Sunday, January 25, 2015

Hutchinson's tax cut: Still seeking answer on omission of working poor

Posted By on Sun, Jan 25, 2015 at 7:44 AM

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After Arkansas Advocates for Children and Families issued a statement Friday praising parts of Gov. Asa Hutchinson's tax proposal, I asked the governor's office about their criticism of the failure to include the working poor in tax cuts.

Hutchinson proposes income tax reductions for people making $21,000 ti $75,000. He would postpone for a year an income tax reduction — from 7 percent to 6.9 percent on the top marginal rate — passed in 2013 for those earning above that amount. And he proposes to repeal a major capital gains tax cut. The net impact will be some $80 million in tax cuts. The Arkansas income tax structure needed moderating and reducing the impact on revenue by raising taxes on higher income people (by delaying or repealing tax cuts is a progressive way to do it.

Still, I thought the Advocates raised a fair question. Why were those with incomes below $21,000 left out of tax cut benefits? They pay a higher percentage of their income in taxes than anyone. Even a small cut has a big impact on a family scraping by.

Saturday night, I got a response to the question from Hutchinson's spokesman, J.R. Davis:

Governor Hutchinson campaigned for two years stating his focus was on a "middle class" tax cut. This tax reduction package will not only deliver relief to middle class families, but it reforms our tax rate to help make Arkansas more competitive from an economic standpoint, which will benefit every Arkansan. It's a good start.

I have asked him again for a specific reason for omitting the poorest workers from a tax cut.

Roughly 40 percent of the 1.2 million income tax filers in Arkansas make less than $21,000 a year and would get no benefit from the Hutchinson tax plan, except the presumed general societal benefits

BUT NOTE: Hutchinson is off to a very good start. I believe that. But no better indication is the howling coming from Debbie Pelley of Jonesboro, the commander-in-chief of the state's politically retrograde Black Helicopter Squadron. She's blasting her e-mail list with reports on how "Asa betrays voters and legislators." This for keeping the private option in place for two years while studying larger health system reforms. You go, Asa.


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