Monday, November 28, 2011
Arkansas Politics / Taxes Davy Carter sets hearings on tax reform
Posted by Max Brantley on Mon, Nov 28, 2011 at 10:25 AM
Unlike many others in his party, Carter understands sensible reform isn't all about cutting. He'd like to reshape income tax brackets in a "revenue neutral" way.
That can't be done through income tax brackets alone, as a practical political matter. It would mean a new higher bracket for the wealthy or dramatic shifting of the overall income tax burden to higher income people. That's not what Carter has in mind, however.
Carter is nonetheless correct that the state graduated income tax is out of date with its inception in the early 1970s. The top marginal rate, 7 percent, kicks in around $32,000. That's not much beyond the federal poverty level for a family of four with a single wage-earner.
So if income tax brackets are made more progressive — meaning lower for the vast majority of Arkansans — somebody has to pay more. Or else schools, prisons and nursing homes would suffer an enormous hit.
Carter's solution is to review the state's many sales tax exemptions. Many have been down this road. All have failed. That's because the biggest sums of money saved by exemptions are saved by businesses with well-paid lobbyists intent on hanging onto preferential treatment — think industrial consumers of electricity; think manufacturers; think media, with their advertising exemption.
It's a worthy idea. But, inevitably, income tax reform that benefits the greatest number of citizens, means some people are going to have to pay more. Carter, at least, isn't following the leadership of congressional Republicans who think the solution is to directly increase taxes on the poor and middle class so as to continue preferential tax treatment for the wealthy. Carter's biggest problem with equity will be dealing with his party's perennial push for an even lower tax on capital gains. Something like 80 to 90 percent of the income tax benefits on this tax break go to the wealthiest taxpayers. To make up that loss inevitably means a regressive sales tax increase or some other punishing tax burden on poorer people.
Good luck with all that, Rep. Carter.
Here are some other ideas:
* Restore an estate tax in Arkansas that's a percentage of the federal levy. It only affects people with millions in assets.
* Add a new 8 percent income tax bracket for taxable (after deductions) income of, say, more than $200,000. And index it.
* End the sales tax exemption legislated for art purchases by Alice Walton's Crystal Bridges Museum of American Art, an exemption no other museum in Arkansas enjoys. Shouldn't all museums have it, too? It saved Crystal Bridges — and cost the state and local governments — $30 to $40 million, by rough estimate. Sounds like a lot of money, unless you're a billionaire.
More where those came from.
Comments (5)
Showing 1-5 of 5
If they all get behind this they you know it's going to be "double down on crazy" to borrow from Gene Lyons.
like
dislike
Tax all income the same no matter how it was acquired.
Hourly wage
salary
capital gains
dividends
interest income
inheiritance
A dollar is a dollar is a dollar no matter which catagory of income it was.
In general, I'm with Citizen1 on this one. But not necessarily on "the same."
I do think that my once-in-a-lifetime inheritance is different from my annual income from wages, rents, interest income, and dividends. Maybe a bit different from capital gains too. So I think there could be different thresholds and perhaps different rates.
And I definitely think that my annual income from wages is different from someone else's income from disability, or even Social Security, and definitely different from the proceeds from a personal injury lawsuit.
But I don't think that the income from people's labor should be taxed at a higher rate and a lower threshold than the income from people's money invested in various revenue-producing enterprises. Why tax only "people"?
I earned my money and it was taxed. Then I invested some of my money, so now my money is earning money; no reason for it not to be taxed. Why a special reward for people who can get enough money that they can live on the money their money makes for them instead of their having to make money by working for it?
Let's consider "fairness" here in this great democracy!
Max does not realize that his same argument for a higher state income tax rate was used in 1971 by Dale Bumpers and it was that the highest rate should be raised to 7% on the richest in Arkansas, but look now and you will see that the "rich" are evidently making less than $33,000. If we allow the liberals to raise the top rate again, guess who will be paying that top rate in the near future? You and me!!! Check out the history yourself at http://haltingarkansasliberalswithtruth.co…
More by Author
-
Friday night fights: Robbery at UALR; shooting near Peabody
Blogger Hugh Mann reported last night on the open line that UALR students had been robbed by a group of teens in a parking lot on the west side of the residence halls on University Drive. Also last night, a drive-by shooting outside the Peabody Hotel.
- May 5, 2012
-
Ethics reform drive has website operating
As promised, the Better Ethics Now Committee has a website up and running. But it's still in development.
- May 15, 2012
- More »
Event Calendar
-
Re: Surgeon general strikes deal on disturbance charges
This whole mess stinks.
- on May 25, 2012
-
Re: Yarnell's scooping again; reveals flavor list
I couldn't agree more! But the flavor I love the most is Death by Chocolate!…
- on May 25, 2012
-
Re: Riverfest eve open line UPDATE
I think about this print stuff a lot and believe I see the future though…
- on May 25, 2012
Top Commenters
Blogroll
Slideshows
-
Police close the Occupy Little Rock camp, perhaps the last Occupy encampment on public land.
Site Index
News
Cover Story / Arkansas Reporter / The Week That Was / Smart Talk / The Insider / The Observer / Editorial / Max Brantley / Ernest Dumas / Gene Lyons / Bob Lancaster / Words / Guest Writer / Letters
Entertainment
A&E Feature / To-Do List / In Brief / Movie Reviews / Music Reviews / Theater Reviews / A&E News / Art Notes / Graham Gordy / Books / Media / Dining Reviews / Dining Guide / What's Cookin' / Calendar / The Televisionist / Movie Listings / Gallery Listings
This Week's Cover
Quick Links
Special Publications
RSS
Facebook
Twitter
