House panel advances competing tax cut plans

LITTLE ROCK — Arkansas lawmakers put a wrinkle in Gov. Asa Hutchinson’s push for a low-income tax cut on Thursday, with a House committee advancing a competing tax credit from Democrats along with the Republican’s $50 million proposal.

The House Revenue and Taxation Committee endorsed Hutchinson’s proposal to cut taxes for those making less than $21,000 a year and to create a legislative task force that will recommend deeper cuts before the 2019 session. The panel later backed a $40 million proposal from House Democrats to instead grant tax credits to low-income residents.

Prospects for the tax credit proposal are dim in the House, where Republicans hold 76 of the 100 seats, but the lawmaker behind the idea said he hoped to discuss a compromise with Hutchinson.

“If we’re going to do tax cuts, I think that we need to do as much as we can to help move our working Arkansans out of poverty,” Democratic Rep. Warwick Sabin, who sponsored the legislation, told the panel before the vote.

But Hutchinson indicated he’s not open to compromise and in a statement said he was pleased with his tax cut package “as is.”

“Our $50 million tax cut provides simple and straightforward relief for more than 600,000 low income Arkansans and continues my focus on reducing the state’s income tax rate,” the governor said. “It’s the right thing to do, and, as such, it continues to generate a great deal of support from both sides, as indicated by the quick passage in both committees.”

Sabin’s proposal would grant a tax credit equal to 5 percent of the federal Earned Income Tax Credit. The proposal would take effect this year, while Hutchinson’s tax cut wouldn’t take effect until 2019.

The House is scheduled to consider both proposals Monday. The majority Republican Senate is expected to take up Hutchinson’s tax cut plan that day, and leaders there have said they expect broad support for the measure.

Hutchinson had initially faced resistance from some fellow Republicans who were pushing for deeper tax cuts, but has vowed to push for deeper tax cuts in two years. His proposed 16-member task force would issue its recommendations on changes to the tax code in the fall of 2018.

“We’re setting a priority,” House Majority Leader Mathew Pitsch told the committee.