After passing the Arkansas House of Representatives last Thursday, Gov. Asa Hutchinson officially signed his plan to cut taxes for the state's top earners into law on Tuesday. The third and final part of his signature tax cut plan, the law will lower the state's top marginal income tax rate from 6.9 percent to 5.9 percent over a two-year span.
Hutchinson told reporters and Republican legislators gathered at the Capitol the $97 million plan will achieve its goal of making Arkansas more competitive to neighboring states.
"This has caught the attention of a lot of businesspeople across the country recognizing the direction we're going, working to make our state more competitive," Hutchinson said. "What a great national message that Arkansas wants to be competitive, and the law we're going to sign helps us to get there."
The plan, dubbed by Hutchinson as the "5.9 Plan," is a revised version of an original tax cut plan drafted by the state Tax Reform and Relief Legislative Task Force. That original plan was scrapped after it was revealed some taxpayers would see an increase under the initial $192 million plan.
This bill, now state law, represents the second of three priorities Hutchinson identified on the campaign trail to successfully pass the legislature. Hutchinson said his third priority, a long-term highway funding bill, is next on his agenda.
"This is a historic shift in Arkansas tax policy. We just need to underscore the moment that what we're doing is historic in relation to what we've done in the past," Hutchinson said. "It sets the right pattern for the future."
The latest bill is the third step of the Governor’s overall tax cut plan, which included cuts for middle-and-lower income brackets in 2015 and 2017.
Senate President Pro Tem Jim Hendren, R-Gravette, said he expects more tax restructuring bills to come before the legislature, including a proposed internet sales tax.