he Governor’s effort to cut the top tax rate sped through both houses of the state legislature, and the special session wrapped up quickly despite some lawmakers attempting to add new items to consider. The House and Senate each voted to approve a plan to give another tax break to the top earners in Arkansas, overriding calls to fully fund state services. The legislation implementing this cut, HB1001 by Rep. Ken Maddox, R-Mena and SB1 by Sen. Jonathan Dismang, R-Searcy, were signed by the Governor on Thursday, December 9th. The proposal will make changes to the states tax table and cut the top income tax rate from 5.9 to 4.9 percent by 2025. An independent analysis says 70 percent of the money will go to the top 20 percent and the top 1 percent (about 15,000 taxpayers) will reap an estimated $10,000 a year on average. The bill includes a tax credit of up to $60 a year (16 cents a day) for people earning around minimum wage or less.
“So, in effect, Arkansas teachers will pay the same top rate as billionaires. And this tax package gives the same cut to billionaires as to teachers and fire fighters. That is not right.” - Senator Clark Tucker
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ARKANSAS EDUCATOR
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Arkansas Advocates for Children and Families Policy Analyst Bruno Showers described it this way to KATV just before the proposal was approved. “Let’s say that we have five taxpayers around a dinner table and there’s a tax cut pie with eight slices, that wealthiest taxpayer - one person at that table, one out of five is going to get six slices of that pie,” Showers explained. “No other person even gets a full slice and the person at the bottom, the lowest income tax payer there - they’re getting crumbs - they’re getting like one percent of this tax cut. Long story short, it’s too expensive and all of the benefits go to the top.” In a letter opposing the cuts, a number of public education and child advocates called on lawmakers to “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. The budget surplus has been built up because, for too many years, the state government has chosen to underfund or not to fund critical investments that would benefit all Arkansans, from toddlers in preschool to the elderly in our nursing homes.”
The governor responded to those calls by saying he disagrees philosophically with the idea that the money could be better managed by the government. “They make the case that they would rather have $500 million instead of tax cuts, let’s put it in more government programs, and I don’t believe that fosters independence,” the Governor said. “I don’t believe it fosters work. I don’t believe it helps us to improve education. We are investing in those separately. Let’s don’t take $500 million arbitrarily and say let’s put it in more government programs.” Senator Clarke Tucker, D-Little Rock explained his vote against the cuts by outlining a number of state services that are not fully funded. “We’ve never invested a single dollar in after school and summer programs for at-risk youth, which we know reduces incarceration rates,” he said. “We barely meet our constitutional minimum of adequate education funding, and who strives for an education system that’s adequate? Our school facilities needs are enormous. It has been 14 years since we’ve made a meaningful investment in pre-k, which is the highest return on investment any government program ever gets.”
