Critics argue the state should invest in programs to support the community instead of cutting taxes for the wealthy.
Arkansas legislators returned to Little Rock Tuesday for the start of the second special session of the year. Two identical bills passed out of committee in the House and Senate yesterday and will be heard on the floor of their respective chambers this morning.
Gov. Asa Hutchinson issued a proclamation last Friday officially calling members of the 93rd General Assembly into session to enact state income tax reductions. If approved, he said it would be the largest tax reduction in the state’s history.
The tax plan is estimated to result in nearly $500 million in tax relief annually when fully implemented and the governor said all taxpayers will benefit with more than 100,000 low-income Arkansans expected to have their state income tax liability completely eliminated.
The proposed tax cut legislation would combine the low- and middle-income tax tables, and provide a $60 non-refundable tax credit for Arkansans with an income of less than $24,700. The bill also aims to lower the top tax rate for individuals from 5.9 percent to 4.9 percent during the next four years.
“This will increase our competitiveness as a state in attracting industry and talent to Arkansas,” Hutchinson said during a press conference Tuesday.
Sixteen nonprofit organizations last week signed a letter and sent it to legislators urging them to invest in schools, infrastructure, health care and rural communities instead of cutting taxes.
“We urge the General Assembly not to spend money on a cut to the top tax rate that will largely benefit a small number of wealthy Arkansans while more than one in five children in Arkansas grow up in poverty,” the letter stated. “Instead invest those funds in programs that will take us up from near the bottom of states in our educational and health outcomes and make Arkansas a great place to live.”
Organizations that signed the letter include Arkansas Advocates for Children and Families, Arkansas Coalition of Marshallese, Disability Rights Arkansas, Hispanic Women’s Organization of Arkansas, Marshallese Educational Initiative, Rural Community Alliance and the Urban League of the State of Arkansas.
Kymara Seals is the policy director for the Arkansas Public Policy Panel, an organization that also signed the letter. Speaking against the bill yesterday, Seals said there is genuine concern about Arkansans’ quality of life because taxes are essential for communities to thrive.
“That’s how you fund these programs so the question is, is Arkansas thriving,” Seals said. “Some parts are thriving, some people are thriving, some communities are thriving, but not all of the communities are thriving.”
The House Revenue and Taxation Committee meeting included discussion about programs in need of funding as well as questions about what programs could expect cuts as a result of the tax plan. There are no proposed cuts to programs at this time, State Budget Director Robert Brech said.
Rep. John Maddox, R-Mena, lead sponsor of House Bill 1001, presented the legislation in committee. The bill is well-vetted and will cut the tax burden for all working Arkansans, he said.
“When we make tax policy and divide it on arbitrary lines…whatever that number is, it’s arbitrary and it’s unfair and I think it divides us,” Maddox said. “So the beauty of this is it cuts everyone’s tax obligations.”
Both HB 1001 and its companion legislation Senate Bill 1 passed out of committee and will be heard by the full House and Senate today. The Senate convenes at 9 a.m. and the House meets at 10 a.m. Both sessions can be livestreamed here.