Phoenix Business Journal by Mike Sunnucks, Senior Reporter
Capital gains tax cuts, reborn tax breaks for movie and television shoots in Arizona and changes in the state tax code related to financial losses are part of last-minute budget negotiations at the Arizona Capitol.
Republicans lawmakers and Gov. Jan Brewer are working on a budget deal that could also impact the fate of some tax proposals.
The main legislative vehicle for those tax cuts right now is House Bill 2815. The bill includes a phasing out of state capital gains taxes. The Arizona Chamber of Commerce & Industry is pushing hard for capital gains reductions, arguing it will boost investment in local businesses.
Skeptics say capital gains tax cuts favor the rich and there is no guarantee investments encouraged by such tax relief will happen in Arizona or even in the U.S.
The most likely scenario right now is a more moderate tax cut to state capital gains, instead of a full phase-out of the tax. Another likely tax cut would expand the state net operating loss tax provisions from five to 20 years. The net operating loss provision allows a business to spread financial losses across its tax returns for a number of years — thus reducing its tax burden in profitable years.
Lobbyists at the Capitol expect that to pass, but tax negotiations hinge on how state budget talks go.
Another bill, HB 2127, wants to bring back state income tax breaks for movie and television productions in the state. Previous motion picture tax breaks expired in 2010.
The new bill gives state income tax breaks for TV shows, commercials and movies shot in the state. The bill, like its predecessor tax break, would prohibit tax help going to adult and pornographic movies.
Arizona competes for TV, movie and commercial productions with other U.S. states like New Mexico and Nevada as well as Canada and other foreign locations. Many of those locations offer tax help to get movie shoots and other productions out of Hollywood. Fiscal and tax conservatives don’t favor the movie tax break.
“The Senate should swiftly defeat this boondoggle,” said Steve Voeller, president of the Arizona Free Enterprise Club . “Republicans shouldn’t stand for tax giveaways to select industries.”
The GOP controls both legislative chambers.