From the historic hallways of the most beautiful state Capitol in our great nation, this is Senator Keith Ingram.
The legislature is going to consider income tax cuts during a special session that probably will take place in October.
The governor announced earlier this year that he intended to call us into special session for the purpose of reducing the top rate from 5.9 percent to 5.5 percent.
Several legislators have been working on similar tax cut plans, and I expect a consensus to develop by mid to late October.
We have to solve several problems first. For example, how much of a tax cut can the state afford, while still maintaining vital services like education, law enforcement and health care.
There are tax cut advocates who say we can afford to eliminate income taxes entirely, and they are quick to point out that the state ended the last fiscal year with a surplus.
But was that surplus the result of a healthy Arkansas economy? Or was it due to federal rescue packages and stimulus funding, which pumped billions of dollars into the state, but on a one-time basis?
Arkansas state government received pandemic funds, stimulus funds, enhanced unemployment funds and Paycheck Protection Program funds.
The most prudent fiscal approach is to assume that those federal dollars will not be forthcoming next year.
The legislature also must decide who is to benefit most from an income tax cut.
There are lawmakers who want the wealthiest people in the state to receive the bulk of the tax savings.
Others want to make sure that low-income and middle-income taxpayers receive their fair share of tax relief.
Over the past four legislative sessions, we have enacted $50 million a year in tax cuts for low-income families, $100 million in tax cuts for middle-income families and $97 million a year in cuts for high-income taxpayers.
The tax proposals that are floating around the Capitol would amount to similar annual reductions in state revenue next fiscal year.
We’re hearing a lot about Tennessee and Texas, because both states don’t have an individual income tax. However, our property taxes are low, both for real estate and personal property such as automobiles.
We don’t want to rely too heavily on sales taxes, for a couple of reasons. Sales taxes are regressive, which means that poor people end up paying a much higher proportion of their incomes in taxes.
Also, sales taxes are more volatile. If the economy goes sour, people don’t buy as many consumer products and the collection of sales taxes goes down. That means government entities that rely on sales taxes are forced to cut back on services.
Cutting taxes forces you to think long and hard about what you expect from government. You’ll hear proposals to completely eliminate the income tax, but that is unrealistic rhetoric coming from political candidates with no chance of winning.
None of us likes to pay taxes, but nobody liked it when the I-40 bridge was shut down. Young people get tired of going to school, but that’s where they learn the skills to get good jobs. No one wants to go to war, but when it’s necessary, our tax dollars pay for our strong military.
Infrastructure, job training, medical research and access to health care. They keep America competitive in the fast-changing global economy.
From the Capitol, it is always my great honor and sincere privilege to serve you as your state Senator. This is Keith Ingram.