Common Sense Institute’s Free Enterprise Report Shines Spotlight on Arizona’s School Choice and Tax Reforms

By Matthew Holloway |

The Common Sense Institute Arizona (CSI) unveiled its 2025 Free Enterprise Report on Monday, positioning Arizona prominently in the realms of education, economic performance, and momentum. The state’s continued leadership is underscored by advancements in tax policy and educational choice, according to CSI’s Executive Director, Katie Ratlief.

Ratlief noted, “Arizona continues to lead the way in key areas like tax policy, state budgeting, and educational choice, proving the impact of data-driven, common-sense policies.” However, she also flagged significant challenges in housing, public safety, and homelessness that are beginning to impede Arizona’s growth trajectory. Addressing these issues is critical for maintaining the state’s competitive edge.

The report specifically ranks Arizona 27th in “free enterprise competitiveness” while acknowledging its strengths in taxation, state budgeting, and education. Nevertheless, rising housing costs and shortages pose substantial challenges to the state’s overall economic health.

In education, Arizona shines, ranking second nationally in student enrollment in school choice programs. This achievement aligns with the success of the state’s universal Empowerment Savings Account (ESA) initiative, which currently supports over 83,000 families financially.

CSI highlighted Arizona’s educational landscape, stating, “Arizona today has the most open K-12 educational market in the country, and hosts a diverse network of District, Charter, and private school options.” The rise of home and microschools is reshaping the educational system, with nearly one-third of students opting out of traditional district schools.

The report also emphasizes Arizona’s energy sector, ranking it within the top 20 states for energy competitiveness. The state boasts a reliable electrical grid, attributed to its substantial nuclear power infrastructure and gradual integration of wind and solar energy, coupled with significant investments in natural gas.

CSI pointed out that Arizona’s favorable tax environment contributes to its competitiveness. The state’s 2.5% flat income tax and the ability to depreciate business investments immediately are central to its attractive tax regulatory framework. Arizona holds a commendable 7th place in the Taxes & Fees Competitiveness Index.

Recent tax reforms have further reduced the financial burden on residents, with the flat personal income tax rate being one of the most significant changes. Ratlief explained that rules necessitating supermajority approval for tax increases were extended in 2022, solidifying the protections around this tax structure.

As Arizona moves forward, the expectation is that these policies will continue to enhance the state’s economic standing. With the right focus on addressing pressing challenges, Arizona is poised to maintain its competitive edge in the long term.

Matthew Holloway is a reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.