Rep. Warwick Sabin’s bill to offer tax credits to low-income, working Arkansans failed to advance from the House Committee on Revenue and Taxation on a voice vote this morning. The Working Families Opportunities Act would have corrected one of the great injustices of this legislative session: With the restoration of the capital gains tax cut and Gov. Hutchinson’s middle-class tax cut, everyone is getting a tax break except for the working poor. This isn’t an insignificant number. It’s some 279,000 Arkansans, or as Sabin put it in his testimony “about 40 to 50 percent of the people we represent.”
Most of the questions, from the likes of Rep. Jim Dotson, Rep. Stephen Meeks, Rep. Lanny Fite, demonstrated a complete lack of understanding of refundable tax credits. Those Republican reps were wary of anyone receiving a tax credit that might exceed the amount of income taxes owed. Of course, when you consider total tax liability, including sales and property taxes, lower income Arkansans pay a vastly higher share of their income in taxes than higher earners, as Sabin and Rep. Clarke Tucker point out.
Meanwhile, the federal Earned Income Tax credit, on which this bill was based, appeared to be a foreign concept to many of the members. They were apparently not stirred by Sabin citing President Reagan’s strong praise for the federal EITC as “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”
Then there was supply-sider Rep. Charlie Collins, who after making his position against the bill known during questioning got up to testify against the bill. Collins said he was in “100 percent alignment with the spirit of where Rep. Sabin is going,” he’d just rather see the income tax brackets be lowered further. Sabin said he thought if you asked the average person on the street whether they’d prefer to see their income tax liability lowered 1/10th of 1 percent or receive a greater EITC, all would prefer the latter.
He closed for the bill strongly.
“This is the only proposal in front of you that brings relief to the only segment of the population that hasn’t received tax relief in the session. Talk is cheap. And when the story of this session is written, what we do on this bill will determine whether we put our money where our mouth is, so to speak, and give tax relief to those people who have been left out.”