The Senate fell two votes short this afternoon of passing Gov. Asa Hutchinson’s income tax cut for the rich after first turning down an unsuccessful effort by Democratic Sen. Will Bond to limit the cut for the very richest Arkansans.

The was 25-5, with five not voting, same effect as a no. But because the bill includes an increase in certain tax rates despite providing overall cuts it required a three-fourths vote, or 27 members of the 35-member Senate. The vote was expunged and cleared for a future vote.

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All five no votes came from Democrats. One Democrat, Sen. Larry Teague, voted for the bill. Not voting were three Democrats, Eddie Cheatham, Stephanie Flowers and Bruce Maloch, and two Republicans, Terry Rice and Bill Sample. None of these made remarks during a relatively brief debate that indicated their absence from the “aye” column. I’m hearing, however, that Sample is a “no” and Rice? Well, there’s lingering political tension between him and Hutchinson forces.

Bond tried to open the bill to amendment. He proposed to limit the reduction in the top mariginal tax rate from 6.9 to 5.9 percent to those making less than $456,000 a year. Bond said the state Department of Finance and Administration had given him figures this morning that showed leaving the 6.9 percent increase in effect for the richest would save $73 million. The full tax cut is going to cost $97 million when fully implemented over two years, according to state figures. In other words, the top 1 percent of taxpayers would get more than 70 percent of the benefit. (An independent analysis says the cost will actually be more than $150 million when fully implemented.)

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Sen. Trent Garner asked Bond, “When did you dream this up?” Bond said he hadn’t brought the amendment up in committee yesterday because he didn’t yet have the figures he’d sought about the impact at various income levels.

Bond’s effort to amend the bill was rejected on a voice vote.

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Bond also spoke against the tax cut bill. “What do we want Arkansas to be?” he asked. He said many areas need improvement and could use investment. “We’re in a battle with West Virginia to be the least educated people in America.” He said, for example, there ought to be a goal for teachers to be paid at least as much as legislators.

“Let’s no longer be NO. 1 in teen pregnancy,” he said. He urged being No. 1 in educational attainment.

He said a cut in tax rates wouldn’t change the future of Arkansas. but the improvement of highways and many other things might.

Democratic Sen. Linda Chesterfield also warned against cutting so much revenue. “You cannot continue to cut your income and maintain your standard of living.”

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Republican Sen. Jason Rapert objected to statistics quoted by Bond about the low state of Arkansas. It’s a product of many years, with Republicans in control for only a short period of time. He said the state was making progress in employment and other areas.  The tax cut “is the right thing for the state of Arkansas.”

Democratic Sen. Joyce Elliott
also spoke against the bill. She said it shouldn’t be a partisan issue as Rapert had suggested. She also said this bill doesn’t reflect the work of the tax task force she served on. The governor offered a new bill, throwing out recommendations of the task force, after it developed it would have raised taxes for many taxpayers at middle-income levels.

Democratic Sen. Keith Ingram emphasized the weight of the tax cut at the high end of the scale — 98 percent going to people making more than $90,000 a year. “I don’t want the people to think we are fully funding government … and that therefore these tax cuts can be seen as returning excess revenue to citizens.”

He went through a litany of needs being shorted, from rural fire departments to pre-K to State Police pay.

It’s easy to cut taxes, Ingram said. It’s hard to do things that make a difference.

Republican Sen. Jim Hendren, the governor’s nephew and majority leader, said the bill to drop the tax rate follows past reductions for lower-income taxpayers. “People in the top rate got zero.” He noted tax cuts of a total of $150 million in the last two legislative sessions. (Note: That means 90 percent of taxpayers got an amount equivalent to what 5 percent would get under the bill.) He said the state has increased teacher pay and expanded Medicaid while making tax cuts.

Hendren repeated claims that industrial prospects don’t consider Arkansas because of a higher marginal income tax rate than any neighboring state. (State officials have never produced a specific example of this nor a rebuttal of study after national study that has found tax rates are insignificant in industrial decisions.)

Hendren also defended the $97 million estimate on cost as being on the best available numbers. It was based on 2016 actual numbers. Other analysts say income will be higher in 2019 and 2020, particularly among the rich, and thus the tax cut will cost more.v Hendren said it was prudent and responsible to phase it in over two years. He predicted it would have dramatic results.