and Silicon Valley.

Arizona’s personal income tax rates range from 2.59 percent to 4.54 percent, according to the Tax Foundation.

Arizona’s state sales tax will go back down to 5.6 percent next year after the failure of Proposition 204.

GPEC’s California 50 program is geared toward high-tech and innovative companies and high-wage industries such as aerospace, biomedical and health care.

The first 50 qualified CEOs that contact GPEC by Nov. 16 will receive free airfare, transportation and hotel rooms for their trip here.

Mike Sunnucks writes about politics, law, airlines, sports business and the economy.