The predicted tax cuts are flowing. Despite testimony against it, the Senate Revenue and Tax Committee endorsed, with only Sen. David Johnson in the negative, House Speaker Davy Carter’s bill to EXEMPT all capital gains above $5 million from the income. EXEMPT ALL. In defending this to me the other day, Carter said, well, hell, the people who score these kinds of windfalls by selling Arkansas companies, for example, just move to Florida or Texas to avoid the tax anyway.
So why not force them to at least have that inconvenience? It’s not true that all barons move out of state to avoid the 4.9 percent state tax bite on capital gains profits. Jack Stephens never did. Nor Witt. They did OK, I’m led to understand.
If anybody think the tax break guarantees the capital gains will be reinvested in Arkansas, they don’t understand capitalism very well. Capital will seek its highest return. That calculation rarely factors in a marginal tax advantage some unknown day in the future when an investment is sold.
Also coming out: Rep. Charlie Collins’ bill to alter income tax brackets to bette reflect inflation and also to cut the top rate by an eighth of a percent (amended tidat to simply give a small break, a tenth of one percent, in each bracket). It’s another big winner for the wealthy, not so much for working people. By the third year, the bill will reduce state revenue by $55 million, better than half of that to benefit the top 2 percent of income earners. Collins’ bill drew three votes in opposition, all Democrats. This might reflect some pushback from Democrats who might prefer an income tax measure on the House side more targeted to low- and middle-income working people.
A number of other cuts are shooting out, too. David Goins of Fox 16 puts the cumulative cuts to come out of the
Senate today at $120 million, about 20 percent more than the figure Gov. Mike Beebe says he prefers. Many of the cuts phase in over a period of years. If Beebe rounds up the Democratic caucus in the House, some of these might have a harder time than in the Senate, with a bigger Republican majority.
More from Roby Brock, who was there.