An addendum to my detailed coverage yesterday of Governor Hutchinson‘s letter to the legislative task force expressing his opposition to raising the grocery tax:

In response to the governor’s letter, Democratic candidate for governor Jared Henderson released a statement crowing a bit that “Hutchinson finally broke his silence.”

I’m glad to hear Asa Hutchinson finally broke his silence on this issue as the Republican-controlled General Assembly has tossed around the idea of increasing the grocery tax for the past month. Raising the grocery tax should never even be up for discussion and as Governor you can bet I’d fight any attempt, from day one, to raise this tax that hits our working families the hardest.

Henderson had issued a press release on Tuesday slamming Hutchinson for failing to speak out against the possibility of raising the grocery tax, which the legislative task force had voted to consider alongside a proposal backed by the scattering of progressives on the task force to enact a tax credit that would provide targeted relief to low-income Arkansans.

Initially, Hutchinson tried to deflect, responding to Henderson on Tuesday that he supported keeping the reduction in the grocery tax that has been phased in since 2007 but that that legislative review and debate was appropriate, no official recommendation has yet been made, and no further comment was necessary until a proposal emerged. Just two days later, Hutchinson decided to nip the issue in the bud, interjecting with a letter to the task force stating his opposition to raising the grocery tax in no uncertain terms.

Hutchinson also faced criticism on the possibility of raising the grocery tax from primary opponent Jan Morgan and his right flank, and a number of Republicans on the task force and the legislature were opposed to the idea. 

The sales tax exemption on groceries is extremely popular and the task force would face immense political blowback if it recommended raising the tax in the context of a giant income tax for the wealthy. The governor going out of his way to state his opposition probably means the idea is D.O.A. in the task force. The task force’s motion to consider the grocery tax paired it with an idea long championed by Democrats, a tax credit such as an earned income tax credit (EITC) or similar policy that would directly put money into the pockets of low-income Arkansans (unlike the grocery sales tax exemption, which applies to grocery shoppers at all incomes, such a credit would be targeted exclusively toward those at the bottom of the income scale). Such a policy would reduce poverty in the state and offer significant help to those struggling to make ends meet.

Offering a tax credit to low-income Arkansans would cost money, which may be in short supply given GOP priorities to cut taxes on the rich (the governor has proposed the largest tax cut in state history for the 2019 session, every cent going to the state’s highest earners). Republicans who have long blocked such a tax credit in the legislature showed openness to the policy if it was paid for with an increase in the grocery tax. As I described yesterday, that’s a pernicious choice: The two policies really have nothing to do with each other (the legislature could keep the grocery tax low and add an EITC). Republicans are essentially saying they would only be willing to consider offering this relief to the poor if it was paid for by raising a tax that would disproportionately hurt the poor. It’s unclear whether or not an income tax credit has much hope of getting a recommendation from the task force.

In Henderson’s original statement, he unfortunately chose to unnecessarily disparage the income tax credit idea as making “little difference at the register for families with a tight budget.” If anything, a properly designed and funded tax credit could provide more help for lower-income families’ budgets than the grocery sales tax exemption, but there’s no reason to put the two policies in competition with each other. That falls into the trap of assuming a link between the two that some Republicans on the task force are insisting upon. One would hope that if elected governor, Henderson would fight as hard to enact targeted relief for low-income Arkansans as he would to protect the sales tax exemption on groceries.