A central issue facing the legislature and Gov.-elect Asa Hutchinson in 2015: will they be able to lower the tax burden on Arkansans?
According to a recent study by the Tax Foundation, Arkansas ranks 39th in business tax climate:
The absence of a major tax is a common factor among many of the top ten states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate tax, the individual income tax, or the sales tax. Wyoming, Nevada, and South Dakota have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.
But this does not mean that a state cannot rank in the top ten while still levying all the major taxes. Indiana and Utah, for example, have all the major tax types, but levy them with low rates on broad bases.
The states in the bottom ten suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates. New Jersey, for example, suffers from some of the highest property tax burdens in the country, is one of just two states to levy both an inheritance and an estate tax, and maintains some of the worst structured individual income taxes in the country.
Typically, when politicians and bureaucrats talk about competing with other states for jobs, it usually means giving favored industries tax dollars and special tax breaks for projects that sometimes don’t pan out.
According to the Tax Foundation, Arkansas has the worst business tax climate when compared to every state on our border. We’re particularly poorly-ranked on our corporate tax rates (40th) and sales tax rates (44th).
I’m interested to see if the legislature will address some of these problems in the 2015 session, or if it will follow down the well-trodden path of throwing more taxpayer dollars at misguided job creation projects — as it has done in the past.