The senator explains that he is voting against the income tax bill. Example: same top tax rate for teachers and billionaires

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Only a handful of Democrats (and not all) voted against the half a billion dollar income tax cut approved during the extraordinary session of the legislature. It was not an easy vote for these outliers and they will likely hear about it in next year’s election.

One of them, my senator, Little Rock Democrat Clarke Tucker, took to the web yesterday to explain his opposition to the tax law, which provides the vast majority of its benefits to high-income taxpayers (73% of the money to the richest 20%; an estimated average of $ 10,000 for each of 15,000 a -percentages). I found his explanation compelling, even though the governor, Republican lawmakers, and many voters cannot. What he wrote:

The legislature met again this week for what is hopefully the last time in 2021. The main item on the agenda was the biggest tax cut in Arkansas history. , which will ultimately cut $ 500 million from the state budget each year. There were other actions too, as always, but the real focus of the session was an unprecedented tax cut …

How the tax cut works

    • Individual Income Rate – Currently, the tax rate for anyone earning $ 39,700 or more in Arkansas is 5.9%. This will drop to 5.5% on January 1, 2022 and fall back to 5.3% on January 1, 2023. Then, if certain triggers are met, the maximum rate will drop back down to 5.1% and 4.9% on January 1, 2024, respectively. and 2025. These cuts will remove $ 274 million from the state budget each year.
    • Corporate income rate – The current corporate tax rate is also 5.9%. It will drop to 5.7% on January 1, 2023. Then, if certain triggers are met, it will drop to 5.5% and then 5.3% on January 1, 2024 and 2025, respectively. These cuts will remove $ 57 million from the budget of the state. every year.
    • Low Income Tax Credit – Taxpayers who earn $ 23,600 or less each year will receive a non-refundable tax credit of $ 60. This credit will cost just under $ 20 million each year.
    • Combine Tax Tables – Arkansas has multiple tax tables. It’s too complicated and it just doesn’t make sense. This bill will combine the low and middle income tax tables at a cost of $ 132 million per year.
    • A few other pieces get the final total price at $ 500 million per year.

Why did I vote no

I am in favor of lowering taxes, but it is important to meet two conditions. First, we need to allocate every dollar in the smartest and most efficient way possible. Second, we should only reduce taxes, especially at this level, if we meet 100% of the basic needs of the state. This proposal is insufficient on two points.

For example, while the $ 60 credit for low-income Arkansans will help some, establishing a state-level Earned Income Tax Credit (EITC) would be the way forward. smarter to follow. This program at the federal level has shown, for decades, that it encourages work and still stimulates the local economy. State-level EITCs are also withdrawing additional federal dollars, so a $ 40 million EITC investment would lift people out of poverty much more effectively, create jobs here in Arkansas, and boost the economy. of the state to the tune of hundreds of millions of dollars a year. Instead, this tax proposal spends the least money where it would have the most impact.

What can be worse than that, even with all this tax reform, the Arkansans who make $ 39,700 will pay the same top rate as someone making $ 100 million a year. So, indeed, Arkansas teachers will pay same top rate as billionaires. And this tax package gives the same cut to billionaires as it does to teachers and firefighters. It’s not correct.

As you can guess, hundreds of millions of dollars of these tax cuts are going to Arkansas’ top earners. When a person who earns $ 100,000 or more (or $ 200,000 per couple), which is less than 10% of Arkansans, receives such a tax cut, they are much more likely to invest that money. in foreign and foreign companies. . So this tax package also spends the most money where it has the least impact on our state’s economy.

As for meeting 100% of the needs of our state, we are not doing so. For example, 3,000 Arkansas are waiting for an intellectual disability exemption. Many have been waiting for almost a decade. They are the most needy citizens of the state, and we are letting them down. Each of their stories is heartbreaking. It would take $ 37 million to eliminate the waiting list. How can we look them in the eye and tell them that we cannot afford to meet their basic needs when we cut half a billion from the state budget? We can not.

Where else could our tax dollars make a difference?

      • We still have over 250,000 Arkansans without health insurance, and the people of our state have lower life expectancies, higher maternal and infant mortality rates, and greater racial disparity in health than other states.
      • We are barely reaching our constitutional minimum for adequate education funding, and who is striving to have an adequate education system? Our needs for school equipment are enormous. It’s been 14 years since we made a significant investment in pre-k, which is the highest ROI that a government program has ever achieved. I don’t even know when was the last time we made a significant investment in higher education.
      • We have never invested a single dollar in after-school and summer programs for at-risk youth, which we know reduce incarceration rates.
      • Our infrastructure needs – the Internet, roads, bridges, clean water, airports and dikes – are real and enormous.
      • Increase access to capital for entrepreneurs.
      • Quality of life investments.
      • This list is only scratching the surface.

If we were to cap the tax cut for those earning $ 100,000 or less, then over 90% of Arkansans would still get tax relief, and we would have hundreds of millions of dollars left to invest in our greatest asset. , our people.

And here’s the irony: the richer would be financially better off in a state where people have a better quality of life, where they don’t live in poverty or prison, where they are healthy, educated and ready to work. than getting a few hundred dollars in a tax cut.

While I respect the work that has been done in this proposal (and there are good elements) and the lawmakers who have done this work, I voted ‘no’ because we can do more at a time to stimulate the economy and to improve the lives of the Arkansans, and we shouldn’t settle for less than that.


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