As the 2017 legislative session looms, it appears that some type of income tax relief is likely.
Which taxpayers will have their income tax burdens reduced — and by how much?
If Gov. Asa Hutchinson has his way, Arkansans making less than $21,000 annually will be receiving a tax cut — their tax relief will amount to approximately $50 million. Retired military personnel would also have their benefits completely exempted from the state income tax.
Gov. Hutchinson explained his plan today at a press conference:
The 100 percent exempt status of retirement income for military retirees will attract more retirees to our state who will enter their second career here in Arkansas.…
The $50 million tax cut will be a key factor in attracting talent to our state. That will boost (consumer) spending. That will have a side benefit of giving a boost to sales tax revenue in our state, but it’s the next logical step for reducing the income tax for all Arkansans.
Hutchinson also touched on other policies that would be part of his legislative agenda during the press conference, but we’re going to focus on proposed tax plan in this post.
After the press conference, Sen. Cecile Bledsoe said in an interview with The Arkansas Project that she was pleased with Gov. Hutchinson’s legislative agenda.
I agree with the Governor. I don’t see anything that there’s to disagree with. I thought he did a wonderful job and I’m excited about the session.
Rep. Dan Sullivan said in an interview he agreed with the Governor on cutting taxes, but there’d still have to be “a discussion” over the details.
I’m in agreement that we need to continue to cut taxes. I like the concept of the bringing in military personnel and giving them (an exemption on retirement pay)…that’s all a good thing. You do have to determine how you’re going to pay for that. That will just be a discussion. I haven’t seen a list of what his cuts are. That’s where we have to start…you have to cut spending before we can cut taxes.
Other legislators have showed less initial enthusiasm for Gov. Hutchinson’s income tax plan. They argue that the plan doesn’t provide any tax relief for taxpayers in higher brackets — who are typically the creators of new jobs and new businesses.
From the Associated Press:
Republican Rep. Charlie Collins said he was “flummoxed” by Hutchinson’s plan, which he says focuses on specific groups rather than broader changes that would benefit more taxpayers.
“It’s just not fair and it’s bad policy in addition to not being fair,” said Collins, who sits on the House Revenue and Taxation Committee.
Rep. Jim Dotson, who is supportive of broad tax reform in Arkansas, declined to comment on Monday when asked about Hutchinson’s plan.
I think at this moment in time I’m going to watch the process unfold.
Some will recall Hutchinson’s comments a few days after the 2016 election, when he said “high and low income” earners would be next in line for tax relief in the 2017 session.
When developing a tax reduction agenda, those comments from last month sound like a good place to start.