Governor’s tax plan clears Senate committee



Governor's Hutchinson's tax cut for low-income earners advanced on a voice vote in the Senate Revenue and Tax committee Wednesday at the state Capitol.

The $50 million tax cut is projected to benefit the 657,000 Arkansans who earn less than $21,000 a year. The bill also creates a legislative task force on tax reform.

Senate Majority Leader Jim Hendren (R-Gravette), the bill’s lead sponsor, called it “a conservative tax cut.”

“The value of having the tax policy set at the front of the session [is] now you know what you can build your budget on,” Hendren said. “I really do think we’re going to lay those bricks here and then we’ll be good to go.”

Hendren filed an amendment Wednesday to add more co-sponsors to the bill. Monday is the earliest the measure could be voted on in the Senate, he said.

House Majority Leader Matthew Pitsch (R-Fort Smith), the lead sponsor of the same tax cut bill in the House, said he plans on presenting the governor’s $50 million tax cut proposal in the House Revenue and Tax Committee on Thursday.

Rep. Warwick Sabin (D-Little Rock) said he would also present his low-income tax relief bill in the House Revenue and Tax Committee on Thursday. Sabin’s bill is an alternative to the governor’s plan. It would establish an Earned Income Tax Credit based on an individual’s income.

“I think that’s yet to be determined which one House members think is better, so we’ll put them both out there,” Pitsch said.

Sen. Jake Files (R-Fort Smith), chairman of the Senate Revenue and Tax Committee, said he wants to have some debate on the EITC.

“I think it’s better policy, personally,” he said, “but I understand both sides of it.”

Files is the lead sponsor of the EITC bill in the Senate. He also has been added as a co-sponsor to the $50 million tax cut bill filed by Hendren.

Files said if the EITC bill were to pass, it would replace the governor’s proposed tax cut if it had already passed.

According to legislative impact statements released by the Department of Finance and Administration, the governor’s tax plan would reduce general revenue by $25.25 million in FY2019 and by $50.5 million in FY2020. Sabin’s EITC plan would reduce general revenue by $40 million in FY2018, which means over the long run it would cost the state less, but it would impact general revenue more steeply, sooner.

“Not only is this a more effective way to move people out of poverty, incentivize work, reduce dependence on social services and stimulate the economy, but it’s also $10 million cheaper,” Sabin said.

Hendren said he doesn’t think it’s likely that Sabin’s bill will replace the governor’s plan.

“I think more people are more comfortable with [the governor’s] approach,” Hendren said.

The Arkansas Nonprofit News Network is an independent, nonpartisan news organization dedicated to producing journalism that matters to Arkansans. Our work is re-published by partner newsrooms across the state.