The Arkansas Legislature could make quick work of Gov. Asa Hutchinson’s proposed income tax cut in the just-called special session.
The governor certainly wants that to happen and has been assured by House and Senate leaders that the votes are there to pass in short order what is being described by some as potentially the largest tax cut in state history.
The session convened on Tuesday with the income tax cut the governor’s primary objective.
Gov. Hutchinson included several other measures in the call, too; but they’re mostly cleanup matters and technical corrections that are not expected to be what could extend this Christmastime special session beyond a few days.
If that happens, it will be because some lawmakers want to stir up serious controversy by allowing other issues to be voted on, including passage of new abortion law modeled after a Texas law.
There could be attempts, too, to debate the nonexistent teaching of critical race theory or fights over bathroom use by transgender people.
Two-thirds of each chamber of the Legislature would have to vote to allow consideration of any measure not included in the governor’s call. Those issues are not in the call.
Maybe these potential sponsors really want this legislation. Maybe they just want the publicity for advocating it, especially with elections coming up next year. But lawmakers can do the business to cut taxes in as little as three days, if they choose to.
The tax cut the governor is proposing is controversial enough, not so much among lawmakers as among organizations that would prefer state surplus funds be spent to improve the lives of lower-income Arkansans rather than provide tax cuts that will most benefit wealthier Arkansans.
Draft legislation for the special session would cut the state’s top individual and corporate income tax rates and consolidate low- and middle-income tax tables, arguably simplifying the tax system and providing some tax relief for Arkansans.
The maximum tax rate for individuals would supposedly drop from 5.9 percent to 4.9 percent over the next four years.
Legislative leaders have said they’ve lined up 25 Senate Republicans and one independent as well as about 65 House Republicans to co-sponsor the tax cut bill.
The plan has nevertheless been sharply criticized. Arkansas Advocates for Children and Families issued a report that state revenue would be reduced by $602 million a year. The estimates are higher than the $497 million annual revenue loss that the state finance department has projected by 2026.
A taxpayer on the lower end of the spectrum might see a whopping $20 in tax savings while those with higher incomes might get $10,000 out of this deal, according to that study reported by Arkansas Advocates and based on an analysis by the Institute on Taxation and Economic Policy.
Those arguments are bound to be repeated in Little Rock this week; but the tax cut is most likely a done deal.
Tax cuts always look good on a politician’s resume.
They don’t want to hear that cutting taxes too much can be a problem, too. Or be reminded that it’s a whole lot more difficult to restore an income stream than it is to cut one.
Besides, with term limits, maybe the tax-cutting politicians — including this governor — won’t have to deal with the down side. The revenue impact will be someone else’s problem.
