It’s all over but the gold-counting for the Arkansas legislature’s orgy of tax cuts for the rich and businesses.
Just listing them all takes so much space that the daily Arkansas Democrat-Gazette, which is devoting an admirable and masssive amount of staff and space to legislative coverage, can’t dig very deeply into pro and con arguments when they’re made or some of the factual elements that underlie major decisions such as tax cuts.
In that vein, after the fact, comes the Arkansas Citizens First Congress. The video above features Jim Metzger, an economist who’s studied state revenue for 30 years, and who testified about smart tax policy. Some cuts help the economy. Some don’t. Capital gains tax cuts, for example, just tend to swell the pocketbooks of the rich, or their investment portfolios. Tax cuts on lower and middle-income workers tend to get pumped right back into the economy.
This legislature had some stark choices. Rep. Warwick Sabin had a bill targeting income tax relief and bracket fairness that would have benefitted middle income workers. Rep. Fred Love wanted to help people who qualify with an earned income tax credit, essentially a small rebate of payroll taxes that would go immediately back into the economy as consumer spending.
The legislature chose to cut income taxes across the board, a cut that will produce more gains for the wealthy. The capital gains tax cut is extraordinarily favorable to the wealthy, particularly in the form House Speaker Davy Carter wrote it with a total exemption for $5 million-plus gains. Manufacturers got a big sales tax cut on utilities. A variety of other businesses get lesser tax cuts.
The Arkansas First Congress notes that the cuts are unfair, even immoral, with about half the benefits flowing to a tiny percentage of high-income people. They favor the top 1 percent, who pay only 6 cents on every dollar of income in taxes, versus middle and low income workers who pay 12 cents of every dollar earned in taxes.
Its statement follows: