In November 2012 voters in Arizona will address Proposition 116, entitled Property Tax Exemptions. It arises from the Senate (SCR 1012) as a proposed Constitutional Amendment. If passed Proposition 116 would amend the Arizona Constitution to allow the state to exempt from taxation the "full cash value" of equipment and machinery or "personal property" used in agriculture or in a trade or business, up to an amount equal to the annual earnings of fifty workers in AZ. To determine the amount of the exemption, AZ would use a national measure of employee earnings, and would adjust it annually. Under current Arizona law, the first $50,000 of full cash value of equipment and machinery used in agriculture or in a trade or business is exempt from tax and the amount is adjusted annually for inflation. It is currently set at $68,079. If approved, the new exemption would apply to equipment and machinery acquired beginning in the 2013 and the current exemption would continue for equipment and machinery acquired before 2013.
Advocates of Proposition 116 say that:
- Proposition 116 will create thousands of new jobs in Arizona by removing one of the heaviest drags on our small businesses. It does so without creating a new bureaucracy or spending taxpayers' money.
- This tax incentive would allow Businesses to upgrade their old equipment, and purchase high tech equipment without paying additional personal property taxes on the new equipment. This incentive creates manufacturing jobs and incentives to lower small business energy costs.
- Proposition 116 encourages job creation by reducing the tax burden on equipment and machinery. This is especially beneficial to small businesses and startups because the tax on equipment and machinery is owed regardless of profitability or whether a new company has actually sold any products.
- Arizona's equipment and machinery tax is a serious impediment to economic growth, investment and job creation. Passing Proposition 116 will reduce this burden and make it easier for local businesses to expand while simultaneously making us far more attractive to employers seeking escape from high-tax and high-regulation states like California.
Opponents of Proposition 116 say that:
No arguments against this proposition were submitted to the Arizona Secretary of State.
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Note: pro and con arguments for the proposition were quoted or paraphrased from the official arguments. More arguments may have been submitted; I am presenting only a few that I believe will most help readers decide how to vote. You can find the entire wording of the ballot proposition, and all the pro and con arguments, in the official election pamphlet.