{"id":314,"date":"2017-01-16T23:20:49","date_gmt":"2017-01-16T23:20:49","guid":{"rendered":"http:\/\/arknews.org\/?p=314"},"modified":"2017-01-22T03:02:15","modified_gmt":"2017-01-22T03:02:15","slug":"tax-task-force-brings-some-around","status":"publish","type":"post","link":"https:\/\/arknews.org\/index.php\/2017\/01\/16\/tax-task-force-brings-some-around\/","title":{"rendered":"Tax task force brings some around"},"content":{"rendered":"
\"\"
GOV. HUTCHINSON: His tax reform tax force proposal won support of his $50 million cut from critics.<\/figcaption><\/figure>\n

 <\/p>\n

Several state legislators who had been critical of Governor Hutchinson\u2019s $50 million tax cut for Arkansas\u2019s lowest earners now say they will support the plan.<\/p>\n

Tipping the scale for many lawmakers is Hutchinson\u2019s proposal to create a legislative tax reform task force, said Rep. Charlie Collins (R-Fayetteville), who had called the governor\u2019s proposed tax cuts for Arkansans earning less than $21,000 a year a \u201cbad policy\u201d and unfair when it was first announced in December.<\/p>\n

Collins, who sits on the House Revenue and Taxation Committee, wanted to further reduce the tax burden on upper income earners. But he said he was on board with the governor\u2019s proposal and excited about the task force.<\/p>\n

\u201cWhat I really want to do is reform our tax system in Arkansas, so we broaden the base, lower the rates,\u201d he said.<\/p>\n

Sen. Bart Hester (R-Cave Springs) had floated a $105 million income tax cut plan, but he said he\u2019s going along with what the governor\u2019s proposing \u201cin order to get more in the future.\u201d<\/p>\n

\u201cI don\u2019t want this to come out wrong, but I don\u2019t know a lot of poor people who are hiring right now,\u201d Hester said. \u201cYou\u2019ve got to encourage people that are doing well to continue hiring people if you ever want a chance for upward mobility.\u201d<\/p>\n

Rep. Matthew Pitsch (R-Fort Smith) and Sen. Jim Hendren (R-Gravette) are the House and Senate sponsors of the governor\u2019s bill. The bill would set the members of the task force at 16 and require it to make its recommendations in the 2019 regular legislative session. Both House and Senate revenue and taxation committees are expected to consider the legislation this week.<\/p>\n

The governor has said the $50 million tax cut will be paid for with projected revenue growth and increased efficiencies on the state level. It is projected to benefit the 657,000 low-income earners who were not part of a $100 million tax cut passed in 2015.<\/p>\n

\u201cWhen you look at the governor\u2019s budget right now there is no margin for error,\u201d said Rep. Joe Jett (R-Success), who chairs the House Revenue and Taxation Committee. Jett expressed concerns that the state could come up short for one-time expenses not included in the Revenue Stabilization Act.<\/p>\n

\u201cIf we flat-line our budget and we don\u2019t meet revenue growth projections \u2026 then not only can we not fund our budget, we\u2019re not funding the one-time money we\u2019ve got out there promised,\u201d Jett said. \u201cThat\u2019s what keeps me awake at nighttime.\u201d<\/p>\n

Revenue collections for the 2017 fiscal year are currently $8.8 million below projections, but Richard Wilson, assistant director of research services for the Bureau of Legislative Research, told the House revenue committee that \u201cgrowth is steady and slow, and we should not collect less money than last year.\u201d He said he expects the budget will be funded with \u201cperhaps a small surplus,\u201d but he added that the refund season could derail this projection.<\/p>\n

Last week, Rep. Warwick Sabin (D-Little Rock) filed alternative low-income tax relief legislation that would establish an earned income tax credit based on an individual\u2019s income.<\/p>\n

\u201cI strongly believe that the earned income tax credit is a more effective way to deliver tax relief to lower income Arkansans,\u201d Sabin said. \u201cIt really helps move people out of poverty. It helps remove dependence on social services.\u201d Low- to moderate-income working people and families may be eligible for a federal EITC.<\/p>\n

Sen. Jake Files (R-Fort Smith), who chairs the Senate Revenue and Taxation Committee, is sponsoring the EITC bill in the Senate.<\/p>\n

Jett told the House revenue committee that the governor\u2019s tax cut proposal would be considered in the near future and other tax cut bills would be shelved until the end of the session.<\/p>\n

Hutchinson has also proposed a tax exemption for military retirement pay and survivor benefits. Sen. Jane English (R-North Little Rock) and Rep. Charlene Fite (R-Van Buren) are sponsors. Retired military personnel are already entitled to a $6,000 exemption under state law. The new bills would increase that amount through an exemption trade: The exemptions for the military would be funded by taxing unemployment compensation benefits, removing a partial exemption on the sale of manufactured homes, and taxing candy and soft drinks at the full sales-tax rate, while reducing the rate of tax on syrups.<\/p>\n

\u201cWe have a lot of military who are abroad or looking for a place to come back to and we want them to choose Arkansas,\u201d said J.R. Davis, the governor\u2019s spokesman. \u201cThis is a game changer.\u201d<\/p>\n

The governor\u2019s proposal is projected to affect 29,000 military retirees, while reducing general revenue by $13.4 million annually. The reduction of the tax rate on syrups is projected to further reduce general<\/del> revenue by $6.3 million a year,* according to Jake Bleed, director of communications for the Arkansas Department of Finance and Administration.<\/p>\n

Taxing unemployment benefits is projected to increase general revenue by $3.1 million. Increasing the tax on manufactured homes is projected to raise $2.5 million. The raised candy and soft drink tax should bring in $13.8 million, Bleed said.<\/p>\n

The new taxes have their detractors. \u201cI would think that unemployment benefits are the last place we ought to look for removing tax exemptions,\u201d Sabin said. \u201cThese are people who are looking for work, who are on the ropes, and to give them an additional tax burden to me makes absolutely no sense.\u201d<\/p>\n

The Arkansas Manufactured Housing Association is not on board with an increase in taxes on mobile homes. The proposed legislation would add $1,800 in sales tax to the purchase price of a $65,000 manufactured home, J.D. Harper, executive director of the association, said.<\/p>\n

The sales tax applied to a manufactured home is on 62 percent of the purchase price. The proposed legislation would apply sales tax to 100 percent of the purchase.<\/p>\n

\u201cWe say houses ought to be taxed like houses,\u201d Harper said. \u201cThe reason the formula is the way it is currently is to tax houses like houses, not like washing machines and TVs and other consumer goods.\u201d<\/p>\n

In Arkansas, when a house is built, only the materials are subject to sales tax \u2014 not the labor, transportation and other nontaxable services, said Harper. \u201cAll of these are included in the purchase price of a manufactured home, and would be taxed unfairly under this tax proposal,\u201d Harper wrote in a policy statement submitted to the governor on Jan. 4.<\/p>\n

\u201cWe\u2019re open to other alternatives, but we haven\u2019t been presented with any that make sense and would work,\u201d Davis said. Arkansas is a small state with a small budget relative to surrounding states, so there have to be offsets, he said.<\/p>\n

\u201cIt\u2019s not just to say you\u2019re robbing Peter to pay Paul. You are talking about specific tax exemptions \u2026 going towards paying for this exemption that really could be an economic boon in this state,\u201d Davis said.<\/p>\n

The horse-trading of exemptions is a topic some lawmakers hope will be considered by the tax reform tax force.<\/p>\n

\u201cOur budget is larded with tax exemptions for very narrow special interests that have been passed individually for many, many years,\u201d Sabin said. \u201cI think it would be a good exercise for the state to go through all of those and see how many of those are really justified and why we are giving some certain interests tax exemptions and not others.\u201d<\/p>\n

\u201cAn exemption here is really valuable, and that\u2019s a bad situation,\u201d Collins said. \u201cWhat you really want is somebody to say, \u2018Hey, I don't feel so bad about my taxes. I'm not going to invest a lot of effort trying to avoid them, trying to \u2014 God forbid \u2014 evade them, trying to lobby for exemptions, trying to manage my affairs so that my income does not occur in Arkansas, all the things up to and including leaving the state.\u201d<\/p>\n

The goal is to have an income tax rate that everyone feels decent about, he said.<\/p>\n

Hester said he would prefer the legislature do away with exemptions in the next General Assembly.<\/p>\n

\u201cEvery exemption on face value is worthy and should be there,\u201d Hester said. \u201cBut, at the end of the day, we have to look at them and say, rather than \u2026 carve-outs and exemptions for special people that had good lobbyists, we need to lobby for everyone in Arkansas and to allow all the tax base to come down \u2026 whether that be just on income or sales tax or both.\u201d<\/p>\n

Hester filed legislation on the fourth day of the regular session calling for an exemption on the purchase of firearms: a tax-free weekend for gun sales. However, he said, \u201cI\u2019m good with stepping back from that\u201d if the legislature decides to eliminate exemptions.<\/p>\n

*\u00a0All revenues derived from taxes levied on soft drinks in Arkansas are used exclusively for the state match of federal funds participation under the Arkansas Medicaid Program. The reduction of the tax rate on syrups would therefore reduce revenues into the Medicaid trust fund.<\/p>\n","protected":false},"excerpt":{"rendered":"

Several state legislators who had been critical of Governor Hutchinson\u2019s $50 million tax cut for Arkansas\u2019s lowest earners now say they will support the plan.<\/p>\n","protected":false},"author":4,"featured_media":316,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[17,30,29,26,20,28,19,18],"class_list":["post-314","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-arkansas-general-assembly","tag-asa-hutchinson","tag-bart-hester","tag-charlie-collins","tag-eitc","tag-jake-files","tag-joe-jett","tag-matthew-pitsch","tag-taxes"],"yoast_head":"\nTax task force brings some around - Arkansas Nonprofit News Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/arknews.org\/index.php\/2017\/01\/16\/tax-task-force-brings-some-around\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tax task force brings some around - Arkansas Nonprofit News Network\" \/>\n<meta property=\"og:description\" content=\"Several state legislators who had been critical of Governor Hutchinson\u2019s $50 million tax cut for Arkansas\u2019s lowest earners now say they will support the plan.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/arknews.org\/index.php\/2017\/01\/16\/tax-task-force-brings-some-around\/\" \/>\n<meta property=\"og:site_name\" content=\"Arkansas Nonprofit News Network\" \/>\n<meta property=\"article:published_time\" content=\"2017-01-16T23:20:49+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2017-01-22T03:02:15+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i1.wp.com\/arknews.org\/wp-content\/uploads\/2017\/01\/Hutchinson-file.jpg?fit=1000%2C667\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"667\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Ibby Caputo\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"8 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Organization\",\"@id\":\"https:\/\/arknews.org\/#organization\",\"name\":\"Arkansas Nonprofit News Network\",\"url\":\"https:\/\/arknews.org\/\",\"sameAs\":[],\"logo\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/arknews.org\/#logo\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/arknews.org\/wp-content\/uploads\/2021\/04\/annn_logo.png\",\"contentUrl\":\"https:\/\/arknews.org\/wp-content\/uploads\/2021\/04\/annn_logo.png\",\"width\":1200,\"height\":900,\"caption\":\"Arkansas Nonprofit News Network\"},\"image\":{\"@id\":\"https:\/\/arknews.org\/#logo\"}},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/arknews.org\/#website\",\"url\":\"https:\/\/arknews.org\/\",\"name\":\"Arkansas Nonprofit News Network\",\"description\":\"\",\"publisher\":{\"@id\":\"https:\/\/arknews.org\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/arknews.org\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/arknews.org\/index.php\/2017\/01\/16\/tax-task-force-brings-some-around\/#primaryimage\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/arknews.org\/wp-content\/uploads\/2017\/01\/Hutchinson-file.jpg\",\"contentUrl\":\"https:\/\/arknews.org\/wp-content\/uploads\/2017\/01\/Hutchinson-file.jpg\",\"width\":1000,\"height\":667,\"caption\":\"GOV. 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