Letting kids down

Make better use of tax-cut dollars

During his most recent press briefing, when asked about the state’s choice to underfund and not fund critical investments that would benefit all Arkansans, Gov. Asa Hutchinson said he believes we are meeting the needs of Arkansas’ children.

But when more than one in five children live in poverty (Arkansas is ranked 46th in the nation), when 41,000 children ages 3-4 aren’t attending pre-K, when our maternal and infant health outcomes rank 49th in the nation, and when more and more of Arkansas’ children are going without health insurance every year, I have to disagree.

Even the U.S. Chamber of Commerce realizes Arkansas is falling short, as its recent report estimates that insufficient or expensive child care costs the state economy $865 million a year.

State lawmakers will soon be asked to vote for a plan that will cut the top personal and corporate income tax rates. The proposed plan will disproportionately benefit the wealthy, with the top 20% of Arkansas earners getting 73% of the personal income-tax cuts, once the plan is fully phased in. The average Arkansan in the top 1% — those making $503,000 or more — would see their taxes go down by more than $10,000.

And the corporate income-tax cut will largely be captured by out-of-state shareholders, with a whopping 81% of the revenue (to the tune of $64 million per year) leaving the state economy entirely. Instead of inducing economic growth, there’s a significant risk of shrinking the state economy. This expensive plan poses danger to Arkansas’ children.

The kids I mentioned above — those living in poverty, missing out on pre-K, missing vital health care — are mostly from families in the bottom 20% of earners in the state. Under the proposed tax-cut plan, Arkansans making less than $22,000 would see their taxes go down by less than $20. We all want families to thrive, but an extra $20 per year isn’t going to help kids have the opportunities they need.

If we want Arkansas to climb out of the bottom rankings for child well-being, we need a strong state revenue system that fully funds programs proven to help kids. Instead, the combined personal and corporate income-tax cuts proposed would cost more than $600 million annually once fully phased in, according to an analysis by the Institute on Taxation and Economic Policy (ITEP).

That’s higher than the official Department of Finance and Administration estimate of about $500 million once fully phased in by fiscal year 2026. That’s because ITEP’s model assumes, based on recent history and empirical evidence, that incomes will continue to grow faster at the top of the income spectrum. Since those with the highest income will reap the biggest benefits, this has a big impact on the ultimate cost of the bill.

So what could we do with $600 million a year? To help Arkansas rise out of the bottom rankings for how we treat our children, we could:

• Expand state funding for pre-K and infant child care

• Eliminate the disability waiver wait list

• Fund the Positive Youth Development afterschool and summer programs

• Fund juvenile justice programs

• Fund more DHS Medicaid caseworkers to help them process new applications

• Reform Enhanced Student Achievement Funding

• Fund education adequacy

• Provide 12-month continuous eligibility for ARKids A

• Offer 12 months of postpartum care for new mothers

• Provide a refundable state earned income tax credit

Arkansas is not a wealthy state. Concentrating tax cuts to serve the wealthy will benefit far fewer Arkansans than using those dollars to fund popular programs that help kids. I hope legislators keep this in mind when it’s time to vote.