Arizona Considers Eliminating Capital Gains Tax

The state of Arizona may be on the verge of strong economic growth.  Why?  They’re considering eliminating their capital gains tax.

A similar proposal was put forward by conservatives in the Arkansas House last year, spear-headed by Rep. Ed Garner, and I strongly suspect it will be a topic of discussion once again in the 2013 legislative session.

Some facts about the capital gains tax, from Goldwater Institute:

  • States that have lowered their taxes on capital gains have seen higher investment and ultimately, job creation.
  • When New Mexico, dropped capital gains taxes to a lower rate than standard income tax rates, venture capital nearly quadrupled.
  • Between 2000 and 2007, states that had low capital gains taxes had job creation rates that were 35 percent higher on average than the states that tax capital gains at higher rates than ordinary income.
  • Goldwater estimates that elimination of the tax could increase investment in Arizona by $30 million in the first two years and create more than 3,000 new jobs by 2016.

As Stephen Silvinski explains,

Taxation of capital gains is, among other things, a tax on entrepreneurship. Businesses – new businesses especially – need investment to flourish.

And of course, as I always say: Businesses don’t pay taxes. Consumers do.

If Arizona passes the bill (HB 2815) they would be the first state to completely abolish the tax. Hopefully Arkansas will follow suit.  3,000 jobs sound pretty good about now.


Nic Horton


One comment

  1. Pingback: Arkansas Republican Policy Platform Starts to Take Shape «

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