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Democratic Rep. Warwick Sabin and Republican Sen. Jake Files were on Talk Business talking taxes today.
Sabin is pushing the earned income tax credit as an alternative to Gov. Asa Hutchinson's proposed tax cut on low-income taxpayers. He offered three reasons for his approach (both passed out of committee last week). "The EITC is a much more targeted tax cut for the group that both the governor and I are trying to hit, which is low-income working Arkansans," Sabin said, adding that the credit would encourage work for this population. "Second, it's cheaper," he said, "because it's more efficient" (it's $40 million as opposed to $50.5 million for the governor's plan).
"Third, the EITC is a proven policy," Sabin said. "It's been in place at the federal level for several decades. It started with support from Gerald Ford and Ronald Reagan. It was Ronald Reagan's favorite anti-poverty program and it's always had bipartisan support."
Sabin faces an uphill battle passing his bill out of the House, where some Republicans are narrowly focused on cutting rates and may see the more targeted nature of tax relief for the poor to be a bug rather than a feature.
"We just want to have a fair policy discussion," Sabin said. "I've made my case to the governor and I've made my case to the colleagues and we're going to continue to work on it." Sabin said that he was open to the governor's tax cut plan if the EITC failed but expressed hope that colleagues would see that the EITC was the more effective policy.
Files, the chair of the Senate Revenue and Tax committee, is a co-sponsor of Sabin's EITC bill but expressed skepticism that it would have enough support to pass in both chambers. "But I do think it's worth a debate," he said. He called it "a great policy for the state" and suggested that it would merit further discussion on the governor's proposed "Blue Ribbon" tax-cut task force.
Files, meanwhile, also said that he plans to propose a bill sunsetting tax exemptions and loopholes in the next five years. Such exemptions would have to be re-authorized by the legislature. "If you're getting an exemption than it ought to be worth something because it’s costing the state money and we’re actually taxing other people," Files said. "Hopefully we can close some of those loopholes, broaden the base and lower everyone’s tax burden in Arkansas."