The House joined the Senate this morning in passing what is known as the largest income tax cut in state history – at least half a billion per year (perhaps more, according to an independent analysis by the Institute on Taxation and Economic Policy) when fully implemented. The vote was 82-16.
Ultimately, people earning more than $ 82,000 a year will see their top tax rate drop from 5.9 to 4.9 percent, a reduction of almost 16 percent. Independent analysis indicates that 70% of the money will go to the richest 20% and that the richest 1% (around 15,000 taxpayers) will collect around $ 10,000 per year on average. The bill includes a tax credit of up to $ 60 per year (16 cents per day) for people earning around minimum wage or less. The corporate income tax rate will also be reduced, a benefit that will go primarily to shareholders who live in other states.
Representative John * Maddox (R-Mena) again defended the big money paid to the rich. They do more, he says. It’s like that, he said. He said the state can afford the reduction in revenues.
Representative Megan Godfrey (D-Springdale) asked Maddox if a 16-cent-a-day cut was significant and if the state could spend money in a more meaningful way on people in that category. Maddox returned to his funny defense with the figures heard in committee. On a percentage basis, poor families will get the greatest PERCENTAGE tax reduction. Translated into dollars, it doesn’t look so good. (About $ 4 per week, for example, for people earning $ 50,000.)
But, yes, Maddox said, the more you earn, the more tax you pay and the more you will get the discount.
A feeling Representative Denise Garner (D-Fayetteville) said most Arkansans will receive benefits of no consequence. “What if we used that $ 600 million to strive for excellence?” She listed early childhood programs, after-school care, helping people with disabilities, job training supports in community colleges, the homeless, inadequate housing and sewers, depression. postpartum, behavioral and mental health needs of students.
She said the 1% would barely notice the extra money, when the money could be spent to make most of Arkansas’ lives “way more than enough.”
Representative Joe Jett, (R-Success) a former Democrat, rose again to challenge figures from an independent consultant (cited by Garner and which lawmakers have employed in the past) on the cost of the tax cut and the benefits for the richest. He insisted that the tax cut was balanced and fair. He said 104,000 people will be fully tax exempt with this bill.
Representative Reginald Murdock (D-Marianna) joined with other members of the tiny Democratic minority on the state’s failure to spend accumulated reserves, some coming from federal money, on desperate needs such as services for people with intellectual disabilities. “It doesn’t make sense that we have so much money and we are leaving here with so many people in need.” He said Democrats must fight for the 16-cent-a-day tax credit for the working poor. He said many Republicans even opposed it.
The House reviewed other elements of the governor’s appeal. House Speaker Matt Shepherd declined to add to the calendar HB 1010 by Representative Mary Bentley to enable vigilante enforcement of anti-abortion efforts like Texas has done.
* A previous version of this article was called John Maddox Richard Maddox.