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 governor’s plan calls for permanently extending the state’s 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 Hutchinson’s plan to reduce the state’s 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 lion’s 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 — 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 governor’s argument for the income tax cuts, but I’m 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 state’s highest earners benefit from a sales tax, everyone will pay more at the pump.
I’m sure the state’s 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 Hutchinson’s plan, and permanently extending the state sales tax would have to be approved by voters in 2020.
It would seem that if the state didn’t hand $97 million back to the wealthiest Arkansans, it wouldn’t have to impose quite so many new (or extended) taxes on us regular working folks.
I’m certainly not an expert on economics, but it seems pretty simple to me: We’ll 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.