Gov. Asa Hutchinson's
legislative opening speech had little to offer with one exception: His "free beer tomorrow" gambit.
To applause, he announced his desire to cut the top marginal income tax rate — in 2019 from 6.9 to 6 percent. He said it would be a $180 million tax cut, the biggest ever, something approaching a 3 percent cut in state revenues.
UPDATE: Contrary to what I wrote previously, a 2017 law lifted the start of the top income tax bracket from $35,000 to $75,000 ($150,000 for married people filing separately on same
return.) So this will further exacerbate tax inequality, in the percentage of income devoted to taxes. Also, indexing of the rates now means the top rates kicks
in at $77,400.
It is easy to promise tax cuts when you won't have to deliver until after your next election.
Also worth noting: this tax cut would be an enormous windfall to a tiny handful of the very rich while giving nothing to the poor (Asa will say the tiny scraps they got from earlier cuts were enough).
For example: In 2013, the most recent year I can get from DFA, about 670 returns reported taxable income of $1 million or more. They paid cumulative state income taxes of about $170 million. Reduce the top tax rate to 6 percent on those earnings and you're talking a savings of $22 million for those 670 people, or about $32,000 each. Less than 1 percent of taxpayers would get 12 percent of the tax cut.
Something like $100 million in tax cuts would go to those making more than $100,000 — though they account for only about 39,000 of more than 1 million tax returns. Middle income? Not exactly.