Task force work­ing un­til last minute to re­duce in­come taxes

The Times (Northeast Benton County) - - OPINION - CE­CILE BLED­SOE Arkansas Se­na­tor

LIT­TLE ROCK — The Arkansas Tax Re­form and Re­lief Leg­isla­tive Task Force is work­ing un­til the prover­bial last minute to fi­nal­ize a pack­age of rec­om­men­da­tions for the reg­u­lar ses­sion of the leg­is­la­ture, which be­gins Jan. 14.

A few de­tails re­main to be ironed out, but it is highly likely that one rec­om­men­da­tion will be a ma­jor re­duc­tion in in­di­vid­ual in­come taxes.

The leg­is­la­ture cre­ated the 16-mem­ber task force dur­ing the 2017 ses­sion. Its pur­pose is to rec­om­mend bills that will mod­ern­ize and sim­plify the tax code, while en­cour­ag­ing job cre­ation.

The act that cre­ated the task force specif­i­cally di­rected its mem­bers to en­sure fair­ness to all in­di­vid­u­als and busi­nesses that pay taxes in Arkansas. Also, rec­om­men­da­tions should have the pur­pose of mak­ing our taxes com­pet­i­tive with other states, in or­der to at­tract busi­nesses to Arkansas.

Over the past two years the task force has met reg­u­larly and some­times at great length. De­cem­ber 12 may be its fi­nal meet­ing. Af­ter that, the task force will for­ward a pack­age of rec­om­men­da­tions to the en­tire Gen­eral As­sem­bly. They will be in­tro­duced as bills and re­ferred to the Se­nate and House Com­mit­tees on Rev­enue and Tax­a­tion.

The rec­om­mended tax cuts would be­gin to take ef­fect on Jan­uary 1, 2020.

While the task force has been work­ing on its ver­sion of an in­come tax cut, the gover­nor and his ad­min­is­tra­tion have also been build­ing sup­port for an in­come tax cut.

The gover­nor’s plan is sim­i­lar in many ways to the task force pro­posal, but not com­pletely iden­ti­cal.

Both the gover­nor’s pro­posal and the task force’s rec­om­men­da­tion would sim­plify the in­come tax codes, while low­er­ing the tax bur­den paid by Arkansas fam­i­lies.

Task force mem­bers and state tax of­fi­cials com­monly re­fer to the leg­isla­tive pro­posal as “Option A,” to dis­tin­guish it from sev­eral other op­tions that were con­sid­ered.

They re­fer to the gover­nor’s tax cut pro­posal as the “2, 4, 5.9” plan, be­cause it would lower in­come tax rates to 2 per­cent for peo­ple who earn up to $8,000 a year, 4 per­cent for those who earn be­tween $8,001 and $18,000 a year and 5.9 per­cent for peo­ple who earn more than $18,000 a year.

Those rates would be phased in grad­u­ally. Leg­isla­tive lead­ers have said they want to pro­tect the state bud­get from a dras­tic short­fall that would neg­a­tively af­fect its ca­pac­ity to pro­vide es­sen­tial ser­vices. For that rea­son, the task force has been study­ing pos­si­ble “trig­gers.” In other words, cer­tain tax cuts would not take ef­fect un­til a des­ig­nated “trig­ger” oc­curs, such as rev­enue growth reach­ing 2 per­cent.

Also, the tax force heard from tax of­fi­cials in other states. The in­tent was to model Arkansas re­forms af­ter states that were suc­cess­ful, such as North Carolina and In­di­ana.

Also, Arkansas wants to avoid the ex­pe­ri­ences of Kansas and Ok­la­homa, where tax cuts were a fac­tor when de­clines in rev­enue cre­ated prob­lems in school fund­ing.

Be­cause of unique lan­guage in the state Con­sti­tu­tion, some tax mea­sures re­quire a 75 per­cent ma­jor­ity of leg­is­la­tors for ap­proval, while oth­ers re­quire sim­ply a 51 per­cent ma­jor­ity.

The dif­fer­ent thresh­olds will af­fect the strate­gies em­ployed by spon­sors of tax cut leg­is­la­tion.

•••

Edi­tor’s note: Arkansas Se­na­tor Ce­cile Bled­soe rep­re­sents the third district. From Rogers, Sen. Bled­soe is chair of the Pub­lic Health, Wel­fare and La­bor Com­mit­tee.

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