In an attempt to cut Arkansas income tax rates, first-year Gov. Sarah Huckabee Sanders successfully gathered the General Assembly on Friday. The latest and third session had probably started today at 11:00 A.M. in the state Capitol.
At The Special Session Regarding Third Cuts In Arkansas Income Tax Rates
During the special session, Sanders brought up plans to reduce the top individual Arkansas income tax rates from 4.7% to 4.4% and lower the top corporate Arkansas income tax rates from 5.1% to 4.8%. According to the lawmaker’s discussions, these changes in Arkansas income tax rates are set to take effect on January 1, 2024. They also mentioned providing a one-time income tax credit of up to $150 for individuals earning less than $90,000 annually. This income tax credit previously took effect last year. Further, they are also looking to review and amend the Arkansas Freedom of Information Act, along with the consideration of several other legislative measures.
According to a senator who proposed a similar measure, the suggested initiative to reduce the top individual Arkansas income tax rates from 4.7% to 4.4%, is estimated to result in an annual decrease of approximately $150 million in state general revenue. Additionally, the proposed decrease in the top corporate Arkansas income tax rate, from 5.1% to 4.8%, is expected to lead to a reduction of about $3 million per year in state general revenue. Moreover, the one-time tax credit designed for middle-income taxpayers would also have an impact, reducing state general revenue by approximately $155 million.
Arkansas Income Tax Rates’ Cuts Received Both Positive And Negative Reactions
A president and chief executive officer lauded the plans to cut Arkansas income tax rates as according to him it will benefit their employers because they believe it will enhance their competitiveness compared to neighboring states. Consequently, they will become a more appealing destination for investment from those looking to create jobs and a more enticing option for individuals seeking to escape high-tax states. He added that the Arkansas income tax rates cut is a mutually beneficial situation for everyone involved.
These statements were backlashed by an executive director and advocate claiming that Arkansas requires significant focused investments to enhance the well-being of its residents and communities. Therefore, it is a matter of substantial concern that Sanders is progressing toward the cuts in Arkansas income tax rates which serves as a vital source of revenue for the state. Also, the advocate stressed that there were several opportunities missed during the session which she enumerated in her statements.
These included the chance to extend Medicaid postpartum, create incentives for expanding the early childcare workforce, and establish a universal newborn home visitation program– all of which were left unexplored due to budgetary constraints. Moreover, state employees didn’t receive a cost-of-living adjustment (COLA), and essential programs like Pre-K and after-school initiatives didn’t receive the necessary additional funding. She noted that in order for Arkansas to be competitive, it must improve infant and maternal mortality rates, strengthen its childcare workforce, and ensure a fully staffed state government. She added that the route to achieving these essential improvements does not involve implementing multiple rounds of tax cuts in Arkansas income tax rates.