A new report emphasizes the obvious: Recommendations by a task force studying state taxes would benefit corporations and the 1
The analysis is by Arkansas Advocates for Children and Families and the Institute on Tax and Economic Policy. Said a release:
… the net overall impact of the combined recommendations would actually raise taxes on the neediest Arkansans. At the same time, it would target a bigger share of the decrease to those with the highest incomes.
In addition, the proposals would reduce state tax revenue and take hundreds of millions of dollars out of the state budget. When you factor in the cuts to the budget that such a large reduction in revenue would necessitate, the task force’s own consultant reported that Arkansas’s economic productivity would decline if all their recommendations were in place.
The recommended changes would move us backwards and away from the task force’s own goal of “fairness to all individuals and entities impacted by our state tax laws.”
In Arkansas, the more you make the less you pay in taxes as a percentage of income.
The bottom 20 percent – Arkansans making less than $18,600 a year – pay more than 11 percent of their income in state and local taxes. The top 1 percent of taxpayers in Arkansas – those making more than $422,400 – pay less than 7 percent of their income to state and local governments.
The unfairness is made worse by taxes assessed on necessities and
The preferred income tax option would reduce the number of tax brackets but give the richest break to the top end in a drop of 6.9 to 6.5
Combined, 51 percent of Arkansas taxpayers overall would see some reduction in their tax burden due to these personal income tax changes. But almost 70 percent of the total income cut would go to the top 20 percent of taxpayers while the bottom 20 percent of taxpayers will see no tax cut at all.
The study particularly objects to proposals that would sharply cut corporate taxes through lower rates and accounting breaks. This would benefit out-of-state corporations and wealthy shareholders, not workers.
Some of the proposals have merit, the analysis says. But:
the overall package raises taxes on the poorest Arkansans while cutting taxes mainly for the top 1 percent. This moves us backwards and away from the goal of “fairness to all individuals and entities impacted by our state tax laws.”
Moreover, the major loss of revenue from these proposed tax cuts needs to be addressed directly by this legislature. If all of the task force recommendations were implemented, state revenue would decrease by at least $350 million annually, representing an almost 10 percent cut to the state general revenue budget. Relying on tax triggers simply hits the pause button on the conversation and requires the tough choices about what programs to cut to be made by someone else in the future. We need to deal with these issues before we enact any major tax cuts – not after.