The Arkansas State Legislature may take up the issue of income tax cuts during a future session. In an interview with KARK Channel 4’s “Capitol View,” Keesa Smith, executive director of the Arkansas Advocates for Arkansas Children and families, pushed back on lawmakers’ intent to pursue those cuts.
Smith says she was surprised by lawmakers because they initially said they wanted to see how previous tax cuts would impact the state before pursuing further cuts. “Here we are talking about tax cuts again when we’ve got some major concerns pertaining to, you know, major concerns, but also major questions about some big expenses that the state of Arkansas has coming up.”
As a report from Little Rock Public Radio points out, earlier this month, the Arkansas Department of Finance and Administration (DFA) revised the revenue surplus estimate for this year from $240 million to $708 million dollars, according to “Talk Business and Politics.”
Last week, Representative Brian Evans, Republican of Cabot, Arkansas, and the Speaker of the House-designate, said that the expected surplus is a reason why the state should pursue tax cuts.
According to figures provided by the DFA, two income tax cuts passed by the Arkansas General Assembly and signed by Governor Sarah Huckabee Sanders in 2023, the top individual income tax rate was reduced from 4.9% to 4.4% effective January 1, 2024. Legislation also provided a $150 individual income tax credit that will result in taxpayers saving $156 million in 2024.
But according to a January 2024 report by the Institute on Taxation and Economic Policy (ITEP), Arkansas has the ninth most regressive tax system in the United States. In a regressive tax system, wealthier people pay a lesser share of their income to tax compared to people with a lower income.. The ITEP report found: “…that in Arkansas, the bottom 20% of income earners pay an average of three times more than the wealthiest individuals. The top 1% pay only 5.8% of their income in taxes, while the lowest 20% pay 13.1%.”
