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Governor Proposes $180 Million Tax Cut For High Earners In State Of The State Address

Sarah Whites-Koditschek
Gov. Asa Hutchinson gives his State of the State address to the Arkansas General Assembly.

Arkansas Governor Asa Hutchinson called for a $180 million annual tax cut for the state’s biggest earners during his State of the State address Monday kicking off the 2018 fiscal session.
Hutchinson said the goal is to compete with other states for business investors. He said that at a recent meeting with the editorial board of the Wall Street Journal, he was asked how much top earners pay in Arkansas state taxes.

"And I said, ‘Well, it’s 6.9 percent, and they looked at me and responded, ‘That is worse than Connecticut.’ That story emphasizes the competitive nature of taxes in a mobile society.” 
Connecticut, in fact, has a top marginal tax rate of 6.99 percent.

State Sen. Linda Chesterfield (D-Little Rock) says she’s afraid tax cuts will send Arkansas in the direction of Kansas or Oklahoma, struggling to pay for services like teachers and law enforcement.
“And those cuts we can’t afford right now because Arkansas is not a state that has lots of money, but we’ve got to make sure that we maintain funding for education. We’ve got to make sure that we maintain funding for health centers, job training. We right now are challenged as far as highway monies are concerned,” she said.
State Sen. Jim Hendren (R-Gravette) is the chair of a task force, the Tax Reform and Relief Task Force, hashing out the details of such tax cuts. He says he wants taxes to be as low as possible. He says the group has met with lawmakers from those states to learn how to avoid such pitfalls.

For example, he says, they were advised to give tax cuts for a set period — don’t plan them into the future when the economy might decline.

"'Be careful about passing tax cuts over a future three or four year period,' so that we can all go out and pound our chest that we passed a $200 million tax cut even though we did 50, 50, 50 over five years or four years. Well, in two or three years, if the economy dramatically changes, you may not have that $50 million that you approved three years ago.”
The task force expects to have a report by September. The governor’s $180 million dollar proposed cuts for high earners would need legislative approval during the 2019 session.

This story is produced by Arkansas Public Media. What's that? APM is a nonprofit journalism project for all of Arkansas and a collaboration among public media in the state. We're funded in part through a grant from the Corporation for Public Broadcasting, with the support of partner stations KUAR, KUAF, KASU and KTXK. And, we hope, from you! You can learn more and support Arkansas Public Media's reporting at Arkansas Public Media is Natural State news with context.

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