House and Senate approve $50 million tax cut

House Majority Leader Rep. Matthew Pitsch (R-Fort Smith) (file photo)

Governor Hutchinson's $50 million tax cut proposal for low-income earners passed in the Senate and the House Monday.

The plan to cut taxes for 657,000 Arkansans who earn less then $21,000 a year passed in the Senate 33-0. An identical version of the bill passed 90-2 in the House, with five voting present. The bill also creates a legislative task force on tax reform.

“So you got 123 votes out of 135, that's a pretty solid bill when you're talking tax cuts,” said House Majority Leader Matthew Pitsch (R-Fort Smith), lead sponsor of the House bill.

Several state legislators had been critical of the tax cut plan when it was initially proposed. Some said the tax cuts didn't go far enough, while others suggested it would be prudent to wait for a few more months of revenue collection before passing another tax cut. The governor's proposal to create a legislative tax reform task force as part of his tax cut plan seemed to tip the scale for lawmakers on the fence.

A $100 million tax cut for middle income earners was passed in 2015. Pitsch said that with that 2015 tax cut, 1.3 million of the 1.5 million taxpayers in Arkansas will have received a tax cut if the governor's proposed $50 million tax cut becomes law.

Rep. Warwick Sabin’s (D-Little Rock) bill to create an Earned Income Tax Credit was on the House agenda following the governor’s tax cut bill, but it was passed over. Sabin said the Minority Leader Michael John Gray (D-Augusta) arranged for a meeting Monday afternoon “to provide the opportunity to meet with the governor to see if there’s any room for compromise.”

Sabin said he’d like to keep the discussion about an Earned Income Tax Credit going as long as possible.

“We at the legislature, we meet only once every two years, and the governor gets to be governor everyday for four years,” Sabin said. “So this is our opportunity to put our ideas out there and make our case for why we think we have some better policy solutions.”

After the meeting, J.R. Davis, communications director for Governor Hutchinson, said the governor has an open door policy to meet with legislators to discuss the issues, but he will not be amending his proposed tax cut plan.

"We feel very good with our tax cut plan as indicated by the near unanimous vote in both chambers," Davis said.

Gray said he didn't think an "immediate compromise" would result from Monday's meeting.

"We had a healthy conversation," Gray said. "We've got a lot more session left to see where tax priorities may be."

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