Another big sales tax lick is on the Senate agenda today and, in keeping with the theme of the session, it comes with a tax break for corporations.

SB 576, set for a vote today, is styled a “reform.” It is aimed, first, at collecting sales taxes from Internet merchants without operations in Arkansas. In theory, customers were always obligated to pay such taxes. In practice, virtually no one did and the law didn’t mandate collection. This bill will change that, effectively adding to the disproportionate burden our sales tax puts on poor people. It is only fair, by the way, to tax out-of-state merchants as we tax in-state merchants.


But that’s not all this bill will do. It also will reduce the top corporate income tax rate from 6.5 to 5.9 percent. It also would amend the law on apportioning net income of financial institutions and extend the net operating loss carry-forward period for computing income tax. Those last two things are not for Joe Six-pack.

The revenue impact posted on the legislation lists an expected $42 million in new sales tax collections in 11 months of fiscal 2020.  The losses on the corporate law changes are huge and burgeoning over time.  The impact statement was done before Hester’s sneaky little amendment last week that included the cut in the top rate of the corporate income tax.  But changes in apportioning sales for multistate corporations and the extended period for claiming losses against income will cost the state $22 million the first year and more than $60 million the second. (And enhance the profits of corporations by the same amount.)


So far this session, the legislature has referred a half-cent sales tax increase to voters, imposed a new sales tax on motor fuel and cut income taxes of a tiny percentage of the wealthiest Arkansans. They’ve imposed a giant new tax on fuel-efficient cars and are working on a variety of measures to increase taxes on tobacco. So there are a variety of sources to pay to cut taxes on the rich and corporations.

House Speaker Matthew Shepherd (R- El Dorado) told the Democrat-Gazette his top priority now is the bill including the massive tax cuts for corporations and a sales tax increase for poor folks. He’s already said he’s opposed to a sop from the Senate that would give an earned income tax credit to working poor and raise taxes on tobacco. A good representative of the home boys of the Murphy Oil fortune.


Do you begin to see a theme here? Add in grinding the poor with obstacles to health coverage; a refusal to provide livable rental housing and transfer maybe $10 million from general revenue to private schools.

Comfort the comfortable. Afflict the afflicted.