Last Thursday was “Arkansas Gives Day”: the General Assembly celebrated by approving a constitutional amendment that would allow the state to give even more taxpayer funding to corporations.
Maybe next session the legislature will pass a bill to give tax breaks to brothels on National Abstinence Day!
All the irony seemed to be lost on most legislators, as the constitutional amendment lifting a cap in the state budget on Super Project Obligation Bonds passed 70-22. Currently, that cap is set at $250 million. In a year and a half, Arkansas voters will get to decide if they want more of their tax dollars going to fund private business enterprises.
Many legislators and lobbyists like to call this “public/private partnerships.” We here at The Arkansas Project call it “crony capitalism” and/or “corporate welfare.” So while you’re doing your taxes, remember that the Legislature wants to “give” more of your money to big business and corporations.
In February, we touched on the dangerous folly of politicians and bureaucrats attempting to pick winners and losers — instead of just providing all Arkansans with the lowest tax rates and levels of regulation possible.
From a John Locke Foundation study released in February that describes how Arkansas is 40th in freedom:
In the case of tax policy, most forms of state and local taxation have statistically significant and negative associations with economic growth. That is, the lower the tax, the better off the economy is, all other things being equal. The main exceptions are targeted tax incentives such as per-job tax credits and enterprise zones. States and localities that reduce their tax burdens in this selective fashion do not appear to experience net economic benefits. The April report also examined studies of state and local regulatory policies such as occupational licensing, permitting, zoning and housing codes, minimum wages, and emissions caps. In 68 percent of the 160 peer-reviewed studies on the subject, higher levels of regulation were associated with lower rates of economic growth.
Translation: broad-based tax and regulatory relief is much better for economic growth than tax credits and subsidies that only favor certain businesses and industries. In short, tax credits and taxpayer subsidies to corporations take revenues out of the state treasury. This lost revenue is then used to justify why Arkansas can’t have more across-the-board tax reductions for average Arkansans.
Perhaps one lesson from all this is that taxpayers should hold onto their wallets whenever “Arkansas Gives Day” is celebrated during the legislative session.