Tax hikes proposed by the Biden administration place tens of thousands of Arizona jobs at risk, according to a new analysis conducted by the Seidman Research Institute at Arizona State University and Ernst & Young.

Looking for revenue to help pay for trillions of dollars in new spending, President Biden and congressional leaders have backed a $3.5 trillion package, which includes a slew of tax hikes 鈥� the bulk of which are aimed at employers and upper-income Americans. One provision in particular 鈥� a planned doubling of the Global Intangible Low-Tax Income (GILTI) rate 鈥� would hammer companies based in the U.S. but with operations overseas.

ASU Seidman and Ernst & Young found that 266 Arizona companies would be impacted by the GILTI increase. Specifically, according to the report, adoption of President Biden鈥檚 plan would:

• Eliminate up to 27,700 Arizona jobs in the first year following adoption, including as many as 42,500 total jobs if indirect losses are taken into account.
• Kill up to 46,800 Arizona jobs within the first five years.
• Reduce total economic growth in the state by as much as $5.1 billion in the first year and $6.4 billion over the course of a decade. 

鈥淎t a time when too many Arizona employers are just now recovering from the pandemic, this multi-trillion-dollar series of tax hikes is one more blow we don鈥檛 need,鈥� Arizona 番茄社区 of Commerce & Industry President and CEO Danny Seiden said. 鈥淭he tens of thousands of job losses forecast by this troubling report mean further economic downturn and reduced opportunity for Arizona workers and families.鈥�

GILTI was intended to target foreign income derived from intangible assets like software services, trademark royalties, intellectual property and more. Unfortunately, its impacts have proven far broader, placing a surtax on essentially any U.S. company that reaches customers abroad. The Biden administration has proposed doubling the GILTI rate to 21%, up from 10.5%. Arizona employers warn the increase, especially when coupled with a raft of other proposed tax hikes, will kill jobs and reduce their competitiveness in a global marketplace.

鈥淥ur economic recovery remains fragile, and these tax increases are just one more headwind for Arizona businesses to face,鈥� said Steve Trussell, executive director of the Arizona Rock Products Association. 鈥淢any of our members have operations around the world, and these proposed tax hikes put them at a real competitive disadvantage. Ultimately, it鈥檚 Arizonans who pay the price if these damaging tax policies are adopted.鈥�

Certain industries would be hit hardest by the GILTI increase. For example: the ASU Seidman/Ernst & Young analysis found that the agriculture, cConstruction, mining and oil & gas sectors could lose more than 4,800 jobs in the first year. The manufacturing industry risks the loss of more than 8,400 jobs.

In recent days, the National Association of Manufacturers (NAM) that found nearly 94% of U.S. manufacturers believe higher taxes would harm their business; 90% said the hikes could hurt their ability to add workers, expand facilities, or invest in new equipment.

Issuance of the report from ASU Seidman and Ernst & Young comes as House Democrats race to finalize details of their budget reconciliation bill, which is likely to include a host of tax hikes. The package is expected to come to a vote before the end of September.

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A new study highlights the tremendous impact groundwater has on Arizona鈥檚 economy and underscores the need to make sure every community has tools to protect and manage it far into the future, said Todd Reeve, director of Business for Water Stewardship (BWS), which commissioned the report. 

鈥淭oday, Arizona relies on groundwater for 40 percent of its water supply, and sustained access to groundwater remains essential for industrial, agricultural and municipal uses in Arizona,鈥� said Reeve, whose organization currently is working with dozens of businesses across the state that are investing in and advancing solutions to make sure communities, economies and ecosystems have clean water to flourish. 

BWS released the first-of-its-kind study Tuesday during a virtual event for new and returning state lawmakers who will be tasked with finding solutions to address groundwater overuse and the effects of the megadrought. The Arizona 番茄社区 Foundation co-hosted the event.  

Groundwater generated $1.2 trillion into economy from 2010 to 2018

Conducted by Arizona State University鈥檚 (ASU) Seidman Research Institute, the study calculated the economic impact of groundwater use from 2010 to 2018 in the state鈥檚 five most populous regions: Phoenix, Tucson, Prescott, Pinal County and Santa Cruz County.  

According to the study, Arizona鈥檚 groundwater use was responsible for generating about $1.2 trillion into the economy during the nine-year period. When broken down on an annual basis, that amounts to approximately 43 percent of the state鈥檚 annual average GDP. 

In Phoenix alone, groundwater generated $102.5 billion of average annual contribution to state GDP, supporting over one million jobs, the study states.

鈥淭hese findings show just how essential groundwater is to the state鈥檚 economy,鈥� said Tim James, director of research at the Seidman Institute. 鈥淎s our state continues to grow and thrive, understanding the crucial importance of groundwater to the economy will be key in planning for the future.鈥�

Study evaluated groundwater impact in most populous regions 

The study looked at the economic impact of groundwater deliveries from 2010 to 2018 in the five most populated regions of the state that are designated as 鈥淎ctive Management Areas鈥� (AMA) for water management purposes. The AMAs are regulated under the state鈥檚 Groundwater Management Act of 1980.    

Among the study findings:

-Approximately 11.7 million acre feet of groundwater was used by agriculture, industrial and municipal customers during the nine-year period  

-Groundwater supplies in the five AMAs contributed to annual employment of 1.4 to 1.7 million jobs, depending on the year

-More than half of the total groundwater uses, 50.1 percent, took place in the Phoenix AMA

-More than a third of the groundwater, 35.5 percent, was used in the Pinal AMA

-The Tucson AMA accounted for 11.7 percent of total groundwater used 

Legislation needed to guide groundwater use statewide 

While the five AMAs are regulated under the groundwater act to ensure adequate water for the future, the rest of the state is pretty much a 鈥渇ree for all鈥� when it comes to tapping into aquifers, Reeve said. 

Legislation will be needed to protect groundwater in these areas as well, he said. Some of the bills that have been proposed include incentives for industry, farmers, landowners and others to conserve water. 

Most importantly, the rural areas of the state that rely almost entirely on groundwater will need tools to carry out conservation and water protection plans based on their local needs, he said. 

Businesses are key players in protecting water

Businesses also will need to continue to invest in Arizona projects as part of the solution, Reeve said. 

Major corporations like Intel Corp, Waste Management, Microsoft, Cox, Arizona Public Service, the Coca-Cola Foundation, Procter & Gamble, Reformation, Silk, and Swire Coca-Cola, USA have invested millions of dollars in recent years on conservation projects to protect communities, businesses and wildlife habitats.

That was something that was unheard of not so long ago, said Reeve, whose organization is currently working with dozens of companies on projects across Arizona.  

鈥淭en or 20 years ago, the notion of companies investing their brand and their financial resources in projects outside of their own operations would have been unheard of,鈥� Reeve said. 鈥淎nd today we鈥檙e seeing this growing commitment, especially across Arizona, in leveraging this business interest to help shore up Arizona鈥檚 water resources and create an environment where these businesses have predictable water supply and they can follow through on plans to expand, to hire and to site here in Arizona.鈥�

Five Active Management Area results

The Seidman study analyzed the economic impact of groundwater in the five AMAs:

To read the full report, go to: . 

Business for Water Stewardship

 Business for Water Stewardship is a program of the Bonneville Environmental Foundation that helps businesses advance solutions to ensure that our communities, economies and ecosystems have enough clean water to flourish. We provide ways for businesses to actively help sustain rivers and replenish aquifers, promote forward-looking water policies, and boost their reputations as environmental stewards.

Learn more at: B

The L. William Seidman Research Institute

The L. William Seidman Research Institute serves as a link between the local, national, and international business communities and the W. P. Carey School of Business at ASU. First established in 1985 to serve as a center for applied business research and a consultancy resource for the Arizona business community, Seidman collects, analyzes and disseminates information about local economies, benchmarks industry practices, and identifies emerging business research issues that affect productivity and competitiveness.
To read more about the work the institute is doing, go to:

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