Taxes, more or less
Arkansas Gov. Asa Hutchinson, as promised, on Monday revealed the details of a $300 million highway plan that would be funded through a variety of tax increases.
The governorís plan calls for permanently extending the stateís half-cent sales tax, increasing fuel taxes by three cents a gallon for gasoline and six cents a gallon on diesel, increasing registration fees on hybrid and electric vehicles and dedicating casino tax revenue to highways.
The announcement came on the same week when the Legislature is expected to begin discussions on Hutchinsonís plan to reduce the stateís top individual income tax rate from 6.9 percent to 5.9 percent over the next two years. That plan would reduce state revenue by about $97 million a year. Although anyone with a taxable income of $50,000 or more would see a lower tax bill, the lionís share of the savings would go to those Arkansans with the highest incomes.
One statewide columnist whose opinion I respect points out that $73.6 million of the tax savings would go to the 14,000 highest-paid Arkansans ó those making $456,000 a year or more.
Hutchinson says the income tax cuts are necessary to help Arkansas compete with surrounding states to attract new businesses.
I understand the governorís argument for the income tax cuts, but Iím not sure I agree with it, especially at the same time that he proposes increasing fuel taxes and making the half-cent sales tax permanent. While the stateís highest earners benefit from a sales tax, everyone will pay more at the pump.
Iím sure the stateís trucking industry will have something to say about the proposed hike in diesel prices, too.
Of course, none of this is a done deal. The Legislature will have to approve Hutchinsonís plan, and permanently extending the state sales tax would have to be approved by voters in 2020.
It would seem that if the state didnít hand $97 million back to the wealthiest Arkansans, it wouldnít have to impose quite so many new (or extended) taxes on us regular working folks.
Iím certainly not an expert on economics, but it seems pretty simple to me: Weíll all pay more so that the folks who can most afford it will pay less.
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Scott Loftis is managing editor for Carroll County Newspapers. His email address is CarrollCountyNews@cox-internet.com.