Relative to other states, Arizona has gradually improved on personal freedom and has generally been above average on economic freedom, while losing a little ground there over the 2009–12 period.
Fiscal policy has been more of a strength than regulatory policy. Although local taxes are at or above the national average, state-level taxes are reasonably low. The state depends heavily on sales taxes, permitting generally low individual and business income taxes. Arizona has very little scope for choice among local jurisdictions. Although municipalities are more important than counties, there are only 91 municipalities in the whole state. Given that local taxes are so important in this state, more choice of locality would greatly enhance residents’ freedom.
On regulatory policy, Arizona is laudably anti-crony. In most industries, business entry and prices are quite liberalized, although a little backsliding has occurred in the property and casualty insurance market, and occupational licensing has ratcheted up over time. Otherwise, its regulatory environment is a mixed bag. The right-to-work law probably attracts manufacturing businesses, but the state has done little to promote competition in telecommunications and cable. It has a higher-than-federal minimum wage and an E-Verify mandate. Although land-use regulation tightened in the 1990s and early 2000s, a regulatory taking initiative may have curbed its growth a little since 2006.
Arizona’s personal freedom improvements are due to growing gun rights (“constitutional carry” passed in 2009–10); a medical marijuana law; school vouchers (passed in 2011–12); declining victimless crime arrests; the abolition of its sodomy law, due to the Supreme Court’s decision in Lawrence v. Texas; and the judicial legalization of same-sex marriage. On the other side of the ledger, incarceration rates have climbed consistently, and smoking bans have become comprehensive and airtight. (The latter, like the state’s minimum wage, is explained in part by the ballot initiative, which really does result in some observable “tyranny of the majority.”) Little change has been observed in alcohol freedom, where the state is better than average, or in gambling freedom, where the state is worse than average.