In the days leading up to the opening of the new legislative session this week, the big debate was about tax cuts.
On the one hand, you had the incoming governor, Mike Beebe, who was elected decisively in November on a platform that included a firm commitment to cut the sales tax on food.
“The people of Arkansas followed this race pretty good,” Beebe said on Jan. 4. “They knew what they were getting. I don’t think we need to underestimate their interest in this issue. I think that I was pretty clear throughout the campaign, and I think they’ve spoken.”
On the other hand, you had the leaders of the state House and Senate peddling vague objections and unspecific alternatives to Beebe’s proposal.
Senate President Pro-Tem Jack Critcher simply doesn’t want to lose the tax revenue — a legitimate complaint rarely heard when tax breaks are handed out to industry and special interests.
At the same time, House Speaker Benny Petrus says he wants to do more for poor families than merely reduce the 6 percent tax on their groceries.
Arkansas News Bureau columnist John Brummett on Dec. 21 wrote that Petrus would rather “carv[e] out personal income tax cuts from the lowest incomes upward until you’ve granted as much monetary relief as you’d bestow with grocery tax removal.”
Only five days later, Brummett conveyed Petrus’ increased ambition to “better help the low-income working man and his family by giving him strategically designed income tax breaks. You could raise the minimum income level for paying income taxes. You could reduce the rate applied to the lowest taxable incomes. You could create an earned income tax credit whereby a working man gets a direct tax credit for wages up to a certain level, and, if the credit exceeds his tax obligation, then he gets the overage in cold cash. Or, you could put a line for a food tax rebate on the state income tax form for persons below a certain income level.”
Those are fine ideas. And the legislature should consider them — after it adopts Beebe’s grocery tax cut, not before.
Intentionally or not, Petrus is taking something simple and making it complicated. Beebe made cutting the sales tax on food a signature part of his campaign for governor, and he got elected by a large margin. And from a purely practical perspective, Petrus’ seemingly altruistic agenda is less likely to pass than an initiative backed by the incoming governor and a majority of the state’s citizens. Therefore, there is no reason to suddenly cast aside Beebe’s promise for the remote possibility that we may get something better.
In fact, by filling our minds with sugarplum visions of what we could get if we let go of the grocery tax reduction, Petrus is already causing us to take for granted what an achievement that reduction would be.
As you can see in the chart provided by the Institute on Taxation and Economic Policy (page 3 at this link), the sales tax burden as a share of total income falls disproportionately and overwhelmingly on the backs of lower-income Arkansans. What do you think most people are purchasing when they make less than $12,000 a year? My guess would be life’s essentials — like food — and right now they are forfeiting over 5 percent of their meager incomes on sales taxes.
By comparison, income tax relief that amounts to less than 1 percent of total income seems a lesser priority.
So let’s respect the will of the voters and take care of first things first. If Petrus is really serious about becoming the champion for the lower-income families of Arkansas (and his record up to now is inconclusive on that point), there will be plenty of chances for him to introduce his ideas after the grocery tax is reduced.