Tax Cut Bills Advance as Democrats Call for Investment in Community Programs

Lawmakers continue discussions on how to help Arkansans keep more money in their wallet.

Rep. Reginald Murdock
Rep. Reginald Murdock speaks at a press conference at the capitol Dec. 8, 2021. Photo courtesy: Democratic Party of Arkansas.

Two identical pieces of legislation aimed at reducing state income taxes are headed to the Arkansas House and Senate where they could receive final approval Thursday. If approved, the governor said it would be the biggest tax reduction in the state’s history.

Lawmakers today continued discussion over how to better serve Arkansans. Republican sponsors have stated the tax cuts will benefit all working Arkansans, but opponents argued a better way to support people long term is by investing in programs. Rep. Reginald Murdock, D-Marianna, believes in tax cuts, but said it’s a balancing act.

“You’re doing something, but you’re not doing the things that can be impactful. That’s my issue with this,” Murdock said.

Rep. Murdock along with other members of the Democratic Party of Arkansas hosted a press conference today where they discussed a difference of opinion with their Republican colleagues on the legislation. Instead of tax cuts, they argued the state could have a bigger impact on Arkansans’ lives by supporting an earned income tax credit for working families, funding the construction of 1,000 new pre-k classrooms and eliminating the disability health care waitlist.

“While the Republicans might be telling us that this is about economic development, it doesn’t look like the way they want economic development done in Arkansas,” DPA chair Grant Tennille said.

Supporters of the bill have argued lowering the tax rate will make Arkansas more competitive with other states in terms of attracting businesses that could create job opportunities. The tax cuts could also support small business owners in Arkansas, said Rep. David Ray, a Republican from Maumelle.

“After 18 months of what the virus and the government’s response to the virus has done to our small businesses, I believe that they deserve tax relief,” Ray said. 

The proposed legislation calls for the top income tax rate to be reduced from 5.9 percent to 4.9 percent during the next four years using a tiered approach. The law would also rename the Long Term Reserve Fund the Catastrophic Reserve Fund and require the state to keep 20 percent of net general revenue spend in the fund. 

The tiered annual tax reductions are contingent upon not pulling money out of the Catastrophic Reserve Fund. If the state has to access money from the fund, the gradual tax reductions will stop, but sponsor Rep. John Maddox, R-Mena, is hopeful that won’t happen

“We’re betting on Arkansas, we’re betting on growth, we’re betting on the continued inbound migration,” he said.

The Arkansas Senate and House of Representatives will consider giving final approval to House Bill 1001 and Senate Bill 1 Thursday morning. The Senate convenes at 9 a.m. and the House meets at 10 a.m. Both sessions can be livestreamed here

Antoinette Grajeda
Antoinette Grajeda

Antoinette Grajeda is Editor-in-Chief of Arkansas Soul, the host of the Affirmative Action podcast and a Northwest Arkansas-based journalist. She has covered race, culture, politics, health, education and the arts in Arkansas for nearly 15 years.