Advocates sound the alarm about more income tax cuts | Arkansas Blog

Advocates sound the alarm about more income tax cuts

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Arkansas Advocates for Children and Families has begun a four-part series on the dangers of another income tax cut, a plan Gov. Asa Hutchinson and the Republican majority legislature seems bound to pursue in 2017.

They could have boiled it down to one word: Kansas. Gov. Sam Brownback's tax slash has burned up the state budget without producing a tsunami of economic prosperity.

But the Advocates go a little deeper and you can read the first installment here.

Tax cuts don't cause economic growth, the report says, citing some 15 reports on the subject.

Recent Arkansas income tax cuts — which left out the bottom 20 percent of wage earners and gave a total capital gains exemption to the super rich — cost the state $242 million over two years. Obamacare Medicaid expansion money made up some of the gap, but not enough to stop Hutchinson from raiding general revenue to pay for roads. That, in turn, has meant no pay raises for state employees and a declining level of support for higher education. Writes AACF:

We are already seeing the evidence of these tax cuts to our budget. Although unemployment is down, state general revenue is up just half of 1 percent this year. That means less money to improve state employee salaries, less funding for libraries, and no hope for bailing out our severely underfunded child welfare system. Five states in addition to Arkansas have had
major personal income tax cuts in recent years, and none of them have seen remarkable economic growth. Instead of growth, states that pass deep tax cuts see huge revenue losses, depleted state services, and unfair benefits bestowed upon the richest taxpayers.

The report details the troubles in five states that took this path.


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