Policy Group: State Taxes Need Overhaul

REPORT WARNS OF FAIRNESS, ADEQUACY IN STATE TAX CODE

Last week, the Arkansas Advocates for Children and Families, a policy arm of a long-standing public policy group, released a very thorough policy paper on those tax cuts and how they impact all Arkansans.

The position paper, entitled “A Better Foundation: Building a Tax System That Works for Arkansas Families,” is 11 pages and somewhat technical in review.

But this policy paper is oh, so relevant as we begin the 2014 political season. It is a little more than a year away at this writing, but already “tax talk” has begun in at least two of the major races.

Announced Republican candidate for lieutenant governor, state Rep. Charlie Collins (R-Fayetteville) has continued to talk about further reductions, if not an outright abolishment of the state Income Tax.

And just last week, Mike Ross, the announced Democratic gubernatorial candidate for governor, says he is favoring deep tax breaks for manufacturers in the state. He explained more of his reasoning to Democrats gathered at a county-wide function in Benton County last week.

Few there were in disagreement with his thinking.

But back to the Arkansas Advocates for Children and Families report. It is not too flattering.

It goes on to say those tax changes “…resulted in flat or underfunding for certain critical services for children and families in the short term.”

Pretty chilling condemnation of that targeted “tax relief.”

The report goes on ... these tax cuts …

“… further undermined an already strained base for funding future services that are critical to the state’s needs.”

The rich got richer and will pay less taxes; the middle-income class will still bear much of the tax load; and the poor, well, they just get poorer.

Two words that still haunt elected officials at all levels from the last two decades in a long-running court case on educational funding — fairness and adequacy — come into prominence in the Arkansas Advocates position paper.

“The tax changes enacted by the 2013 General Assembly fall short on both fairness and adequacy, two key principles of a good tax system,” the report said.

Fairness is not present in the current tax system in Arkansas on both the state and local level. Too many times communities are overrun with sales taxes to bypass the more political ways to raise money for needed services. The poor or low-income, proportionally continue to pay more of their basic income to sales taxes than the middle- or upper-income counter parts in every community.

The cuts in 2013 that were cuts to personal income taxes and new cuts to capital gains (from the sales of assets such as stocks or bond portfolios), let’s face it, benefited upper income tax payers.

And that much talked about and heralded tax cut on the sales tax on groceries will only take place IF and only IF certain conditions are met and fails to negate the 0.5 percent increase in overall sales taxes that were passed last year, by you the voters, for highway and roads.

Adequacy of revenue, that system to take care of the critical needs of state government is talked about, but often in whispers and wishes, the report indicates. Seldom is there any mention of a down-turn in revenue when tax cuts are promised or asked from the Legislature.

To see a full copy of the report, log onto: www.aradvocates.org