BRIAN CHILSON
CLARKE TUCKER: Explains a vote against income tax legislation.

Only a handful of Democrats (and not all of them) voted against the half-billion-dollar income tax cut approved during the special session of the legislature. It was not an easy vote for those outliers and they’ll likely hear about it in elections next year.

One of them, my senator, Little Rock Democrat Clarke Tucker, took to the web yesterday to explain his opposition to the tax legislation, which provides the vast majority of its benefits to higher-income taxpayers (73 percent of the money to the top 20 percent; an estimated average of $10,000 for each of the 15,000 one-percenters). I found his explanation persuasive, even though the governor, Republicans legislators and many voters may not. What he wrote:

Advertisement

The legislature reconvened this week for what is hopefully the last time in 2021. The major item on the agenda was the biggest tax cut in Arkansas history that will ultimately cut $500 million out of the state budget each year. There was other action too, as always, but the real purpose of the session was an unprecedented tax cut…

How the Tax Cut Works

    • Individual Income Rates–Right now, the tax rate for everyone earning $39,700 or more in Arkansas is 5.9%. That will change to 5.5% on January 1, 2022 and drop again to 5.3% on January 1, 2023. Then, if certain triggers are met, the top rate will drop again to 5.1% and 4.9% respectively on January 1, 2024 and 2025. These reductions will knock $274 million out of the state budget each year.
    • Corporate Income Rates–The current corporate income tax rate is also 5.9%. It will drop to 5.7% on January 1, 2023. Then, if certain triggers are met, it will drop to 5.5% and then 5.3% respectively on January 1, 2024 and 2025. These reductions will knock $57 million out of the state budget each year.
    • Low-Income Tax Credit–Taxpayers who earn $23,600 or below each year will receive a $60 nonrefundable tax credit. This credit will cost just under $20 million each year.
    • Combining tax tables–Arkansas has multiple tax tables. It’s overly complicated and makes no sense. This bill will combine the low- and middle-income tax tables for a cost of $132 million per year.
    • A few other bits and pieces get the final total price tag to be $500 million per year.

Why I Voted No

I’m for lower taxes, but it’s important to meet two conditions. First, we ought to allocate every dollar in the smartest, most effective way possible. Second, we should only cut taxes, especially at this level, if we are meeting 100% of our essential state needs. This proposal falls short on both counts.

As an example, while the $60 credit for low-income Arkansans will help some, establishing a state-level Earned Income Tax Credit (EITC) would be the much smarter way to go. This program at the federal level has demonstrated, for decades now, that it incentivizes work and always stimulates the local economy. State-level EITCs also pull down additional federal dollars, so a $40 million EITC investment would much more effectively pull people out of poverty, create jobs here in Arkansas, and stimulate the state economy to the tune of hundreds of millions of dollars per year. Instead, this tax proposal spends the least amount of money where it would have the greatest impact.

What may be worse than that, even with all this tax reform, Arkansans who earn $39,700 will pay the same top rate as someone who earns $100 million per year. So, in effect, Arkansas teachers will pay the same top rate as billionaires. And this tax package gives the same cut to billionaires as to teachers and fire fighters. That is not right.

As you might guess, hundreds of millions of dollars of these tax cuts go to Arkansas’s top earners. When someone who earns $100,000 or more (or $200,000 per couple), which makes up less than 10% of Arkansans, gets a tax cut like this, they are much more likely to invest that money in out-of-state and other foreign corporations. So, this tax package also spends the most amount of money where it has the least impact on our state’s economy.

As for meeting 100% of our state’s needs, we are not doing that. For example, 3,000 Arkansas are waiting for a developmental disability waiver. Many have been waiting for the better part of a decade. These are the state’s neediest citizens, and we are failing them. Every one of their stories is heart-wrenching. It would take $37 million to eliminate the waitlist. How can we look them in the eye and tell them we can’t afford to meet their basic needs when we’re cutting half a billion from the state budget? We can’t.

Where else could our tax dollars make a difference?

      • We still have over 250,000 Arkansans without health insurance, and people in our state have lower life expectancies, higher maternal and infant mortality rates, and greater racial disparity in health outcomes than other states.
      • We barely meet our constitutional minimum of adequate education funding, and who strives for an education system that’s adequate? Our school facilities needs are enormous. It has been 14 years since we’ve made a meaningful investment in pre-k, which is the highest return on investment any government program ever gets. I don’t even know when the last time was that we made a meaningful investment in higher education.
      • We’ve never invested a single dollar in after school and summer programs for at-risk youth, which we know reduces incarceration rates.
      • Our infrastructure needs — internet, roads, bridges, clean water, airports, and levees — are real and huge.
      • Increase access to capital for entrepreneurs.
      • Quality of life investments.
      • This list only scratches the surface.

If we capped the tax cut for those earning $100k or less, then over 90% of Arkansans would still have tax relief, and we’d have hundreds of millions of dollars left to invest in our greatest asset, our people.

And here’s the irony: top earners would be financially better off in a state where people have a higher quality of life, where they don’t live in poverty or prison, where they are healthy, educated, and ready to work than to get a few hundred bucks out of a tax cut.

While I respect the work that went into this proposal (and there are some good components) and the lawmakers who did that work, I voted ‘no’ because we can do more both to drive the economy and to improve the lives of Arkansans, and we shouldn’t settle for less than that.

 

Help to Keep Great Journalism Alive in Arkansas

Join the fight for truth and become a subscriber of the Arkansas Times. We've been battling powerful forces for 50 years through our tough, determined, and feisty journalism. With over 63,000 Facebook followers, 58,000 Twitter followers, 35,000 Arkansas blog followers, and 70,000 daily email blasts, our readers value great journalism. But we need your help to do even more. By subscribing and supporting our efforts, you'll not only have access to all of our articles, but you'll also be helping us hire more writers to expand our coverage. Together, we can continue to hold the powerful accountable and bring important stories to light. Subscribe now or donate for as little as $1 and be a part of the Arkansas Times community.

Previous article Little Rock School District superintendent to retire after this school year Next article ICYMI: Economic recovery is real and often being ignored by media