We near a session of the newly and historically Republicanized state Legislature. Overlapping that will come the season for gathering your W-2s and 1099s and 1040s and figuring out your federal and state income-tax bills.
So nothing would be timelier than a treatise on the certainty that the newly Republicanized state Legislature will cut state income taxes for a great many of you—that being an easier undertaking than tending to the actual arithmetic of paying for public services.
Eighty-seven of the 134 incoming members of the new Legislature are Republicans. That means a few bucks in the bank for many of you, sure as the world. Cutting taxes is what Republicans do.
But it means $100 million a year taken out of the state General Fund, which gets us into the aforementioned matter of arithmetic.
Not to fear: As one eminent Republican put it the other day, the way to tend to a leaky roof is to reduce your household income.
Well, I paraphrase, perhaps with some generosity. We’ll get back to that.
Once I debated state Rep. Charlie Collins of Fayetteville, ever-personable Republican, on cutting state personal income taxes.
He was for it.
I, seemingly alone among 3 million people in Arkansas, wasn’t.
The staff people from state Republican headquarters in Little Rock came up to Fayetteville to live-tweet the event. That was because there was no way in the wide world their guy could lose politically by arguing with a supposedly liberal newspaper columnist that we ought to cut people’s income taxes.
Cutting taxes is the easiest political advocacy known to modern man. The only comparably easy political advocacy is keeping prisoners in prison, which we cannot seem to do in Arkansas—maybe because we’re so hell-bent on cutting taxes instead of doing our arithmetic.
We’re already in the process of making fractional reductions in our marginal personal income-tax rates, thanks to bills advanced two years ago by the personable Collins, who likes to say lower income taxes will amount to a “good jobs magnet” for the state.
That is to say that Collins contends an employer wouldn’t come to Arkansas if the top personal income-tax rate was 7 percent, but could well come if that rate was something below 7 percent.
A few weeks ago, chamber of commerce officials from around the state were telling me that economic development prospects want whatever handouts and inducements we can provide them in competition with those offered by other states. They said the income-tax rates to be paid by people who will work for these prospective enterprises seldom if ever come up.
The ultimate inducements have come in recent years from the governor’s “quick action closing fund,” which is made up of surplus tax collections, the existence of which Republicans often cite as a justification for cutting income taxes. Those surplus funds also get tapped when trouble arises, such as with the actuarial soundness of the teachers’ health-insurance system. Most years, the surplus is less a surplus than a vital and fully tapped savings account.
Actually, the tax-cut plan advanced by Gov.-elect Asa Hutchinson is the best way to go—if we must abandon arithmetic and have any income-tax cut at all. The rate cut would go to middle-class working people making between $34,000 and $75,000. No longer would that portion of their incomes be placed near-criminally in the top bracket populated by the really rich people.
I never said we didn’t need tax reform. The problem is that real tax reform means lower taxes in the bottom and middle and higher at the top—achieving a revenue neutrality so that budget decisions get made logically, not by the chopping ax of arbitrary tax cutting. And a higher tax rate for rich people is decidedly not a Republican concept.
The issue is that we need to build and then operate a $100 million prison, a matter on which the tax-cutting governor-elect already backtracks because he wants the tax cut above all. Presumably he seeks a way to imprison more people without new space or new cost.
The issue is that we need to pay back counties for holding inmates for the state.
It is that we must keep funding public schools at increased levels to meet court-dictated adequacy requirements. It is that Hutchinson has promised higher education officials he won’t cut their funding. It’s that we may abandon insanely the private-option form of Medicaid expansion, which would put us back on a more expensive matching-fund requirement for basic Medicaid. And Hutchinson said Tuesday that he wants the tax cut before even deciding—or announcing—whether he would propose continuing the private option.
The issue is arithmetic. That is all.
Well, to be fair: We can afford the tax cut for now if the Barack Obama economic recovery continues and picks up the pace. So the state’s Republicans need to be rooting for our nation’s president. But they probably aren’t.
More interesting to me was the recent and rich metaphorical assertion from outgoing state Rep. John Burris, a Republican architect of the private option who has begun writing an occasional and mildly pithy column for Talk Business and Politics.
He wrote in this week’s offering that there are excesses and inefficiencies in the current state budget, which he called leaks in the roof, and which he blamed on Mike Beebe while he complained that Hutchinson would get the blame for them.
He said that declining to let Hutchinson have his tax cut because of those inefficiencies would be like blaming standing water in your home on an inadequate number of collection buckets rather than the leaky roof itself.
The answer is to fix the roof and go ahead and cut taxes, he wrote.
He and I then got into a Twitter fuss about that, with my saying he was essentially arguing that the way to attend to a leaky roof in your home is to ask your employer to pay you less, and his countering that … well, that I wasn’t correct about what he was saying.
Then Charlie Collins horned in and tweeted that the Republican emphasis would be on fixing the roof, not bailing water, to which I said mildew would result.
Collins said the “good jobs magnet” of tax cuts would provide more household income to fix the mildew problem, to which I said he was admitting his tax cuts would cause damage, after which it got silly.
Let me make my position clear: You need both to fix the roof and bail the water. And you need to hang on to all your current income at least until the roof is fixed. Only after you’d fixed the roof might you be able to implore your boss to give you a pay cut, assuming the roof would never ever leak again.
John Brummett’s column appears regularly in the Arkansas Democrat-Gazette. Email him at [email protected]. Read his blog at brummett.arkansasonline.com, or his @johnbrummett Twitter feed.