Governor Hutchinson signaled his preferred approach to state taxation and services last week — keep pinching services to provide a tax cut for the rich.
He signaled his endorsement of a plan to restructure tax rates with the key element a reduction in the top tax rate of incomes over $65,000 from 6.9 to 5.9 percent. The new rate tables actually require tax rate increases at virtually every level, particularly the poorest workers, but increases in the standard deduction would offset the increases, supposedly. The bottom line is still a windfall for the wealthy.
It’s simple: 75 percent of $192 million in tax cuts would go to the top 13 percent. A further analysis shows it’s even worse than it already appears.
Here’s the overall picture:
There are 483,000, or 38 percent of taxpayers, making less than $20,000. They’d get virtually nothing in tax cuts — about $1.9 million altogether, or about $4 each.
About 614,000, or about half of all taxpayers, make between $20,000 and $80,000. They’d reap about a quarter of the tax cut, altogether about $46 million, or about $75 each.
About 170,000, or 13 percent of taxpayers, would get $144 million, or $850 each.
But wait, there’s more. That $850 figure is misleading. A person making $81,000, for example, would save only about $85. A person making $810,000 would save about $7,000.
Tax data I’ve obtained shows almost 5,000 taxpayers made more than $500,000 in 2016. At that same income, with Asa’s ideal tax cut plan in place, they’d save by my rough calculations $50 million or $10,000 or so each.
In short: Fully 25 percent of the tax cut would go to 5,000 people, or less than a quarter of 1 percent of the state’s 1.2 million tax filers.
Here’s just one illustrative specific example: Asa’s tax cut would be worth $200,000 in tax savings alone on the dividends on Jim Walton’s directly owned Walmart shares, never mind his other income. Versus $0 for someone making less than $5,000.
We’d pay for these cuts like Kansas paid for theirs, in cuts to state services, beginning with public schools, which receive about half the general budget. The cuts also would reduce support for prisons, public safety and health care for the elderly and poor.
Republican orthodoxy holds that tax cuts trickle down in prosperity. Failures from Kansas to the national budget prove otherwise.
Do we really want to lure people who give the top marginal tax rate a higher priority than good schools, fine universities, sound infrastructure, preservation of the Buffalo River, clean air, clean water, equal rights (medical and otherwise) for women and sexual minorities?
Being poor, cheap and anti-worker hasn’t done much for Arkansas so far. Adding greedy doesn’t look like a winner to me.