Thursday, June 19, 2014

Asa Hutchinson takes a brave course on tax policy

Posted By on Thu, Jun 19, 2014 at 9:25 AM

Credit where due. The City Wire reports on  remarks in Fort Smith after a closed speech by Republican gubernatorial candidate Asa Hutchinson to manufacturers. He and Democrat Mike Ross both have tax and economic development plans. Some of the emerging differences are interesting.

Part of Ross's plan calls for the elimination of sales tax on replacement parts for manufacturers as a way to encourage re-investment in Arkansas-based facilities. But after speaking to the manufacturing executives in Fort Smith Tuesday, Hutchinson said he didn't agree with that proposal in Ross' jobs plan.

"My view is — and I'm speaking to the manufacturers here — sure, they want something that helps manufacturers, but how about the retail market in Arkansas? And how about the farmers? And how about the tourism industry? How about the small business owner? Under my plan, they all get tax relief. But if you enact simply the relief for the manufacturer's replacement parts, that's not across the board and it's not allowing people to make decisions on how they want to invest their money and how they can grow their business."

Hutchinson is to be commended for opposition to scattershot tax breaks doled out to the most-favored on sometimes dubious premises. Huge breaks given the paper mill industry years ago, to name one, were purely windfalls, as accountants long ago demonstrated. 

Hutchinson's income tax plan — with no details on how it will be financed and with curious income cliffs and lack of help for the poorest — will get its own attention in due course. And Ross has income tax cut plans, too. But opposing a manufacturers' tax break? A Republican? That's newsworthy.

It was not praiseworthy to the Ross campaign:

“My comprehensive tax cut plan will help small business and manufacturers of all sizes and nearly every working family in Arkansas. Congressman Hutchinson’s plan offers no tax relief for manufacturers and, if you make less than $20,400 a year, Hutchinson’s plan won’t cut your taxes a single cent.”

“Congressman Hutchinson voted to ship our jobs overseas, and now he refuses to support a Chamber of Commerce-backed tax cut that will help bring these jobs back to Arkansas. Manufacturing is Arkansas’s third-largest private industry sector and employs more than 1 in 8 Arkansans. We need to eliminate this unfair tax, which punishes small and large manufactures that want to modernize their facilities, grow and hire more workers – all of which will help prevent layoffs. The fact that Congressman Hutchinson is doubling down on his opposition to cutting taxes for job creators shows just how out-of-touch he is with working families in Arkansas.”

Ross also criticizes Hutchinson for opposition to the governor's quick-action closing fund — a pot of money that Ross proposes to increase to dole out to potential industries with jobs to bring to Arkansas. In his 2006 race, Hutchinson called it a "slush fund." Ross says it has led to the announcement of 30,000 new jobs.

Here, again, I think Hutchinson is due credit. We don't know — and no business will ever honestly answer —if this quick action fund alone created jobs or if they were coming here anyway and the corporate welfare just amounted to a tip of appreciation to the business. Most serious economic studies say incentives and tax breaks aren't job creators — education, workforce, raw materials, transportation, location and other obvious factors are the determinants. State giveaways are just marginal issues.

Hutchinson follows plenty of specious Republican economic dogma, but where he parts company from the Chamber of Commerce line, I give him credit.

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