A from the Common Sense Institute Arizona (CSI) and the Arizona ˿����Ƶ Foundation warns that dozens of bills introduced in the 2025 Arizona legislative session could have placed the state’s decade of economic growth at risk, threatening jobs, incomes, and overall competitiveness.

The 2025 Arizona Job Killers report identified 88 bills that, if enacted, would have imposed more than $45.9 billion in new annual costs on businesses, reduced employment by 660,000 jobs (a 20% decline), cut per-capita income by $4,600, and shrunk Arizona’s economy by $64 billion.

Bad bills could cost Arizona jobs

The report underscores that Arizona’s pro-growth policies since 2016—including lower taxes, smaller government, and fewer regulations—helped drive some of the nation’s strongest gains in jobs and GDP. Recent slowdowns in hiring and housing, however, coupled with the volume of “job killer” legislation considered in 2025, highlight the risks of policy missteps.

“Arizona has shown the nation what happens when states embrace policies that encourage growth,” said Courtney Coolidge, executive vice president of the Arizona ˿����Ƶ of Commerce & Industry. “But this report makes clear that the progress we’ve made is not guaranteed. The sheer number of costly bills considered in the 2025 session should serve as a warning. We must remain vigilant in protecting Arizona’s competitiveness and preserving the policies that have made us an economic leader.”

The costliest proposals

Among the most significant measures flagged in the report:

• Repeal of Arizona’s right-to-work law — projected to impose $18.6 billion in new costs and reduce employment by nearly 4% by 2033.
• New or increased taxes — totaling $3.7 billion, including a proposed 1% payroll tax on employers with more than 50 workers and a $1,000 minimum corporate income tax.
• Energy and environmental mandates — including adopting California-style vehicle emissions standards and requiring 50% renewable electricity generation by 2035, which CSI estimated would raise energy costs by billions and reduce job growth.
• Housing market interventions — such as rent control, which CSI cited as a policy with a “well-documented” record of reducing supply and harming affordability.

Lessons from Colorado

The report draws sharp contrasts with Colorado, where CSI has tracked the enactment of more than 20 “job killer” laws since 2019. Once a peer economy, Colorado has since fallen behind Arizona in both GDP and job growth. CSI estimates that if Arizona had followed Colorado’s trajectory, the state would have 113,000 fewer workers and $18.6 billion less in annual economic output today.

Katie Ratlief, executive director of CSI Arizona, said the findings illustrate the direct connection between public policy and economic performance.

“Good policy choices have helped Arizona outpace much of the country in growth over the last decade,” Ratlief said. “But as this report shows, just a handful of costly mandates could reverse those gains. The lesson from states like Colorado is clear: when lawmakers pursue policies that burden job creators, the entire economy suffers.”

While none of the 88 bills analyzed were enacted this year, the report cautions that the annual introduction of such legislation reflects a continuing risk.

CSI and the ˿����Ƶ argue that sustaining Arizona’s economic momentum will require policymakers to reject measures that add costs, restrict growth, or erode the state’s business-friendly climate.

“Arizona stands at a crossroads,” the report says. “After a decade that brought generational change, job growth has stalled and the economy has slowed. The lessons are clear: there are pro-growth policies, and policies that hurt growth. Too often, the search for villains – developers or data centers being blamed for water shortages, or investors and short-term-rentals for housing market woes – deflects from real problems and leads to harmful policies.”

Image courtesy Pixabay and was published prior to July 2017 under the Creative Commons CC0 1.0 Universal Public Domain Dedication license

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A new policy brief by the Common Sense Institute (CSI) challenges the narrative coming from some corners that Arizona’s flat personal income tax is to blame for the state’s projected $1.6 billion budget shortfall. The report, titled Flat Tax & State Budget Myths and Facts, finds that robust revenue growth has continued since implementation of the 2.5% flat tax—and that spending, not tax policy, is the real driver behind the state’s fiscal strain.

“The data simply don’t support the claim that the flat tax has gutted Arizona’s budget,” said Glenn Farley, CSI’s director of policy and co-author of the brief. “The state has a spending problem, not a revenue problem.”

Key findings:

• Revenues remain strong: Since the flat tax was enacted in 2022, General Fund revenues have grown at an average rate of 4.5% annually, exceeding post-Great Recession averages. Arizona is bringing in $1.9 billion more today than before the tax went into effect.
  
• Spending outpaced growth: From 2022 to 2024, state spending surged by nearly 40%—more than four times the long-term trend. Had spending been held to historical averages, Arizona would be facing a $4.3 billion surplus instead of a shortfall.
  
• Cities benefited: The flat tax law also increased the share of income tax revenues distributed to cities and towns, yielding an additional $250 million in shared revenue last year alone. Local governments are currently running historic surpluses, CSI reports.
  
• Education funding increased: Despite flat or declining enrollment, per-pupil spending in Arizona public schools has climbed to a record $15,100—up 30% since FY2016 when adjusted for inflation.
  
• Economic growth is strong: Since 2015, per-capita personal income in Arizona has increased by 68%. CSI attributes this growth in part to pro-growth policies like the flat tax and tax code modernization efforts such as HB 2822.

Farley and co-author Thomas Young caution against reactionary calls to repeal the flat tax or impose new income tax surcharges. Their research estimates that reversing recent tax reforms would cost the state nearly 59,000 jobs and reduce GDP by $11.9 billion over the next decade.

“Policymakers must resist the temptation to view tax increases as a quick fix,” Farley said. “Raising taxes now would ultimately leave Arizona with fewer resources for priorities like education, infrastructure, and public safety.”

Arizona ˿����Ƶ of Commerce & Industry President and CEO Danny Seiden said the findings affirm what the state’s job creators have long known.

“Arizona’s flat tax is doing exactly what it was designed to do—strengthen our economy, attract new investment, and put more money in the pockets of working families,” Seiden said. “This report makes clear that it’s not tax policy causing budget stress, it’s unchecked spending. We should stay the course on pro-growth policies that have made Arizona a national leader.”

As lawmakers and stakeholders debate the state’s fiscal future, the CSI report underscores the importance of disciplined budgeting and long-term economic planning. “Arizona’s flat tax was never the problem,” the authors conclude. “Unchecked spending was.” The full report is available at .

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