by Max Brantley
Arkansas legislators discussed tax "reform" at a committee meeting today. Up again was an idea to give income tax preferences to poor counties. Though described as a boon to poor people and an economic incentive, it wouldn't likely be anything but a drain on the treasury. The poorest working people already are exempt from most income taxes. Giving corporations in poor counties a zero tax rate would mean a windfall to already wealthy corporate residents, particularly farmers, who don't making farming decisions (not labor-intensive anyway) based on tax rates. Will a corporation locate in an impoverished county on account of the tax rate? Again, as ever: Not unless transportation, raw materials, work force, education and amenities of life justify it. And corporate location is mostly meaningless to multistate corporations that have all kinds of corporate income tax shelters already.
It would be fun to watch millionaires establish bogus residencies in Eudora and the like — as many have done in Texas and Florida over the years — to capture income tax breaks.
Davy Carter, who's been pushing a broader-based view of tax changes (the graduated income tax is badly out of date, for example), said sensibly:
Carter, though supportive of Rapert’s tax presentation, expressed some skepticism about the piecemeal approach of the plan.
“When you have more exceptions than the general rule, you need to change the rule,” he said. “That’s when you need to address the policy.”
UPDATE: Gov. Mike Beebe praises Republican Carter's call for a comprehensive review of taxes, including every exemption.