SARAH HUCKABEE SANDERS (file photo) Brian Chilson

That little three-day session of the Arkansas legislature in August must be counted as the roaring success that the Republican Party and its state leaders touted. Like no other in nearly a century, the session advanced the central goal of today’s GOP: to wreck the state’s fiscal system so that people of inherited riches or high incomes will never again have to worry about paying much in the way of taxes to support education, health care and law enforcement — i.e. government services for the needy and the commoners, for which a few comfortable people think they should not have to pay.

Presuming that Sarah Huckabee Sanders is sincere about her promises, and that Republicans are loyal enough to elect her governor in November in spite of her evasiveness, we will shortly (in eight years, by her schedule) see the end of income taxes in Arkansas on both corporate and individual taxpayers. Like all the other Republican candidates for governor, real and would-be (that includes Lt. Gov. Tim Griffin and Attorney General Leslie Rutledge), Sanders has promised to end the taxes, not just reduce them a little more than the timid Hutchinson has.

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Realistically, that will be forever. Neither Governor Hutchinson nor any of the Republicans championing the elimination of state income taxes ever mention what their goal really means: Thanks to a Depression-era provision in the state constitution (Amendment 19), there will be no state income taxes ever again — only sales taxes, excise taxes and property taxes, which are most burdensome on the poor and ordinary wage earners, who are too often ignorant of what is happening to them. After all, freeing the rich from tax burdens is exactly what Donald Trump would do if the socialists hadn’t stopped him. And once the income tax is scrapped, thanks to Amendment 19 it realistically cannot be reinstated.

Is that an overstatement? Not if you have a modicum of knowledge about Arkansas history, or even of American history. The income tax goes back to the Civil War and the first Republican, Abraham Lincoln, who got the Republican Congress to levy an income tax to pay for his war against treason. It was scrapped after the war.

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But it is Arkansas history that gives us a tutorial on what Hutchinson and the overwhelming Republican majority in the legislature, with Sanders’ promised help, have wrought. Remember that, although the state this summer was drowning in tax revenue — a planned event, as I will explain — Republican legislators could see no reason to spend any of the vast surplus to raise pay for teachers, despite the enormity of the education crisis as schools from border to border can’t find qualified teachers for their classrooms (not to mention the fact that Arkansas teachers are among the most poorly paid in America).

Future historians will compare Hutchinson and his legislative majority to their counterparts in 1932 — a popular and goodhearted governor named J. Marion Futrell and a legislature of 135 like-minded conservative Democrats. The country was at the depth of the Great Depression and Arkansas was the dreariest place in the land, suffering from floods, drought and famine on top of a complete collapse of the economy. In 1929, just before the stock-market crash and the economic collapse, Arkansas had enacted its first income tax — at least the first that withstood judicial scrutiny. It was a nearly meaningless tax because the law provided no reliable system for collecting it (withholding didn’t come along until 1966) — and besides, almost no one in the state was earning anything more than subsistence, so collections were slim. The legislature also had just mandated public education for the first time, although since 1874 the constitution had required the state to provide a suitable and equal education for every child. Now every kid was obliged by statute to go to school, and the state was obliged to provide the means to do so.

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Three previous governors — Tom McRae, John E. Martineau and Harvey Parnell — had set out to provide a good education to everyone, like prospering states had been doing, and to raise some taxes to do it. These would have included the first income and severance taxes in the state, although the Arkansas Supreme Court struck down McRae’s tiny income tax (a tenth of 1% tax on income over $1,000 a year). The final income tax was Parnell’s. However, his successor, Futrell, thought education was overrated, and he was outright opposed to the state spending a dime on high schools. Universal secondary education was a waste of taxes, he said.

In 1933, Futrell and the legislature slashed some of the few taxes on the books. The state defaulted on its debts, and Arkansas became a ward of the federal government. Federal taxes then paid for basic commodities for starving white families in east Arkansas and also the paltry payments that were made to school teachers in lieu of state and local taxes (many teachers got IOUs or county scrip in lieu of money).

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The Roosevelt administration declared an end to its sufferance of the Arkansas beggarliness in early 1935. If the state did not raise some taxes to support the schools and other services, as all the other states had done, the feds would end all its aid to Arkansas on March 15 of that year. Fearing a march of thousands of beggars on the state Capitol, Futrell pleaded with the legislature to raise some taxes — and it did, creating the first sales tax, legalizing and taxing liquor, and taxing racetrack wagering. So, the federal aid continued. Arkansas has continued to be a marginal ward of the federal government ever since, which partly accounts for the big surpluses Hutchinson and the legislature are parceling out, with income-tax cuts and big bonuses to key bureaucrats and lawmen.

Champions of the wrongheaded notion that low and nonexistent taxes, notably on income and wealth, are the secret to economic growth and prosperity might ponder the history of the Depression era, but also every era before or since. Low taxes never mean growth and prosperity, and higher taxes never mean lower growth and recession. A summary of that history, state and national, from Ronald Reagan to Donald Trump (and James Conway to Asa Hutchinson in Arkansas) may be the subject of another disquisition.

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J.M. Futrell’s legacy is even worse than his hasty succession of tax cuts and tax increases. As he took office in 1933, he wrote two amendments to the state constitution, and the legislature passed them along to the voters at the 1934 election. Once passed by the voters, they became known as the Futrell Amendments. One of them, Amendment 20, barred government from ever going into debt without a statewide vote. Subsequent governments, helped often by tolerant courts, found ways to skirt the mandate and go into debt. Embracing the idea of the modern Federalist Society, the courts concluded that constitutional authors like Futrell hadn’t really meant what they wrote.

Futrell’s other legacy, the aforementioned Amendment 19, was meant to make it much harder for the legislature to raise taxes and also to spend them. The amendment states that state taxes can never be raised, except by a statewide vote at a general election or in a dire emergency by a three-fourths majority of both houses of the legislature. And the legislature can appropriate money to be spent only by a similar three-fourths vote — unless the money is to be used for pensions for Confederate veterans and their widows, public education, highways or to pay “the just debts of the state.” Futrell’s Amendment 19 didn’t define “just debts of the state,” and it is still a mystery. By his own actions after the amendment became law (i.e., signing bills that didn’t get the three-fourths votes), Futrell insinuated that anything passed by the legislature was a just debt. We haven’t followed his example, so a nay-saying minority of the legislature decides how state revenues are to be spent.

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There is no evidence that the three-fourths-vote threshold ever kept taxes any lower or saved even a dime of spending. It merely affected who had to pay the taxes, and who got the money.

The principal effect was to make it impossible to raise income taxes except under the rarest of political conditions, and to make the new tax source — retail sales — the go-to tax. Needing only 18 votes in the Senate and 51 in the House, sales taxes assumed a big burden of financing almost everything: schools, local governments, lakes, streams, parks, and finally highways. Ever since, Arkansans have paid it in bits and chunks every day and never marked its burden — unlike income taxes, which are shown on weekly pay stubs and tax preparations every April. If the legislature really wanted to stimulate economic growth, cutting sales taxes would do the job. At least, Hutchinson and the legislators have not embraced the Arkansas Democrat-Gazette’s simple and unconstitutional idea of suspending income taxes for five years for people who will establish residence in Arkansas. The most desirable citizens are supposed to be people who don’t want to pay taxes.

Only four governors, two Republicans and two Democrats, ever tried to climb the cliff and increase either corporate or personal income taxes: Republicans Winthrop Rockefeller and Mike Huckabee (that’s right, Sarah’s dad), both of whom sought to raise both corporate and personal rates, and Democrats Dale Bumpers and Bill Clinton, who succeeded in raising one or the other. Rockefeller, in 1969 and again in 1970, proposed raising personal income taxes to a top rate of 12 percent, which would have been the highest in the country (Witt Stephens and Rockefeller himself might have been the only ones to pay the top rate). Rockefeller also sought to raise sales, tobacco, gasoline and other excise taxes. The overwhelmingly Democratic legislature rejected Rockefeller’s personal income tax, but adopted his corporate tax, raising it from a top rate of 5 percent to 6 percent. Bumpers tried to raise the top individual rate to 9 percent but, after repeated defeats in both houses, settled for 7 percent. He declared that he would never raise the sales tax. Clinton in 1991 went along with a slight raise in the corporate tax rate, from 6 to 6.5 percent. And Hutchinson, who was defeated in his first race for office in 1986 by Bumpers, has now abolished Bumpers’ legacy by reducing the rate on wealthier citizens below where it was when Bumpers took office.

Mike Huckabee’s actual record demands some attention, since his daughter seems to suggest, in the few things she’s said about how she would govern, that she would govern more like Trump than her dad. The senior Huckabee raised more taxes than any governor in Arkansas history, and he can still be seen on archival video begging the Democrat-led legislature to raise income taxes, or indeed any kind of tax. Send the bill to me, he said, and I will sign it into law. And so, he did. He signed bills adding a 3% surcharge on every individual and corporate taxpayer for a couple of years. Huckabee also signed or supported many other tax increases, since he happened to be governor just when the state suffered revenue shortages from the delayed first George W. Bush recession as well as court decisions ordering the state to meet the constitutional requirement that it furnish a good education for every child. Huckabee did his best to carry out the constitutional edict of well-funded schools.

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Mike’s daughter has other ideas. After first saying when she announced for governor that she would abolish income taxes entirely, Sarah Sanders lately has talked about “phasing” them out. You have to presume that her daddy, who has moved back to Little Rock from Florida’s Redneck Riviera, has told her from personal experience that if she eliminates $5 billion a year in tax receipts — the state’s income-tax haul last year — she will have to raise sales taxes by half or else implement a four-month school year (along with a further reduction in teacher salaries). Of course, that doesn’t mean she still won’t do it. The current legislature would jump at the chance.

Politicians of every stripe are moved to do what will be popular today with little regard for the distant or even the near future, but it is a dangerous motive for changing the constitution because it will limit the available solutions when we are faced with new and emerging problems. That was Futrell’s profound mistake, closing the options for future generations. Thanks to Amendment 19, Hutchinson’s tax cuts have made it realistically impossible for future leaders to raise needed revenues with income taxes. If Sanders carries through and eliminates corporate and individual income taxes, no future governor or legislature can raise money that way. They can only raise sales taxes, which lands heavily on low- and moderate-income families. Amendment 19 says that without a three-fourths vote in each house, the legislature can never levy income taxes on even one bracket of taxpayers as described in the 1929 law. If the legislature simply re-enacted that old law — which it might do with a simple majority if the courts acquiesced — even very poor families would pay the same rate as billionaires. That is where Hutchinson and, presumably, Sanders are taking us.

The vast majority of Arkansans (and of people everywhere) believe that the rich, whether they are heirs of fortunes or just engaged in lucrative careers, do not pay their share of taxes. Some of them even think that their model Donald Trump, whose daddy paid few taxes even when he was legally bound to do so, probably should pay a little more.

Hutchinson’s cover has been the big budget surplus which, largely thanks to the federal government, shows up in the treasury every July 1 at the end of the fiscal year. It looks like Asa has fashioned such a booming economy and has saved so much money with his government reorganization that the only thing to do is cut taxes and give the surplus to needy groups like the National Guard Association. The state, apparently, just has no need for so much money.

The facts are considerably different. The Arkansas economy has always followed the nation’s, usually a little slower and later but not always. Job creation in Arkansas waxes and wanes from year to year, usually a little behind the nation’s. Arkansas had a net loss of jobs during Trump’s four years. Job growth has been a little better since Trump departed but is still nothing to brag about.

Much of that surplus in the state treasury is not from Hutchinson’s economizing and industrial growth, but from Arkansas’s old patron from the Depression era, Uncle Sam, who in the last days of Trump and the first year of Biden flooded the state with money — more than Hutchinson could or even wanted to pass out to people and businesses clobbered by the pandemic and the recession it induced. But the first big inducement was Obamacare, which took effect in 2014 and flooded Arkansas with money — especially after Governor Beebe and the legislature, unlike those in other Southern states, opted to participate fully in Medicaid coverage for low-income people. Beebe and the legislature had the foresight to build the state’s Medicaid structure in such a way that insurance companies could participate and, therefore, flood the state treasury with premium taxes as well as income taxes. It continues to be a fiscal bonanza for the state, although Hutchinson tried to limit medical coverage for the very poorest people, the unemployed. Sanders, a critic of Obamacare, may end the Medicaid participation and all that cash.

Budget surpluses are almost never surprises; they are planned. The governor can pretty well control whether there will be a surplus in any year, and about how much. Every June or so, his fiscal director calculates what the economy is going to do in the next 12 months and picks a revenue forecast that will be short of what is likely to be collected, and then money is parceled out to agencies every month based on that conservative forecast. In recent years and probably the years ahead, the public schools, most of the colleges (but of course not the University of Arkansas at Fayetteville, home of the Razorbacks) and the prisons are starved of aid because the governor and the legislature calculate beforehand how much money they should get. Whatever their needs might be — most notably the schools, under the Lake View v. Huckabee court settlement — a minimal sum goes into the allotments decided by the governor with the consent of legislative leaders. Lake View is no longer effective.

That is the explanation for the growing teacher shortage, the surge of retirements and resignations, and the growing fiscal problems at the state’s regional colleges like the University of Arkansas at Little Rock and the former Henderson State University.

The worst is to come.

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