Tax Ex­emp­tions: Tricky To Deny, Hard On Poor Folk

A long-time vet­eran of the House Rev­enue & Tax Com­mit­tee, for­mer State Rep. Charles Ste­wart of Fayet­teville, once told me that ‘ev­ery­one has a great rea­son for a tax ex­emp­tion, but some­where, you have to say no.’”

Washington County Enterprise-Leader - - OPINION - May­lon Rice Po­lit­i­cally Lo­cal MAY­LON RICE IS A FOR­MER JOUR­NAL­IST WHO WORKED FOR SEV­ERAL NORTH­WEST ARKANSAS PUB­LI­CA­TIONS. HE CAN BE REACHED VIA EMAIL AT MAYLONTRICE@YAHOO.COM. THE OPIN­IONS EX­PRESSED ARE THOSE OF THE AU­THOR.

No one pub­licly thought re­vis­ing the state’s tax code or at least try­ing to do so on an in­terim ba­sis would be­come such vit­ri­olic cam­paign fod­der — at least in the GOP pri­mary.

But it has.

The chair­man of the 16-mem­ber task force, State Sen. Jim Hen­dren, R-Sul­phur Springs, is fend­ing off crit­i­cisms of the work done so far – and the work yet to be done, from sharp jabs from the GOP’s far right chal­lenger for gov­er­nor Jan Morgan of Hot Springs.

She and other con­ser­va­tives are loudly de­cry­ing the work to be done be­fore the Sept. 1 dead­line for a re­port to be is­sued.

This past week, the panel qui­etly re­vealed 43 sales tax ex­emp­tions un­der re­view.

The list has quite a laun­dry list of ev­ery­thing, from keep­ing the last vis­ages of the sales tax on gro­ceries, to in­creas­ing the sales tax on used cars un­der $4,000, to nix­ing the ex­emp­tion of bail­ing twine used in the pro­duc­tion of toma­toes.

That last item, ex­empt­ing the tax on tomato twine, is an es­ti­mated tax ex­emp­tion of state taxes to­tal­ing $2,641 each year.

As the tomato twine takes the vir­tual last place on the list, it will no doubt be a top pri­or­ity to save that ex­emp­tion by State Rep. Jeff Ward­law, R-Her­mitage, the past chair­man of the Pink Tomato Fes­ti­val in War­ren and Bradley County.

And so it goes with vir­tu­ally ev­ery sales tax ex­emp­tion be­ing stud­ied by this com­mis­sion.

A long-time vet­eran of the House Rev­enue & Tax Com­mit­tee, for­mer State Rep. Charles Ste­wart of Fayet­teville, once told me that “ev­ery­one has a great rea­son for a tax ex­emp­tion, but some­where, you have to say no.”

Say­ing “no” may be a new word to many on this ex­emp­tion list. Some of these sales tax ex­emp­tions — well most of them — cer­tainly pre-date the rise of the Arkansas Repub­li­can Party, gaining con­trol of the state House, state Se­nate and the ma­jor­ity of the state’s con­sti­tu­tional of­fices — es­pe­cially that of Gov­er­nor.

And therein lies the rub. Gov. Asa Hutchin­son loves a tax cut.

He ran on cut­ting the taxes on mid­dle in­come Arkansans. And to his credit he has been able to “re­duce” that tax bur­den — but re­ally not cut that tax bur­den as much as he would to have cut taxes.

Gov. Hutchin­son wants — very en­thu­si­as­ti­cally —– to re­duce the top in­come tax rate of 6.9 per­cent on those earn­ing more than $75,000 a year to a flat six per­cent.

How can he do this? He can­not do this with­out re­mov­ing some — if not many of these 43 sales tax ex­emp­tions — or with some sleight of hand ma­neu­ver­ing of the Legislature to put some of the tax re­duc­tions on the sales tax of food back on the tax­pay­ers.

Some have sug­gested the im­ple­men­ta­tion of an earned in­come tax credit for the work­ing poor. The more the poor folks work and stay em­ployed — es­pe­cially at the poverty line of wages less than $10 an hour in Arkansas — the less they will have to pay in state in­come taxes.

There are two schools of thought on this.

One is that the work­ing poor should not have to pay in­come taxes if they stay work­ing.

The other is that the work­ing poor might get back more taxes from the state than they have paid in dur­ing the pre­ced­ing year. That last the­ory is a non-starter for the GOP al­most from top to bot­tom of the po­lit­i­cal party.

Will the tax cut from 6.9 per­cent to 6.0 per­cent for top wage earn­ers of over $75,000 a year oc­cur?

That is yet to be seen, es­pe­cially when this tax over­haul com­mis­sion must find the $180 mil­lion a year needed to do so.

Maybe cut­ting the tomato twine ex­emp­tion is a start.

Or see­ing if Leg­is­la­tors can find a used car for un­der $4,000 they would drive.

We shall watch and see the push and pull for re­peal­ing these ex­emp­tions.

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