Income Tax Cut Plan: Arkansas Lawmakers Approve the Bill Worth $124 Million

Arkansas lawmakers have approved a plan by Republican Governor Sarah Huckabee Sanders to cut individual and corporate income taxes by $124 million a year.

Arkansas lawmakers approver $124 million income tax cut plan. (Photo: Arkansas Times)

Tax Cut Plan in Arkansas

The legislation calls for reducing the top individual income tax rate to 4.7% from 4.9% and the top corporate income tax rate to 5.1% from 5.3%. State finance officials said that the proposal would benefit 1.1 million taxpayers who earn more than $24,300 per year.

However, opponents of the tax cut have said it would disproportionately benefit wealthier taxpayers and has come at a time when other needs in the state have been underfunded in recent years, according to a published article in Associated Press.

The tax cut is set to take effect as Arkansas’ revenues have come in higher than expected in recent years, with the state ending the last fiscal year with a record $1.6 billion surplus. The state’s revenue for the fiscal year so far has come in $306 million higher than expected.

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Arkansas Tax Cut Plan is Now on Sander’s Desk for Approval

In a published article in KARK, the bill has been approved by the majority-Republican House and will now go to Sanders’ desk for approval. The tax cut would cost $186 million in its first year, as it will take effect this year. Republican Rep. Les Eaves, the bill’s House sponsor, said before the vote that the tax cut would eat into the state’s sizable surplus.

Sanders, who took office in January, has called for phasing out the state’s income tax. Over the past several years, her Republican predecessor, former Gov. Asa Hutchinson, and the majority-GOP Legislature have enacted a series of cuts. However, opponents of the tax cut have argued that it would lead to shifting the tax burden onto everyday Arkansans.

Democratic Rep. Tippi McCullough, the House minority leader, said, “The more we cut income taxes, the heavier the burden to keep our government up and running. We’re on a reckless path of shifting our tax burden to everyday Arkansans.” The tax cut is one of the last major items on the legislative agenda as leaders hope to conclude this year’s session by Friday.

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