Michael Wickline of the Arkansas Democrat-Gazette this morning detailed income tax reduction legislation stamped with the approval of Governor Hutchinson and the heads of legislative tax commissions.
No special session yet because the governor wants guaranteed approval before the date is set and the votes are not yet committed.
My question: Is the delay due to the fact that the tax cut is not sufficient? Other than a handful of Democrats, I can’t imagine much resistance within the Republican legislature to cut hundreds of millions of dollars in state revenue, as it could hurt already inadequate public services.
No, the question is only how much richer the rich will get.
There is help for the working poor in the proposal that is circulating. The emphasis is on work and the poor.
There is a proposed tax credit of $ 60, or $ 1.15 per week, for people earning up to $ 23,600. The credit then begins to gradually disappear and disappear entirely at an annual income of $ 24,700. In case you are not one of those lucky ones, know that the minimum wage in Arkansas is $ 11 an hour, or $ 440 for a 40-hour week, or nearly $ 23,000 a year for a job at full-time. Hair over and no tax credit for you.
The tax cut would result in a loss of $ 137 million in state revenue for the remainder of the year; then $ 307 million the following year and much more if the optimistic projection of revenue growth continues with full implementation of the tax cut by 2025. The plan also requires the state to is supported by a $ 1.2 billion reserve fund. No expense for anything other than dire circumstances.
More pre-K, childcare assistance, home help for people with disabilities, post-prison rehabilitation programs, food assistance, affordable teachers’ insurance, state support to offset the ruinous costs of the Higher Education ? Such “frills” like these will NOT be improved by lowering taxes. Maintaining existing support levels will be difficult enough.
But wait. Let us not forget the promises which the poor will be violated. The millionaires who will reap the majority of the benefits are sure to create prosperity for all the Arkansas Fleeing Boats, right?
Fully implemented, the plan is to eventually reduce the state’s top marginal tax rate from 5.9% to 4.9%. That’s a tax cut of almost 17 percent.
Suppose you are a lucky member of the sperm club and you lose $ 1 million in income a year thanks to your lucky birth. The top tax rate is currently $ 82,000. Where a millionaire taxpayer would need 5.9% on about $ 900,000, or about $ 53,000, the ultimate tax cut by 2025 would produce a tax of about $ 44,000, a savings of $ 9,000, or over $ 700 per month. And no phasing out for millionaires as their income increases, unlike the 16 cents per day tax credit offered for minimum wage earners.
I am waiting for the next analysis on the distribution of benefits in this bill. It might be slightly less biased in favor of the rich than previous plans. But it will be ignored. And there will be no serious analysis of the demonstrated failure of the trickle-down fiscal policy as an economic stimulus. Faith is good enough for our legislature. It didn’t work on COVID policy, but it wasn’t a deterrent.
Nor will there be any serious consideration of what the state provides for the least of us and how the state could be lifted by focusing more on helping those in need than on the comfort of people at ease.
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