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Tax cuts pass both chambers of Arkansas Legislature

The Arkansas State Capitol.
Dwain Hebda
Arkansas Advocate
The House and Senate are advancing new tax cuts in a special session this week.

The Arkansas House and Senate both passed identical tax cut bills Tuesday morning, the second day of a special legislative session.

Only a handful of lawmakers in each chamber voted against the legislation. The bills will cut the top individual income tax rate from 4.4% to 3.9%, and slash the top corporate income tax rate from 4.8% to 4.3%.

Democrats who disagreed with the proposals argued that the tax cuts only benefited the richest Arkansans. They also said there are other ways to help Arkansans aside from cutting taxes.

The legislature, in conjunction with Gov. Sarah Huckabee Sanders and her predecessor, Gov. Asa Hutchinson, have been working for years to cut taxes. Sen. Jonathan Dismang, R-Beebe, called it a “journey.”

“We have previously focused on lower income and middle-income earners,” he said. “And this is driving down the top rate which makes us more competitive with our surrounding states.”

Sen. Greg Leding, D-Fayetteville, said he disagrees with the tax cuts, although he acknowledged they are popular.

“Cutting taxes is easy. It's great in an election year,” he said from the well of the Senate Tuesday. Noticing one of his fellow legislators, he said “I see one of my colleagues smiling back here.”

Leding wished his colleagues would consider social policies other than cutting taxes.

“There are a couple of meaningful things we can do to make the lives of everyday Arkansans just a little bit easier than cutting taxes,” he said.

He listed off several ideas including more money in the Arkansas Housing Trust Fund, creating tax credits for people who rent their homes and giving money to community colleges. Despite his speech, the cuts passed the Senate by a vote of 28 to 5.

A few minutes later, the cuts were discussed in the House of Representatives. Rep. Denise Garner, D-Fayetteville, spoke against the bill saying the legislature “cuts and underfunds essential programs.”

“Proponents argue that we have a large surplus,” she said. “But much of that has largely been due to temporary federal dollars. [The Arkansas Department of Finance and Administration] reports annual revenue is down 5.5% and our newest budget only increased 1.67%.”

She said the majority of the money from the cuts goes to people making over $100,000 a year.

“They disproportionately benefit only the wealthiest among us,” she said.

Rep. David Ray, R-Maumelle, said this is the same argument he hears every time they debate new tax cuts. He said the idea that the cut only helps the rich is a “gaffe.”

“If you look at the fiscal impact statement on this bill, it impacts 1.1 million Arkansas taxpayers,” he said.

Ray said he was “excited” to vote for the bill which he called “historic.” The bill passed by a vote of 86 to 10 in the House.

Meanwhile, both chambers also passed a homestead tax credit bill with only a few lawmakers not voting. This is an annual credit for property owners, which the bill seeks to raise from $425 to $500.

After passing both chambers Tuesday, both the tax cut bills and the homestead tax credit bills also passed through committee with little to no debate. The bills could face a final vote in both chambers Wednesday, and if approved, will go to Gov. Sarah Huckabee Sanders for a signature.

Josie Lenora is the Politics/Government Reporter for Little Rock Public Radio.
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