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OPINION: Tax table 'cliff,' reducing top rates, will Arkansas solons agree?

by Maylon Rice | June 9, 2021 at 5:25 a.m.

The only thing more boring than writing about the proposed lowering of state income tax rates in Arkansas is to do the actual work in getting the rates lowered.

But a promise made almost seven years ago has haunted Gov. Asa Hutchinson, who ran saying the state's top tier of personal income taxes in Arkansas need to be lowered.

And as Al Capp said in his popular newspaper cartoon of the fictional Ozark hillbilly character Lil Abner Yokum -- when in a hurry, "times a-wastin'."

Unlike the 6-3 and perpetual 19-year-old handsome and physically strapping youth of Lil Abner, Hutchinson is now in the twilight of his mandated two terms as Arkansas's governor.

And Hutchinson knows that time's a-wastin' to get state income tax reform done.

So, this past week, there has been a buzz emanating from down in Little Rock as the bulk of the 135 members of the Arkansas General Assembly are finally back home -- or headed out for summer vacations after a long, exhausting 118-day session of the 93rd General Assembly.

The last two weeks of what was to have been a 90-day session have both legislators and the public in no hurry for a mid-year session to straighten out the long-ago promise of trimming the state's personal income tax levels.

But if and only if ... he can get solid commitments from the solons to agree on a very narrow and specific tax trimming package.

If you wait for the legislature to cut taxes ... there doesn't seem to be an appetite for getting the real work done in a groundbreaking fashion.

In all, there are, sadly, only about 20 members of both the state House of Representatives and even fewer, say eight, in the state Senate, who really understand the state's labyrinth of personal income tax codes and how to adjust these percentages to fix what Gov. Hutchinson and most Republicans agree is a high state personal income tax on the backs of Arkansans.

Few, if any Arkansans, for example, can tell you what their personal income tax rate is. Even fewer, in reality, can tell how much of their income is actually taxed by the State of Arkansas.

But all will say the state's taxes are too high.

As witnessed in the headlines, a new-fangled "cliff adjustment" on the Arkansas State Income Taxes seems to be touted as a one-time fix to lower the state's personal income tax rate.

Under a draft from the state's Department of Finance and Administration, the same people who get a check from you at the DMV to license your automobile, dropping the state's personal income taxes from 5.9% to 5.5% over two years will affect 580,000 in-state taxpayers.

About 1.4 million Arkansans pay and file state income taxes every year, according to the DFA.

So how much do Arkansans pay in state taxes? Here is an example: For Arkansans making between $22,900 and $82,000 a year -- the top tax rate of 5.9% only applies to their income above $38,500.

If the cuts are made, as wished for by Gov. Hutchinson, the state will lose $115.1 million dollars a year by the fiscal year 2024 and thereafter.

"Voila!" as Al Capp, the author of Lil Abner, would say, "It git done for everyone!"

Will the Legislature return for a one-week session on cutting income taxes? Only if a consensus can be reached and assured.

And if the state's personal income tax cuts are too severe and hurt the state in the future, well, that's a problem for another governor and legislature.

Anyone remember what Lil Abner did for a job? It wasn't cutting taxes.

-- Maylon Rice is a former journalist who worked for several northwest Arkansas publications. He can be reached via email at [email protected] Opinions expressed are those of the author.


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