Seize opportunity

Make state friendlier to business

For months, lawmakers in Little Rock have been talking about how to improve our tax code to make Arkansas friendlier to taxpayers and job creators. To help, a task force was created to come up with the best ideas.

No doubt there are a number of good ideas being discussed, but in case they are looking for help, one place to look for inspiration is Washington. Just a few months ago, Congress did what many thought was impossible by enacting an ambitious tax reform package. It wasn’t perfect, but it held firm to the idea that tax dollars do more for our economy in the hands of taxpayers than in government coffers.

——————

One of the central pillars of the tax plan was permanently cutting the corporate tax rate from 35 percent—the highest in the industrial world—to 21 percent. This was done to make the United States a more attractive place to invest.

On the personal side, about 80 percent of all American taxpayers will be able to keep more of their hardearned money because individual taxes were cut across the board.

Just three months after the bill was signed into law by President Donald Trump, there is overwhelming evidence that tax reformers in Washington were right to cut taxes over the objections of those who said it would do little to grow the economy and help American workers.

All across our country, hundreds of companies have been providing their employees bonuses and pay raises and announcing plans to hire additional workers. Here in Arkansas, the energy provider Entergy recently announced that it would be lowering utility bills as a result of the changes to the federal tax code.

There are important lessons to draw from what Washington was able to accomplish: Making the tax code friendlier to job creators and taxpayers works.

Now it’s time for Arkansas to follow suit.

For starters, it’s vital that lawmakers remember that Arkansas does not have a revenue problem, but a spending problem. Scholars at the Mercatus Center estimate that between 1991 and 2013, state spending has grown by 97 percent even after adjusting for inflation and population growth. Gov. Asa Hutchinson’s plan to reform state agencies, boards, and commissions to deliver services more efficiently, and cost-efficiently, shows some promise, but there is much to be done on the spending front. For context, Arkansas spends almost 24 percent more per person than any bordering state. What’s driving all this spending? It’s a combination of things, but it encompasses plenty of wasteful spending on handouts to special-interest groups and well-connected industries. That includes special tax treatment for the film industry and businesses that promise to invest in our communities—but only after they know they can skip out on their tax bill. Arkansas is not alone in believing that such tax breaks are good business, but there is ample evidence to show that this is simply not the case.

Instead of looking out for the needs of a favored few or the politically connected, lawmakers in Little Rock should cut unnecessary spending and lower tax rates to help everyone in the state.

And by making our state more attractive to job creators, we could see increased employment while allowing Arkansans to keep more of our hard-earned money.

For example, Colorado and a handful of local municipalities have embraced what is known as a Taxpayer Bill of Rights, which requires voter approval for any tax increases and requires any tax revenue raised beyond the growth of inflation plus population to be returned to taxpayers, unless voters say otherwise.

There is no shortage of good ideas on how to improve our tax code. The question is: Will lawmakers have the will to get past the talk and special interests, and get on to the action of working on behalf of taxpayers who stand to benefit from a growing and prosperous economy?