Rich Huddleston of Arkansas Advocates for Children and Families writes that the governor and legislature are creating a “perfect storm” for lower-income people this legislative with tax policies that favor the rich, harm the poor and reduce money for public services. Amen.
The summary of the political meteorology:
* An income tax cut for the rich — an estimated $150 million when fully implemented with about three-fourths of the benefits to the richest 1 percent, those making more than $456,000.
* An as yet unspecified corporate income tax cut likely to take more money from general revenue. These, too, would benefit the wealthy and mostly out-of-state corporate owners at that.
* A highway construction plan financed mostly by sales taxes — partly on all sales and partly on a new motor fuel sales tax, plus a levy on sensible electric cars and diversion of casino money that was supposed to go to general revenues. Sales taxes hit the poor the hardest because they already pay a disproportionate share of their income in taxes.
* A property tax cut, through increased homestead exemption, that favors homeowners, a category not overpopulated by poor people. They get no tax break as rental tenants, though some states provide such relief.
* Passing a law that would ensure collection of the sales tax on Internet sales. I support this for fairness with local retailers, but it’s another regressive lick on poor people’s sales tax burden.
Collectively, these changes would make the tax system less fair for low-income families. Several would reduce revenue for the state budget and undermine Arkansas’s ability to make critical investments in Arkansas children and families.
He has many more details. He addresses, too, the governor’s talking point that relief was extended to
Some policymakers argue that low-income taxpayers were taken care of during the 2017 legislative session through a personal income tax cut that cut taxes for taxpayers with annual incomes of less than $21,000. The reality is that the impact of the 2017 tax cut was very limited in its scope. It only reduced or eliminated their personal income tax burden, which was a very small part of their state and local tax burden. It did nothing to offset their much higher sales tax burden. Even after the 2017 tax cut for low-income taxpayers, they still had a much higher overall state and local tax burden. According to a 2018 ITEP study, the bottom 40 percent of Arkansas taxpayers still had a much higher state and local tax burden, relative to their income, than the top 1 percent of taxpayers. Going into the 2019 session, the bottom 40 percent of taxpayer paid over 11.3% percent of their income in all state and local taxes, compared to just 6.9 percent for the state’s highest income earners. This gap in fairness will only get worse given the tax changes likely to be adopted during the 2019 session.
Huddleston’s piece has all the details. He concludes:
If all these measures are adopted, the 2019 legislative session could forever be known as the “perfect storm” that hit Arkansas’s low-income taxpayers. Arkansas has failed to adopt the one policy change that could offset the impact of these tax changes and improve the fairness of the state and local tax system for our low-income working families: creating a state earned income tax credit (EITC).
He’s right. But I’m inclined to borrow a crude weather-related cliche about Huddleston’s likely impact on the Arkansas legislature: Pissing into the wind.