The University of Arkansas Economist Suggests a Tax Reform To Make The State Competitive

University of Arkansas Walton College economist thinks that changing tax reform will make Arkansas more competitive.

Mervin Jebaraj, an economist at the University of Arkansas Walton College, suggested that there may be a more important priority for Arkansas’ efforts to be more economically competitive than reducing the state’s top income tax rate.

In an interview with Talk Business & Politics, Jebaraj stated that reducing or removing the state income tax rate would not always increase business. He also stressed that the investments would have a more excellent value for the economic prosperity of Arkansas.

Jebaraj stated that he doesn’t necessarily know that zero income tax will make Arkansas more economically competitive. “What’s going to make Arkansas economically competitive is improving the standing of our workforce compared to our surrounding region and improving educational attainment in our state,” Jebaraj said.

University of Arkansas Walton College economist suggests a tax reform (Photo: University of Arkansas)

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Texas and Tennessee Vs. Arkansas

Jebaraj highlighted that Texas and Tennessee do not have a personal income tax, had larger urban areas with better infrastructures, and a higher level of educational attainment among its workforce. Additionally, Texas has increased the energy taxes on oil and gas and increased sales and real estate taxes. Tennessee also has a more extensive state economy and many urban areas. He concluded that the two states do not offer an “apple-to-apple” comparison to Arkansas.

In a report from KATV news, Gov. Asa Hutchinson and State’s Legislators are planning for a special session in order to reduce the state’s personal income tax from 5.9 percent to 5.5 percent or even lower.  Additionally, there is a proposal to abolish one of Arkansas’ three tax brackets, creating a bracket for income above and below $82,000. 

Attorney General Leslie Rutledge, a Republican candidate for governor, has suggested the concept of totally removing the personal income tax by 2030 through a citizens’ initiative. However, no details about the campaign’s organization have been released.

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