Our state’s desperate need for tax reform has been answered — with a call for yet another task force.
Gov. Asa Hutchinson said in his “State of the State Address” yesterday that he wanted the Legislature to support the formation of a legislative task force to study tax reform ideas that we might pursue in the future.
Task forces studying health care, criminal justice and transportation have all been formed under Hutchinson’s tenure, so it shouldn’t come as a surprise that taxes are getting the same treatment.
Hutchinson told legislators yesterday:
I pledge to continue down the path of lowering the income tax rate for all Arkansans. We need a specific plan for the future so the public knows the direction in which we are heading and how we can get there. My goal from the beginning has been to reduce the overall high income tax rates in Arkansas and to do it for all Arkansans. Today I’m asking for your support for a blue ribbon legislative task force to be created and recommend further reform. The goals are fairness, competition, simplification and economic growth. The focus of the plan is to reduce the high income tax rates in Arkansas. We need to have a plan to reduce the tax rate over time to a more competitive level. Let’s create that task force and I ask for your support.
Hutchinson’s tax reduction plan for this session focuses on two groups: those making $21,000 per year and military retirees. Some Republican legislators had previously expressed disappointment in Hutchinson’s plan, saying it doesn’t go far enough.
State Rep. Charlie Collins was one of those legislators skeptical of the Governor’s tax cut agenda this session, but in an interview today with The Arkansas Project, Collins said he’s “optimistic” Hutchinson’s tax agenda will pass the House with the announcement of the task force formation.
I’m very excited about this. We’re going to have to make it the great thing that it can be.
It’s my view that we can create a seminal, long-term adjustment with how Arkansas goes to market with taxes and literally make a big step forward in turning our state into a good jobs magnet. Yes, I’m excited about it. Yes, I’m 100 percent on board. I trust the Governor. I don’t think he lies. I’ve never experienced him lying to me. I think he’s genuine and sincere in terms of what he hopes this task force will be able to accomplish for us as a state.
Collins also said it wasn’t likely pro-tax reform legislators would be able to persuade Gov. Hutchinson in time to get legislation passed this session.
For those of us like me who believe we need big, bold tax reform, there was zero probability we were going to be able to somehow influence the Governor’s plan to become a big bold tax reform effort on this kind of timing. What we now have is the opportunity to make that happen in coming years in 2019, 2020, 2021 and beyond.
Only time will tell if any other legislators still try to pursue tax reform this session. However, it’s looking like many are willing to let this session pass while fighting for changes to the tax code at a later date.
State Sen. Bart Hester told Arkansas Online yesterday:
I hope to be appointed to it and I hope we use the next couple of years to really look at the best way to overhaul our tax system in Arkansas … to make it simplified but competitive, where I don’t think we would have to use as much money like paying companies to come to Arkansas. We just create an environment that draws them here.
I think if I back off right now, I can get more than I wanted next time around.
State Rep. Jim Dotson, another supporter of comprehensive tax reform, said in a phone interview:
I’m optimistic the task force the Governor is looking at supporting will actually be charged with actually putting together some tax reform and relief recommendations and ideas after thorough study of taxes and tax policy within the state. Rather than just having an idea here or there I think [the task force will] look at all of the aspects of Arkansas taxes and come up with a plan and recommendation that can actually be implemented legislatively with thorough public buy-in. Hopefully, in a couple years we’ll come back with a mandate to do broad-based tax reform.
If the Legislature decides to embrace the task force route, there will be a ton of work to accomplish.
According to the Tax Foundation, Arkansas has the highest top individual income tax rate as compared to the surrounding states — 6.9 percent — so there’s definitely room for improvement.
I guess we’ll have to wait a couple of more years to see if Arkansas is up to the task of making its tax code competitive with the rest of the nation.
You can watch Gov. Hutchinson’s entire speech yesterday here.