Donna Gatehouse, who blogs at DemocraticDiva and elsewhere on all things Arizona, sends us this.

Arizona, as the pithy Jon Stewart put it a while back, is the “meth lab of democracy.” The Grand Canyon State has achieved international notoriety for legalizing guns in bars, SB1070 [anti-immigrant legislation], a Birther Bill, and of course, the antics of Sheriff Joe Arpaio, among other things.

We are so proud! But our reputation for zany characters and appalling social legislation notwithstanding, Arizona has been no slouch at pushing an economic agenda very favorable to the upper crust and very unfriendly to working families. We are one of the top go-to states of the American Legislative Exchange Council (ALEC) as a fertile ground for its horrendous ideas.

This year, ALEC and its BFFs at the Arizona Chamber of Commerce and Industry are pushing hard for capital gains tax cuts. Capital gains, put simply, are the profits earned from the sale of a property or investment. Long-term capital gains are capped at 15 percent at the federal level, thanks to the Bush tax cuts.  States collect capital gains tax too, usually at ordinary income rates. ALEC wants to eliminate state capital gains taxes entirely. The AZ Chamber has a slightly less ambitious goal for Arizona.

Reduce capital gains taxes to stimulate investment by using the same proportion of capital gains tax to ordinary income tax as the federal system.

They proposed that in their “2011 Legislative Priorities” They didn’t succeed last year but advisers are back again this year to persuade an eagerly receptive Governor and state legislature that capital gains tax cuts are a super duper awesome economic stimulus.

[Gov. Jan] Brewer also wants to alter how capital gains are taxed under Arizona law.
Federal laws tax capital gains kept for a longer period of time at a lower rate than regular income. The governor is proposing a similar dual tax rate here, though the proposal made Wednesday does not say how much difference she wants.
Here, too, the Ways and Means Committee has a more far-reaching plan: Total elimination of the state’s capital gains tax.”

Shockingly, they’re wrong about that, according to the Institute on Taxation and Economic Policy, as other states have already learned.

Capital gains tax preferences are costly, inequitable and ineffective, depriving states of millions of dollars in needed funds, benefiting almost exclusively the very wealthiest members of society, and failing to promote economic growth in the manner their proponents claim. States cannot afford to maintain these tax breaks  any longer, and lawmakers considering introducing these regressive loopholes should understand the fairness and revenue implications before allowing this seriously flawed policy into their tax code. Lawmakers considering introducing these regressive loopholes should understand the fairness and revenue implications before allowing this seriously flawed policy into their tax code.

But hey, when have right-wing Arizona politicians let a little thing like being wrong stop them?