I'd like to take this opportunity to stand up for the high-income taxpayers in Arkansas, meaning those who live here already and do business here already, by choice or birth or habit.
You'll find no class-warfare rhetoric in this column. Another maybe, but not here.
The warfare today is Gov. Asa Hutchinson's, declared on the high-income taxpayers already in Arkansas in favor of high-income people who don't live here but presumably would come if the state prostituted itself and made these in-migrators essentially a special appropriation, a straight-out check written off the state treasury mostly from the contributions of the high-income people who live here already.
This is about the governor's proposed new budget proposal for the next fiscal year, to be considered in whatever kind of legislative session we convene in January amid the raging virus. In it he calls for providing that any newcomer to the state will pay, for five years only, a 4.9 percent income-tax rate on the portion of income exceeding $79,300 annually. The state's top rate for non-bribed existing Arkansans is declining to 6.6 percent, on its way, the economy permitting, to 5.9 percent--forever higher by a point than the five-year newcomer discount that the governor proposes.
The governor seems to believe that people of means won't come here to live and do business unless we bribe them. I, on the other hand, do not believe our state must bend over to grow.
Once, years ago, I drove into Vermont from New Hampshire. I beheld a wide valley of green bucolic beauty. My rental compact made ground on a pickup along a modest two-lane highway, and got close enough for me to read the bumper sticker: "Welcome to Vermont, now please leave."
I did not agree with that as a state attitude. I'd like something between that and Asa's bumper sticker: "Welcome to Arkansas. If you're high-income, we'll pay you to stay, please."
How little the governor must think of our beauty, our hills, our springs whether seasonal or flowing, our autumns, our resources, our schools, our dogwoods, our azaleas and our 4-3 football Hogs counting the win over Auburn.
I can't say much for the Augusts. If the governor wanted to cut the top rate to 4.9 during that month for everyone choosing to stay here and do business, I'd be fine with that.
Otherwise, to say that newcomers would pay only 4.9 percent in the highest bracket is no different from making a direct appropriation to these high-income newcomers and giving them a check equal to those savings--with the appropriation inordinately covered by those willing inhabitants who pay most of the taxes, at 6.6 percent headed maybe to 5.9.
Does that seem fair to anybody?
I told the governor it didn't seem right to treat his existing friends and neighbors that way. I asked if any other state was a prostitute in that way. Well, I didn't use that word, wanting to save it for the newspaper.
He, ever prompt and responsive, replied: "Courts have upheld disparate tax rates as long as there is a rational basis for the variance in rates. We exempt military retirees' retirement income, and this is an example of different treatment of taxpayers that serve a legitimate state need. The fact that Arkansas will be in better position to recruit tech workers, manufacturing companies and skilled workers, and the fact that the different treatment is temporary are sufficient to support the constitutionality of the tax. The Department of Finance and Administration has researched other state tax laws, and while it is not certain whether this exact tax structure has been offered in other states, there are varying rates in other states for specific groups or purposes."
In other words: The governor's answer was no.
Obviously, I cannot credibly assert that I understand the mind of the average Republican state legislator. I would not wish to venture into that abyss. But I'm wondering if that average Republican state legislator wants to go back to his district and tell his highest-bracket-income taxpayers that he just voted to charge less to newcomers to the state.
I'm also wanting to meet the first high-income job creator who moves to the state for a 4.9 percent top income-tax rate because it's lower than the 6.6 he would otherwise pay.
If it's a discount he's seeking--if that's his determinant for residence and commerce--then Texas and Tennessee offer a zero percent tax rate.
And another thing: If a guy would come here only for a 4.9 percent tax rate for five years, it stands to reason he'd go back to where he came from in the sixth year.
Here's my bumper sticker: "6.6 percent--worth it for the statewide newspaper alone."
John Brummett, whose column appears regularly in the Arkansas Democrat-Gazette, is a member of the Arkansas Writers' Hall of Fame. Email him at [email protected] Read his @johnbrummett Twitter feed.