Arkansas Gov. Sarah Huckabee Sanders signed a package of tax cuts into law on Wednesday. The legislation furthers the governor’s long-standing desire to phase out the state income tax for good.
Since taking office in 2023, Sanders has worked every legislative session to cut taxes. Wednesday, she boasted of having passed four major tax cut bills in four years.
These newest cuts bring the top individual income tax rate to 3.7% and the corporate tax to 4.1%, some of the lowest rates in state history. People earning over $94,700 will pay less for the money than they did before Wednesday.
Arkansas tax brackets largely remained stagnant starting in 1971. Then-Democratic Gov. Dale Bumpers passed a bill raising the income tax to 7%. Over the past decade, Republican governors have been working to bring that number down. Sanders’ predecessor Asa Hutchinson cut the tax rate to 4.9%.
In remarks Wednesday, Sanders described the legislation complementing her political philosophy.
“If you make over $26,400 a year,” she said, “you will see more money back on your paycheck starting immediately.”
She thanked the people of Arkansas, whom she expected to spend the money “better than the government ever could.”
Tax cuts were the only focus of a three-day special legislative session that began Monday.
Two bills cutting income and corporate taxes sprinted through both the state House and Senate with some pushback from Democrats. A handful of lawmakers said the cuts should be spent on public services, and that the wealthiest Arkansans would see the most benefit.
Sanders addressed those concerns before signing the bills into law.
“We’ve invested in our key priorities,” she said. “At the same time as being able to cut taxes.”
She listed off education, police and state parks as examples of recent legislative investments.
Statewide, Arkansas spends about $2,200 per person before including federal money. Sanders compared this to spending in larger states like New York, which she said spends almost $13,000 a person, and California, which spends about $8,800 per person.
“It's no surprise that both states are staring down multi-billion dollar deficits.”
The numbers she cited for New York are both the state and federal per-person spending and not the state per-capita spending. Not accounting for federal dollars, both California and New York spend somewhere over $6,000 per capita.
Sanders also mentioned Texas and Florida spending more per person than Arkansas. But their per capita state spending is fairly close to Arkansas’.
California, New York, Texas and Florida are donor states; they’re required to give large amounts of tax revenue to the federal government. California is required to give more money to the federal government than any other state in the union. That money is sometimes redistributed to states that need it. Arkansas gives very little in annual taxes to the federal government.
Accounting for federal and state numbers, per-capita spending is generally even across states. This is because federal money is often distributed to states with the highest need.
