Arkansas Democrats unveiled their ideas for tax relief this morning and it’s a marked departure from Gov. Asa Hutchinson’s plan to give more than 90 percent of tax cuts to the top 5 percent, with the top 1 percent getting 75 percent of the eventual $150 million in tax reductions.
The Democrats’ legislation would do two things:
* Provide an earned income tax credit to low-income workers. It would be equal to 10 percent of the federal earned income tax credit, an idea originally championed by many Republicans. If the credit exceeded tax liability, the taxpayer would get the difference from the state. This would cost about $78 million, they said.
* Keep the top marginal tax rate of 6.9 percent in place for those making more than $456,000, but cut it to 5.9 percent for those making less. Sen. Will Bond proposed this as an amendment to the governor’s bill when it passed the Senate but was quickly overruled. He said then it would save $73 million that could be used for state services. That figure is based on the state estimate of a $97 million cost when the tax cut is fully phased in over two years. But an independent analysis says that estimate, based on 2016 figures, is likely to be far exceeded by 2021, likely to more than $150 million because of expected growth in income at the highest levels.
They said their plan would provide relief to 99 percent of taxpayers. McCullough said in prepared remarks:
History tells us time and time again that the most effective form of tax relief occurs when we put more money in the hands of the people who will spend it and put back into our economy. My values and my faith tell me that we should always try to do the most good, for the most people. I believe this legislation passes both of those tests. It will benefit 300,000 working families