Kevin McCarthy on the Impact of Taxes 59:06

Welcome to Broken Potholes with your hosts. I'm Sam Stone. Chuck Warren in the studio with us has almost always the irrepressible Kylie Kipper. And today's guest, someone I'm very excited to have on the program because I'm a nerd. Kevin McCarthy is president of the Arizona Tax Research Association, which is probably an organization not many people outside of the government circles have heard of, but it's an incredibly important one.

You are a recognized expert in the fields of public finance and taxation, extensive experience representing taxpayers and policymakers at the state and local level. I know you've been very helpful to some of us, at least in the city of Phoenix over the years. Hope so. Some were maybe not as happy with that help.

from time to time. That's true. You've been appointed to and served on numerous legislative and executive committees. You're currently serving on the Arizona State Retirement System Board and the Property Tax Oversight Commission, both of which are critically important to Arizona families, taxpayers, anyone walking around in our state. They just don't know it. That's right. That's right. So, Kevin, thank you. Welcome to the program. Appreciate the invite.

So tell us a little bit about ATRA. What is it? What do you do? And how is that? How's it going right now? Well, so the Arizona Tax Research Association is an 80-year-old taxpayer organization, one of the older taxpayer associations in the United States. We have about 28 organizations around the country that are similar, that are statewide taxpayer groups. ATRA was formed...

80 years ago by largely the ranching and copper industry and largely business, been business membership financed through our history. And our job is to be a watchdog of state and local governments, how they spend, how they generate their revenue from taxpayers and how they spend those monies.

myself and a staff of three others do that. A lot of people in government, particularly local government, think we have a staff of 30 because they think all we're doing is looking at city governments or K-12 schools, but we're a very small organization. One of the things that we do that I think is really important when the legislature's in session

We are ever present at the Capitol. We read every bill that's dropped that has a public finance or tax impact. Our staff are experts in public finance. They can tell lawmakers what the impacts are. Four very overworked experts by the sound of it. Yeah, my staff likes to remind me of that on a regular basis. And so we lobby at the Capitol. We testify on bills. We have our own legislative program, so we're heavily involved in...

Any state and local tax issues, whether it's changes in property taxes, sales taxes, income taxes, my staff are experts in the school finance system that's quite complicated. And so if there's a change being made to a technical area of the school finance system, we're often testifying in front of committees explaining to lawmakers how this is going to affect both schools as well as taxpayers.

And if we think it's a bad policy and it's something that's going to negatively affect taxpayers, we'll be opposing it. And so we're pretty good at stopping legislation that is bad. Lawmakers, you know, a lot of times lobbyists get a bad rap. But a lot of times if there's not somebody in the meeting room to explain to a lawmaker maybe that is new what the technical impacts are of legislation, they don't know. And those bills move through committees. And so we...

We try to be there to make sure that at least they understand what the impacts are, not only on the entity that's levying the tax, but the taxpayers that are paying it. Kevin, of the legislators, who up there do you feel has the best grasp of budgets? Every legislature has some people that are just due to background or they just have the ability to understand it. Who up there, if I was a Arizona voter, would you say has the best grasp on budgetary numbers?

You're asking for a specific member. Yeah. You're going to get me in trouble. No, I mean, let's say they're all good. OK, but there's always an exceptional people. Right. There's always one or two. Who would you up there that you feel like is just that just really understands it?

It's not easy. It's not like an Excel sheet for Little League accounting, right? And before I answer that, I think it's in fairness to lawmakers in the process. When I meet with new lawmakers or somebody that's running for office and going to be at the Capitol, I say,

One of the many things I tell them is don't pretend that you're going to be an expert on everything. It is very difficult. There are upwards of 800 bills that are introduced in any given year. I'm amazed at the amount of work that they've got to plow through. We're only dealing with public finance and tax. They're dealing with the whole gamut of issues. And so some will have decided to...

develop some area, develop their strength in an area that's non-budget related. It is, you know, maybe environmental, for example, and running the...

you know, important water issues that the state might face. But there are some that focus on budget and tax. In the House, the current House Appropriations Chair, Regina Cobb, has done an outstanding job getting up to speed with how the budget works. You could spend 20 years there and not completely understand all the various aspects of the budget.

You know, in the Senate, you know, you've got Senator Vince Leach, who's the Senate pro tem, has, I think, early in his career decided that he was going to focus on public finance and tax as an outstanding job. And Vince has really grown over the years in that knowledge and his ability to navigate that. Yeah, yeah.

Senator David Gallin, the appropriations chair, same thing. He's spent a lot of time working on that, and they don't get as much credit. People don't realize how much time goes into building. I tell people we could have sessions and not pass a bill, and it might be a rewarding exercise, but you do have to pass a budget. And it's easy for some lawmakers to criticize that.

spending, the size of the budget, maybe various aspects of the budget. But if people run for office and say, listen, I don't like how much money is being spent, so I'm just going to vote no, and I'm checking out of this process, and I'm not going to really engage in it because I don't like it to begin with. Forget that that's really the number one reason why they were elected, was to pass a state budget.

So I encourage lawmakers to stay in the fight. You know, success is at the margins are important. And you're not a partisan organization. We are not. We we don't get involved in partisan campaigns. We are very active in statewide initiatives that affect taxpayers. We were we were heavily involved in.

A year and a half ago, trying to defeat Prop 208, which was a devastating proposal to raise personal income taxes. But we do not get involved in partisan activity. We take calls on a regular basis from Democrats and who ask us questions, just straightforward questions. How does this work? How does how does the tax system impact democracy?

taxpayers in a particular area and they know we'll answer the question straightforward and honestly. Because if you're a U.S. Congress member, you have the Office of Management, OMB, Office of Management and Budget. They score all the bills that affect these things. And there's some questions about whether that's a partisan process or not. But

We don't have that kind of thing in the states, right? It's organizations like yours that fill that role. Well, that's true. There is some of that going on there. We have a very, very capable group at the Joint Legislative Budget Committee that scores bills, but not every bill gets scored.

You could have a quite complicated bill in the area of school finance that may not look to have an impact on taxpayers directly, but it does. As all school finances seem to be. They seem to get more complicated as every passing day occurs.

Yeah, we've done a good job over the last 40 years of overcomplicating what should have originally been a relatively straightforward school finance system that pretty much let dollars follow the kid. Question. Okay, so the 2.5% flat tax that the legislature –

How does that benefit the state of Arizona? And why did the Democrats and teachers unions bring over $4 million of out-of-state money in to try to— And are doing it again. That's what they spent so far, almost $5 million, to overturn this. First of all, what are the benefits for the state as you see it? And why are they panicking so much that they're having liberal unions outside of Arizona come in and spend almost $5 million trying to overturn it?

So the the that was the large the your the tax cut you're talking about was large tax cut in Arizona history approaching two billion dollars in moving Arizona's marginal rate structure that is roughly between two and a half and four and a half down to a flat tax of of two and a half percent.

was the direct result of the passage of Prop 208. So 208 financed, as you had indicated, by out-of-state special interest groups, which really did by precious little

in terms of generating a lot of money for the K-12 schools. It was $800 million roughly that was being generated. We've appropriated that in single years to the K-12 schools, especially in recent years. So it wasn't going to be an amount of money to dramatically improve their financial situation, but it did extraordinary damage to a personal income tax system that was in pretty good shape and drove our top marginal rate

to 8% making it the ninth highest income tax in the country. We led with the first analysis on the impact of that and tried to educate taxpayers that actually we have benefited significantly from

a relatively low marginal rate of four and a half percent. We've been swimming in income tax revenue for the last 25 years, and this was going to was going to literally ruin that. It, as you know, it passed. And the legislature, the Republicans in the legislature were quite concerned about the long term damage that that was going to do and said, we're

We're going to do whatever we can to try to mitigate that economic development and economic growth damage. And so they set out on doing everything that they could in the income tax code to mitigate the damage done by 208. What evolved was an income tax package that if you had told me back a week before the election occurred that they would be doing that, I'd say that would be rather remarkable. But I think it was a response to, by them...

in unanimous, by the way, Republicans in both the House and the Senate, how significantly their concerns were that this was going to do huge damage. And so that's why it passed. And the same group

By the way, that advocated for 208 came back to put that back on the ballot. We have an initiative process and a referendum process, so they've referred that back to the ballot. That's what I was talking about. They brought in almost $5 million from out of state to just put this back on the ballot again now and to get rid of it. It's quite remarkable that no one in Arizona is funding this. Well, no one in Arizona, for the most part, in my eyes, funded the original 208. No, they didn't. It was...

20 million spent, more than 20 million spent on both sides. Our money in opposition was dominantly Arizona-based monies, and theirs were out-of-state monies from Portland and the National Teachers Union. We'll carry on with that when we come back. Broken potholes coming back in just a moment. It's the new year and time for the new you. You've thought about running for political office but don't know where to start.

Before you start any planning, you need to secure your name online with a yourname.vote web domain. This means your constituents will know they are learning about the real you when they surf the web. Secure your domain from GoDaddy.com today. Welcome back to Broken Potholes with your host, Chuck Warren. I'm Sam Stone. In the studio with us today, Kevin McCarthy from the Arizona Tax Research Association.

This is the geeky love. This is the geeky stuff I love, Chuck. I love this stuff. But, you know, I want to talk about something that's kind of one of the important talking points you hear from a lot of Republicans around the country here in Arizona is they want to push for a zero income tax. That's not always the best idea versus maybe just having the lowest overall tax burden. Right. What are the effects? I mean, if if we were to push to that here in Arizona.

Well, there have been at least a couple of Republicans who've run for office in Arizona and said that they wanted to eliminate the income tax. Started with Governor Fife Symington, who made quite a push for that and made a fair amount of progress in decreasing personal income taxes almost upwards of 40 percent during his tenure.

The problem with the complete elimination of the income tax is that it is one thing to build a tax system without it, as Nevada has done and Texas has done and Florida has done, where the other systems are built so as not to overburden them, whether it's property taxes or sales taxes. Most states have what we call a three-legged stool, income taxes, property taxes, and sales taxes.

If you have a tax that's already in place and you try to eliminate it,

let alone wean yourself off of it, it can create quite a bit of a shock to the overall balance of the tax system. And Arizona's, regrettably, Arizona's property tax system and sales tax system aren't poised to take on much more of a burden than they've already got, particularly the property tax. Arizona's property tax has been famous for having some of the highest property tax burdens on business in the United States. At one time in the

In the late 1990s, our effective tax rates on businesses were third highest in the United States. No one wanted to come here with a major industrial operation like an Intel plant.

Which is why some of the tax incentives that were put into the property tax system, whether it's foreign trade zones, what have you, to try to decrease that burden. Because we had set up the system intentionally to overtax business and undertax residential property. So if we were to eliminate income taxes and shift more of that burden on the property tax, you'd immediately have...

some serious economic development challenges in aggravating the business property tax problem. And before I leave that, to the credit of state policymakers, there's been a lot of progress made in fixing that problem. We now are in the business property tax rate rank in the low 20s.

the assessment ratio on business property that was as high as 25 percent some 15 years ago is now headed to 16 percent with the most recent legislation that was passed and it's not an easy political area to work in and a lot of lawmakers over a lot of long period time and governors deserve a lot of credit to go in that direction to solve that problem as opposed to targeted tax breaks. The other thing on the sales tax if we if we tried to recoup

All that income tax on the sales tax, there's really not room for that either. We have some of the highest sales tax rates in the United States. It's not uncommon in Arizona to run into a sales tax rate that eclipses 10%.

That's quite uncommon across the United States. Sales taxes are popular in Arizona. If you want to get something passed, if you want to fund a transportation project or something big, that's the easiest place to go. The reason for that is nobody knows how much they pay. If I don't know how much I pay in sales taxes and I'm the geek that you're referring to, I'm pretty sure no one else knows. It's just – And they don't look at it a lot of times. No. Yeah.

No. You know, when Phoenix passed the luxury tax, the add-on to our sales tax that kicks in on products that are, I think, over $98,500, that actually drove down our tax revenues. Sure. Because all the businesses that sold products that cost more than $100,000...

went out of state because they're out of city. They went just across our border because you can see it. If you're going to go buy a $100,000 car and it costs two grand more on one side of the street than it does on the other, that's pretty easy to see. And it doesn't matter how much money you have. You're going to go save two grand. Yeah, no doubt about it. Well, that's why a lot of the auto dealerships, if they can, they'll try to gravitate to the unincorporated areas more.

of the county so they don't have to negotiate the city a city sales tax at all and so um yeah and when you when you eclipse 10 on the sales tax and and taxpayers do the math in their head now you have problems when

When it's south of that and people don't do that math, they don't think too much about it. When they start doing it, when they're doing it in their head. When they start counting on their fingers, you're in trouble. Yeah, yeah. Now, as a fiscal system, we were aided in that challenge by the-

the wayfarer decision in the US Supreme Court that tax remote sales. A lot of people, you know, probably don't like me hearing saying that, that that was a good thing. But if you're a state that has a fiscal structure that relies on sales taxes as much as we do, unless we want to go get it in higher income taxes or property taxes,

You have to you can't have that leaky hole in the bottom of your your bucket and have that much commerce being done online. And when that was happening, most of those transactions weren't taxable and the state was losing hundreds of millions. And part of the shot in the arm that we've seen during the pandemic state and local governments, by the way, are swimming in money.

The impact that the federal largesse has had on state and local budgets has been unbelievable. And so we continue to have record sales tax growth. We wouldn't be having that if we weren't able to tax those transactions that are occurring through online, through Amazon, and having delivered. How much revenue has that since the wave started?

fair decision. How much revenue has it increased for the state? Just on that alone, at the state level, we think roughly $300 million.

Annually? Annually, and that doesn't include local governments. They're probably in the $100 million. Phoenix thinks it's $140, $150 million. Yeah, well, probably not for them alone, but statewide for cities, it could be that high. Now, some of that might be temporal. Clearly, I think through the pandemic,

people locked at home. There was a lot going on, and people getting all of the stimulus money. A lot of transactions that were occurring online that were state and local governments are benefiting from that tax revenue. So some of that will slow, but it's better. Not much, though. I mean, I think this is a habit for people now. There's no doubt. People are, and I know it. For the introverts of the world, this is a wonderful thing, right? Yeah, well, I don't know. My wife's not an introvert, but there's a package at the front door every day.

And so we are paying I'm paying a lot of sales taxes on to whatever. Well, we we appreciate your efforts to help the Arizona state government. You know, one of the things you kind of touched on, and it's one of the things I want to talk about when we come back for the next segment. But the city of Phoenix and dealing with their unions and we have this union coming in from outside.

They only see raising taxes as a way to increase the revenue. And it's really all about their membership. But they never see growing the economy.

And so I think that's one of the disconnects that we're talking about with these propositions and these folks coming in from out of state. Well, that's because they're not responsible for a paycheck. The money comes on a tree. Right. I mean, it's monopoly money to them. Well, and you get a raise every single year. Ask every school district or the supervisor making the salaries they make.

Yeah. And that's the point that we made in 208 was that we benefited so much from having a steady reduction in income taxes here. And the number of millionaire filers we have have skyrocketed in the last 30 years. That doesn't happen if you have those high rates. They're not going to locate here. No. Broken potholes coming right back.

The 2020 political field was intense, so don't get left behind in 2021. If you're running for political office, the first thing on your to-do list needs to be securing your name on the web with a yourname.vote web domain from godaddy.com. Get yours now. Welcome back to Broken Potholes with your hosts Chuck Warren and Sam Stone. In the studio with us today, as always, the irrepressible Kylie Kipper and

Our fantastic guest, especially if you like the nerdy tax stuff that we deal with every day, Kevin McCarthy from the Arizona Tax Research Association. Right before we went to break, we were talking a little bit about some of the effect of these unions and others coming in with these big tax proposals. But I think another thing that people don't understand, there's a lot of cheering when we get a Taiwan semiconductor coming in, building a $3 billion plant, right?

But that's being done with special tax breaks, special deals, right? And those actually have effect on everyone else, on all the existing businesses. Yeah. Our property tax system, largely because what I referred to a little earlier about the impact on the classification system that overtaxes business property tax,

Because we want to, quite frankly, we want to subsidize the homeowner voter. And so over decades, there was more of an incentive to keep taxes low on residential and overtax the business that couldn't vote, right? We've made changes to that system that aren't the rule, but the exception for a company like a Taiwan or an Intel company.

to be able to make a decision, see their way clear to make a locational decision here by availing themselves to what we call foreign, in this instance, foreign trade zones. The truth is, in that instance, I'd be the first to acknowledge probably wouldn't locate here and pay that level of property taxes they otherwise would be paying here.

From a government standpoint, if you've got to make that deal, you're still benefiting. Sure. I mean, so you're on a bottom line basis. You're going to do that.

One of the things that is a bigger concern, though, is the extent to which this goes on on a much more micro level. As you know, being at the city of Phoenix, you probably heard of instances where people were shopping opportunities where they were going to have their property taxes completely exempted through what's called the government property lease excise tax. Your former boss over there was never wild about those, thank God. Yeah, I'm not a fan.

We were highly critical of that and have participated with Goldwater Institute in some litigation that we think has been successful, that we think is going to go a long way to limit that activity. But in that instance, it is sort of the height of unfairness from not only a policy standpoint,

But from a legal standpoint, you have downtown Phoenix. A lot of people don't don't appreciate is one of the highest tax areas in the United States, let alone Arizona. The overall collective taxes in in downtown Phoenix because of the significant taxes from Phoenix Elementary, Phoenix Union and and Arizona.

To a lesser extent, Maricopa County and City of Phoenix are high. Property taxes in downtown Phoenix are double what they are in Scottsdale, if you can imagine that.

So if they want to – and that is a result of, in my opinion, a series of bad decisions that have been made over the last 25, 30 years on what the overall tax burden is going to be. Phoenix sidesteps that by just rifle-shotting a property tax exemption to whoever it is they deem is qualified in their central business district in downtown. Right.

That's bad enough, but we get calls from the property owner who finally pays attention to this and realizes for the last 25 years they've been paying some of the highest property taxes in the United States, and then they read in the paper that the new neighbor is going to pay exactly zero for years. There's a great example of that I want to bring up right before we go back to break, but we actually, the city of Phoenix went out and built a hotel downtown some years ago. Right.

And among the 27 jeeplets that Sal had been – that they had brought to Sal to vote on, he only approved one over all the years. And it was because the hotel next door was getting hosed by this deal, right? And that's what you're doing. You have one building on one corner that is getting a big tax break and then right across the street from them is one that's paying full boat. And they're doing the same thing. Well, and even somebody –

like, uh, Sal or, and, and, uh, Councilman Waring is, is, um, I know is not a big fan of this. After a while, it gets to be tough to say no to people. When you have, when you have an owner who's sitting in front of you saying, how is it? I, I pay these extraordinary property taxes every year and my neighbor pays zero. Uh, at some point people give in and, uh, as, um,

Then-Senate President Andy Biggs used to refer to this kind of stuff as path dependency. Once you do it, you have to keep doing it. It's a vicious cycle. It's vicious, and it's insidious, and—

And oftentimes it's the result of somebody going to hire a lobbyist to go to the city and get it done. And so the insiders win, and the people who don't hire a lobbyist to go to the city lose. Broken Potholes coming back in just a moment. You're going to want to stay for this section. This next segment we are talking Virginia and the Senate race. Governor's race. Governor's race. Coming up.

The 2020 political field was intense, so don't get left behind in 2021. If you're running for political office, the first thing on your to-do list needs to be securing your name on the web with a yourname.vote domain from GoDaddy. Get yours now. Welcome back to Broken Potholes with your hosts Chuck Warren and Sam Stone. In the studio with us today, Kylie Kipper and Kevin McCarthy from the Arizona Tax Research Association. But right now,

On the line, a guest I think we're all pretty excited to hear from. Brent Buchanan is CEO and founder of Signal, an innovation-driven public opinion polling and predictive analytics firm. Started in 2007 as a regional consulting firm, but by 2017 transitioned to focus fully on solving problems with political polling and the insights industry. That was after the mess of polling in 2016. They've been by far the most accurate national pollster ever.

And right now they've been doing a lot of work on the Virginia governor's race that is in everybody's news, but is breaking pretty significantly over these last couple of weeks ahead of the election. Welcome to the program, Brent.

Well, thank you for the opportunity. Good to talk to you all. So, Brent, this is Chuck. Tell us, what are you finding as you survey Virginia? It seems like the last six polls I have seen come out in Virginia, including yours, have showed Youngkin making significant gains, and he's now leading or tied. Fox News came out with one yesterday. What did you find when you did your survey that surprised you as a person who does polling all the time?

Yeah, that's a good question. I mean, I live in Virginia. I live in Arlington, and it's 80% Democratic, and driving to church, there are actually young consigns in people's yards. So, I mean, anecdotally, you can feel that this is different than the presidential race, where

Everybody was terrified to even say they were a Republican, let alone put a Trump sign out. It was Europe. Um, and, and you, you can feel the anger of the parents and especially in places like Loughton County, which is a huge County in Northern Virginia. Um,

But the problem that we see in the data, and we've actually been doing an experimental nightly tracker with a totally new methodology that we're testing out at Park Stumpf. And it was fascinating because we had a different team work on the Virginia survey that had the race tied down to the tenth of a percent as the team doing this experimental tracker. And they actually had the exact same ballot results.

two totally different approaches. But then what we started to see around like Saturday, Sunday timeframe last week and into Monday was a pickup of steam from

for, um, Terry McAuliffe. And he started to get out actually outside the margin of error. And that, that is in the past couple of days, come back to a little bit closer race, but you know, the, the, the polls like the Fox news poll, um, it's really important when you're looking at polling to consider outliers and then to look at them, see what's so different about them under the hood and then determine do, is this really an outlier? Is this a trend, a new trend occurring? Um,

And one thing that stuck out to me most about the Fox News poll that had Yunkin up by eight is that, one, this is Virginia 2021. This is not Virginia 2019.

and nine where Bob McDonald won by a much bigger margin than Obama had won by. There was a huge swing. I mean, Virginia's changed drastically in 11 years. Y'all are in Arizona. I'm not telling you something you don't know about quickly changing demographics and voter trends. But they had, the Fox News poll had McAuliffe only winning votes

college-educated voters by two points, which is just not a realistic number when you look at all the voter trends that have been occurring over the last several cycles where degree-to-voters, those who are college-educated and higher, are trending further and further away from us. So I would not expect a double-digit correction among that group when there's really nothing to point to as to why there would be a

What are the other trends? Go ahead. No, let me ask you this, Brent. So did you do any polling in Virginia during the presidential campaign, just on your own or anything? Yeah. We actually did the U.S. Senate race in Virginia. Okay, so here's my question for you. I think this race hinges on, do these suburban moms...

There is, but it's like Twitter.

you hear about the ones that are angry. Customer satisfaction surveys, how many of those do you take when the experience was good to mediocre? Very rarely, but when you're pissed off and it went wrong, the first thing you want to do is give your feedback. Exactly. So it doesn't speak for the whole when you see a small group that is very loud and angry. Is Yunkin going to do better with them than Gade for U.S. Senate and Trump for president did last year? Yes. There's

There's just not enough of them to make an impact, and there's not enough of them swapping their votes. So when we ask questions of, are you okay with mask mandates for kids, suburban moms are actually favorable of mask mandates for children. How are they on the critical race theory? How are they on the host of other issues that they're pushing? I don't understand the Republican obsession with critical race theory because it really only plays to our base.

moderate voters, suburban women, they are actually okay with it being taught because they care more about race issues than older voters do. And so it's just not... When our candidates come to us and say they want to talk about it, we go show them the cross tabs of critical race by party, and we're like, you don't bring anybody your way with this. This is a base issue. So why would Youngkin win? If he wins...

Why will he win? Besides Terry's a schmuck, why would he win? And a horrible dancer. Yeah. He will win because, even though it's not a big portion of the electorate, Hispanic and Asian and other minority voters, not African-American voters, are starting to trend our way. And they're trending along the same lines of the non-college educated voters.

Our tracker last night actually had us winning non-college educated voters by 19 points. So that share is growing. The problem is the college educated voters are also growing in share towards McAuliffe. So we have a surge at the end of non-degreed voters.

voters show up and that the democrats in northern virginia just don't have much to be excited about so you've got to have both sides of that equation does is this because it's so close to dc um i mean states are states state elections focus on state issues but does biden

just being what he is right now and his low approvals, is that having any effect with voters? Is that suppressing Democrat voters and exciting Republican voters? It's definitely moving independents our way. And we see that in Oregon, Virginia, Florida, wherever we're doing the polls right now. But, yeah, it's more an income and education factor.

Those are becoming significant predictors of competitiveness. I mean, you look at states like Colorado, for example. It swung so fast because its educational attainment increased sort of drastically. You know, people who are college-educated wanted to move to Denver, Boulder, even Colorado Springs, and they're changing the composition of the electorate. Same with Arizona.

So that's something we really look at is how bad are we losing degreed voters and how much are we starting to pick up with non-college educated voters. Brent, how much are you seeing? We hear all the time about, oh, you know, I took the red pill. But I actually don't see that as being much of a shift when you've got these college educated voters. They're pretty set in their ways, just like the Republican base is.

I really don't see much movement from that. That appears to be more of an Internet influencer phenomenon than it is a real one. Or am I off base? What do you mean by that? I just mean there's this whole idea right now that Republicans are pitching that if we just push our ideas to these dedicated –

liberal voters, if they see what's really going on, for instance, in our education system, all that kind of thing, we can transfer them over to our side. But in a number of years, I've never seen that happen anywhere in any number. Have you seen a big shift in either base switching side? You bring up a really good point. And this is why we developed something last year called a motive analysis, because voting is not a logical thing.

It is very illogical how people go about voting. I mean, just like Democrats will say, well, how in the world are these lower income, non-college educated voters swapping over to Republicans when Republican policies hurt them, don't help them?

And then we say the same, like, how are these college-educated voters who are making a bunch of money supporting Democrats who want to tax them to kingdom come? So even just that one economic point proves that voting is not a logical behavior. It's an irrational behavior.

So we have to understand what drives ration and irration, and that is our emotions. And so when you get to a point of like personality politics where we find ourselves, Donald Trump, Joe Biden didn't win. Trump pushed people away from him with his personality. They loved his policy, didn't like his personality.

And we've got to take that into consideration to your point of like, no, we can't logically tell them our policies are better for them because they're not making a logical decision. What do you see? Let's briefly go here to national politics. Do you see Biden being able to get out of this funk he's in with the voters right now? Does he have that ability or voters or independents, which are the big part of this? Have they just made up their minds that this guy is not with us?

Yeah, it's pretty rare that somebody that loses it holds it back. I mean, Chuck, you've done hundreds if not thousands of races. Once somebody's image goes underwater, which means more people are unfavorable than favorable of them, the only thing you can really do is try to tread water and hold it where it is. It's very hard to flip your image. When somebody like a president, there's very little undecided, if any.

Everybody knows who that person is, and they have a formed opinion of that person, and it's difficult to change it back the other direction. I mean, we've now got Biden at 53%. We just came out of a national poll last night. 53% unfaithful, but still 45% favorable. And so he's been trending, but not as drastically in our polling as other people have, and he

We believe that it's driven a lot still by COVID. So when you look, when you start to dive into the numbers of polls, and this is in the Virginia poll, it's in the national poll we just finished, like seniors are still sticking with Biden because they're still worried about COVID.

at a higher rate than people under the age of 65 are. And he's empathetic about the topic. You know, had Trump during COVID just come out and said, hey, I'm worried too. We don't know how to solve this thing. We're going to try some stuff and it may fail, but we're going to try because we care.

If he'd had that attitude about COVID, he would have won 300-something electoral college votes. His seniors could not stand how his tone about the issue, how he would stand offish about it as opposed to how they felt, which was very, very anxious and worried. Well, in Arizona in 16, Trump won by eight or nine points, though 65 and older. In 2020, he won by two. Right. I mean, and, you know, as we hear...

all the attention about irregularities and things on the election. You know, there's two things here I can point to why there's not a Trump massive victory in Arizona. Seniors regarding COVID and just every opportunity you can to curb stomp John McCain's name. And, you know, so if I was to drive to Vegas, which is a short four hours from here today, who would you bet? Who would you tell me to bet on to be the next governor of Virginia? Gosh, I'd say cover the come.

You would do what? It's just to cover the cum. It is so close. And, like, our model shows that it's going to – it's flattening out. So one of the things with this experimental tracker is we're trying to use past trends to predict future trends. And it's showing that it's going to level out around this, like,

one half point, one point, 1.5 points, which again is all within the margin of error. And we all, every election, it's like it's going to come down to turnout. But Virginia's got some really unique regions and really unique demographic differences. And so it legit will come to turnout. Right now it's pouring outside, which...

It's going to hurt early voting. But actually, I think it benefits Republicans a little bit. Tomorrow's the last day of early voting. 30 seconds left. If you were my pollster and I'm running that campaign for Youngkin, what would you tell me to do the next 72 hours? Got to juice it with evangelicals. We're not getting the margins we need out of the evangelicals that we should. Interesting. Interesting and surprising. Yeah. But I think evangelicals are the ones that believe that the election stole my vote doesn't matter.

And that's a big problem we've got for this election and, you know, 22 in general. You have to confidence in the system. Brent, we sure appreciate you being on. I hope you'll join us again in the future. Fantastic, my friend, and glad you're doing so well. Thanks for the opportunity. Good to talk to you all. Thanks, bye-bye. Back on air next week, but stay tuned for our podcast-only segment. We're keeping Kevin in studio with us.

It's the new year and time for a new you. You've thought about running for political office, but don't know where to start. Before you start any planning, you need to secure your name online with a yourname.vote web domain. This means your constituents will know they are learning about the real you when they surf the web. Secure your domain from godaddy.com today. You are my sunshine, my only sunshine.

You make me happy. We try, but we don't always get the sunshine into the studio here on Broken Potholes, but today we have a little bit of it. Yes, and this one's a good one. I like this one. Also because I'm very superstitious as well, so I enjoyed reading this story. But as many people may or may not know, the Atlanta Braves are making their first World Series appearance since 1999.

And inside the clubhouse, players are pointing to a secret weapon that does not field, throw, or hit. But it's delivered over and over again since it had arrived in June. And this is a soft serve ice cream machine.

And if it's delivered over and over again since arriving in June, it's definitely not the one McDonald's uses. No, because that's always broken. But this came about when the team was treading water early in the season, and they were in Boston in late May, and they were losing 9-5, and there was a three-hour rain delay. The fans had left. It was pouring rain. There was nothing to do. But the clubhouse, the pantry in the clubhouse, did have a soft-serve ice cream machine. So the player said there was not really anything to do but eat ice cream. Right.

So as soon as they returned home, the players rallied together and were kind of giving the clubby a hard time saying that his counterpart in Boston was doing better than he was. And he knew that he... That's a big insult in the clubhouse world. It is. That poor clubby who's just working really hard. I mean, the road clubhouse had more amenities than your home. Oh, boy. Yeah. So the players in the clubby rallied together again and assigned Freddie Freeman, the first baseman, to speak with the GM to kind of get approval on this. And...

the GM said that they knew that this was a good idea. They weren't sure because their players were going to end up 500 or 400 pounds, but they ended up going with it anyways. And since that arrived in June, they were on a, I think it was a nine game losing streak and they had two consecutive wins, which was great. They're turning things around. Freddie Freeman started the season very slow, but finished batting 300 with 31 home runs. And then they ended up making the world series. And,

So they said that, of course, if they win the World Series, that not only champagne and beer, but also soft-serve ice cream will be flowing. Sounds a lot like the Giants and their donuts. We talked about that earlier this year, that they went and had donuts, and their clubhouse attendant goes and has donuts for every game, and they say it gives them energy. We forget.

It's still a kid's game. Now, absolutely it is. And you're talking about the most superstitious people on the planet. Oh, absolutely. Pro athletes, especially baseball players. Well, I wore socks last night. I've been wearing all year when the Cardinals were playing and they lost. Those socks have been thrown away in the garbage can. I think it's because I wasn't there. They won every time I went to a game. You were invited. Look, folks, I'm going to have to apologize on this one.

I am also very superstitious about this. I will never again announce I'm running for office on Cardinals game day. Thank you, Sam. Thank you, Sam. Thank you, Sam. Well, let's go back and talk about the exciting world of taxes in Arizona, shall we? Yes. I get fired up over this. Probably makes me a little weird.

No. I mean, I guess we got a whole studio full of weirdos here. Look, taxes and the revenue generated for them or how high they are not really determines the environment that you operate your businesses, your household disposable income and so forth. So it really needs to be a sexier issue for people, which I wish people would spend more time understanding, especially when you talk about city council meetings and the schools. I mean –

The schools are like a Ponzi scheme, it seems like, with how they do their budgeting and so forth. So the legislature, let's use an example. The legislature goes and says, we want to give teachers 20% salaries. They send the money to the school boards. They don't seem to get 20% salaries. How do we explain that to voters? Well, yeah, you have to have voter interest before you can even explain it to them. And I tell people that the reason why taxes are so important is they are a gauge for our demand for government.

Taxes in many respects are a really, really good thing. And if you want to see why they're so important, look at what happens in Washington and how much money is spent without the backing of tax revenue. It's easy to spend money if it's going to be debt financed. And you don't have to go to a voter or a taxpayer and explain the purpose for the expenditure, which is why

In my judgment, some of the best tax systems in the United States at the state and local level are the ones with higher individual taxes, not necessarily income, but taxes that are very transparent that individuals have to pay. If you go to a – I've been to probably more budget meetings at the local government level in Arizona than anybody. I've been to hundreds, if not thousands, counties, cities, community colleges, schools.

It is a rare day to go to a budget meeting, and Sam, can I say this in fin? To go to a budget meeting where the budget's being adopted and there's anybody to show up that is gonna express a concern over an aspect of the budget, a tax or an expenditure. And the reason for that is that we've gone to great lengths

to generate our revenue in a manner that people really don't pay much attention with. We have relatively low homeowner property taxes. How often have you met somebody that's moved here from the Midwest, Wisconsin, or maybe New Jersey back east? And the first thing they conclude is,

government doesn't have enough money here because I'm not paying near the property taxes that I paid when I lived in Wisconsin or New Jersey. I've actually seen letters to the editor about that in the Republic. People are like, I'm from Connecticut and our property taxes are way too low. Yeah. So ergo, it has to be true. The schools don't have enough money because they know they're not paying much. They don't realize that we're extracting twice that amount per dollar of value from the businesses that's down the street.

And what's bad about that is that it pushes people away from their government. People don't understand how much government is taking in the aggregate for expenditures. And so when you do really want them to engage, you've done the reverse, that you've pushed them away. You've created – they're flabby. They don't understand what government does. And I went to – I was in –

Vermont, many years ago, took a son on a trip there to look at a college, and there were signs all over this town, school budget meeting tonight. I asked the baseball coach who was showing us around the town, I said, what is the deal with all these signs? We go into a diner to have lunch. It's on the cash register. I said, what is going on? He says, oh, it's a big deal here. Everybody shows up at the budget meeting. He goes, because taxes are really high. We want to know exactly how they're spending the money, because if they're going to increase taxes...

We want something to say about it. I almost canceled my flight out of there that afternoon just to be able to see that. You do not see it. We should do that here. Maybe that's a good thing for your group to raise some money for. And, dude, just show up and listen. Well, we do show up. Well, you do, but the citizens, right? But what I'm saying, it's hard to get that engagement and that interest when people really aren't paying. They're not disturbed about the amount that they're paying in taxes. Through your thousands of tax means.

What do you feel for every dollar someone earns, what percentage comes to the point where you say people just say that's too much or it suppresses economic growth? Is it 20 percent? Is it 30 percent of every household income? What tax level is there that you just start seeing a reverse effect of what they hope would happen?

So that's obviously going to vary depending upon what silo you're in. So you've got state, local, federal, and everything, right? Yeah, right. And it does make a difference if there are consumption taxes versus income. But clearly with income taxes, what we should have learned now over the last many years with federal taxes on top of state and local taxes, that you get those taxes up above 25%, let alone pressing above 30%, that it has significant impacts on income.

on people's decision making, not only where they locate at the state level, but where they locate internationally. Taxpayers will go. People are smart. Once they start feeling that they have they're paying more than they should, they'll go to considerable lengths.

Ask Florida. Yeah, or look at the amount of millionaires that are back in the 80s that were domiciled in Las Vegas that probably really were domiciled in Arizona because we had considerably higher income tax rates. And then look at how many millionaires we have now, now that the rates were brought down prior to 2008. And we hope that that stays. Supreme Court has pretty much put a nail in that, but we're waiting for a lower court judge to put the final nail in it, and that will...

will go by the wayside. But the amount of millionaires that locate you, people will not pay the costs of avoidance.

If it's a marginal amount of money, right? I'm not going to claim residency in Las Vegas if it's going to be 4%, but you raise it to 9% and 10% and keep climbing. And I'm going to start doing this. Or you do what they're doing. Look at the data coming out of California. The IRS has great data now that shows people the changing locations based upon income tax filings and their...

They're losing the upper income Californians by the thousands. I was at a dinner last Friday and was sat at a table with two people who had just joined this organization. And they had both moved from a city in Los Angeles. And I said, what happened? And they just

Tax is too high to defund the police. I'm done. We just moved here. And I would not even consider them Republicans. But they're just like, it's just done. I'm just done with this. I'm not going to tolerate this anymore. And it's not going to get better out there till the last person who makes any money just turns the light off. And it's quite remarkable to watch this transpiring. And some states just never get it. Yeah.

Kevin, in this vein, you were pretty critical in passing what we call truth and taxation here in Arizona, right? When any of your governments are actually going to raise your taxes, they're required to send you a notice in the mail that details that increase, right? Yeah. So we were. We were the authors of the truth and taxation statutes that are in the property tax area. So it's not a mailer to a residence, but it requires a local government –

based on a formula that we think fairly appraises how this levy is going to impact taxpayers. In other words, is it neutral or is it an increase or a decrease? And so if it's an increase, they have to put an advertisement in the paper. They've got to put it on their websites telling taxpayers we're going to – and they have to have a hearing. It's a truth and taxation hearing. And –

They that that works well in some areas of the state, not so much in others in terms of what type of interest it is drawn. But fortunately, in most instances, it does one thing, and that is that it educates the reporters that are covering that beat.

that this budget actually increases taxes and here's the notice that the entity had to put in the paper and they're going to have the hearing on Tuesday night and allow people to come in and yell at them if they don't like the tax increase. Have you ever met a reporter that likes a tax cut?

Yeah, well, you know, I'm not trying to get you in trouble. Bob Robb, you know, Bob Robb likes a tax cut. He's not a reporter. Yeah, there's, well, regrettably, I think a lot of them probably are not as bothered by tax increases as I might be. But yeah, over my career, I've seen a few that are pretty fair and balanced. One last question here as you look at how many millionaires do we have in Arizona now?

I should have read our study that we did for 208, and for anybody that wants to see that, it's on our website at ArizonaTax.org. And what's phenomenal about it is that we're not talking about a modest increase in the number of millionaires from the early 1990s prior to the reductions that started to occur in the income tax rates.

To today, it's phenomenal. I think it was a 600% increase in millionaire filers. And people say, well, that's income-based. We controlled for all of those factors. These are locational decisions that people are making to locate here. And it is beyond me why anybody would view that negatively.

I want the more millionaires that we can outlive. They bring a lot of money. They spend it in the economy. I think they talk about that a lot in the Bible. It's called coveting. Yeah. Yeah. But they pay a lot of taxes. They do. And they spend a lot. They do. And they spend a lot of money. Yeah. They spend a lot of money in the Arizona economy. And to the extent that their businesses. They're angel investors, too. I mean, you know, you meet most people here in Arizona who are quite wealthy. It's like, oh, they've invested in four or five companies. You hear that all the time in conversations. Yeah.

So they're just not sitting around and playing with it. When someone goes and buys a $100,000 car from a dealership, they pay more taxes into that local government in that one transaction than a lot of restaurants do in an entire day. Kevin, thank you so much for being on the program. ArizonaTax.org, I know they can follow you there. Any other ways for folks to follow along and learn about what you guys are doing?

that's probably the most effective means to doing it. And I appreciate the invite. Love to come back. Love to have you back. Let's have you back during the session. There you go. We'll get to see your eyes cross-eyed from all the budgets you're reading. We can talk about all the bad ideas. Yeah, what's planned on that in February? When you got 800 bills, there have to be at least a couple hundred terrible ideas in there. There are. Kevin, appreciate you, buddy. Thank you. Absolutely. Chuck?

Great program today. Folks, if you're listening out there, be sure to tune in. Saturdays, 3 p.m., you can listen to us live. Podcast comes out. Apple, Spotify, Substack, all those fun things. Be sure to follow us on Twitter, too. And not YouTube because of... Not YouTube because of... There is legal issues right now. Copyright. Copyright. Man, they are tough. Kip should write a song for us. Anyway, have a great weekend, folks. Bye.

The political field is all about reputation, so don't let someone squash yours online. Secure your name and political future with a yourname.vote web address from godaddy.com. Your political career depends on it.