Race To Lead State Centers On Tax Rates

The race to cut your taxes is on.

Whether it’s Mike Ross, the Democrat, or Asa Hutchinson or one of his other Republican challengers, the folks who want to replace Mike Beebe at the helm of Arkansas government are trampling over themselves to propose reductions in the tax burden on Arkansans.

Hutchinson is the latest devotee of cutting the state’s income tax, saying it can be done without harming current state spending by relying on economic growth to pick up the slack.

In his first asgovernor, Hutchinson said, he wants to ask the state Legislature to cut the state’s income tax from 7 percent to 6 percent for people earning between $34,000 and $75,000 a year. People who earn between $20,400 and $34,000 a year would also see their tax rate drop from 6 percent to 5 percent.

That, according to Hutchinson, would deliver some tax relief to about 500,000 Arkansans.

A taxpayer earning about $50,000 a year would save about $300 annually, according to Hutchinson’s estimates.

Hutchinson says his plan starts with tax relief for the middle class, but he cites his “passion” for job creation as the motivation for the proposal. Giving $300 back to Arkansas taxpayers would result in new jobs, he said, by removing a barrier to Arkansas’ competitiveness with other states.

Hutchinson is relying on figures dug out of state government by state Rep. Charlie Collins of Fayetteville, who consistently ties almost every issue about Arkansas governance and future prosperity back to job creation and what he considers as Arkansas’ exorbitant income tax rates. Collins is running for lieutenant governor.

Tax cuts sound great. Who can complain about getting to keep their hard-earned money? But such matters are never so simple. Tax reductions have to be approved by state lawmakers, and they’re also the ones who have to make sure the vital services of state government continue to function effectively. Most of the talk one hears from government at all levels is a need for more, not less, to meet the needs of residents.

Take, for instance, the money one might expect will be needed next year to shore up public school employees’ insurance coverage? And all this talk about reform of parole, probation and imprisonment will eventually require millions in annual funding. Education continues to be the state priority for funding, if for no other reason than the courts say so.

We’re skeptical a tax break that amounts to $300 a person will open the fl oodgates of economic expansion and job creation, but it will provide less money for important state initiatives and programs.

Ross is also pressing for an income tax reduction, though he says he wants to implement cuts that benefit “working families,” a spokesman said. Ross proposed an additional tax cut - gradually reducing the state’s sales tax on partial replacement and repair of manufacturing equipment - that appears more directly linked to economic development than income tax reductions.

Perhaps Arkansas residents win either way if their taxes are being cut. Voters will need to listen closely in the coming months to fi gure out whose theory of tax reduction best serves their interests.