Tuesday, January 27, 2015

The Senate hard core on tax bill — same lineup on private option?

Posted By on Tue, Jan 27, 2015 at 7:04 AM

click to enlarge READING IS FUNDAMENTAL: Linda Collins-Smith learns that belatedly on tax bill.
  • READING IS FUNDAMENTAL: Linda Collins-Smith learns that belatedly on tax bill.
Don't you reckon that the six senators who tried to recall Sen. Jonathan Dismang's tax bill in the Senate yesterday also will be reliable votes against any form of continuation of the private option?

Those six hard-liners are Alan Clark, Linda Collins-Smith, Gary Stubblefield, Scott Flippo, Blake Johnson and Bryan King.

Flippo, Collins-Smith and Johnson were elected in 2014 on campaigns about little more than hatred of Obamacare.

It takes nine votes to defeat tax increase and private option measures. The big question is whether three more will join this posse when health insurance rolls around.

Bad day for Linda Collins-Smith. She admitted publicly she didn't know what she was doing when she earlier voted for the bill, which cuts income taxes for people making $21,000 to $75,000 a year, but repeals a 2013 cut in the capital gains tax. Reading is a wonderful thing. She apparently learned that the bill would repeal a tax cut — a tax increase in her view.

The House Revenue and Taxation Committee will consider an amendment today to reinstate some of the 2013 reduction in the capital gains tax rate. Sale of appreciated assets are currently taxed at 70 percent of the top marginal rate of the taxpayer — 4.9 percent for those making more than about $35,000 a year under current law.

The 2013 law would have dropped the rate to about 2.8 percent. A compromise in the works would put the rate at 3.5 percent for those in the top bracket of income (virtually all of those with significant gains). It's unclear whether the amendment will also eliminate the total exemption given gains of more than $10 million in a single year. These sorts of gains, it's worth noting, most typically occur on major stock sales, such as when major Alltel shareholders cashed in on sale of the company. These were shares acquired at little cost to being with, often as incentives to executives.

Gov. Asa Hutchinson has been cautious in response to House resistance to repeal of the capital gains cut other than to say it's part of systematic budgeting. He'll talk about his overall budget this morning.

PS — These six are on legislation to repeal the private option, of course.

David Ramsey reminds me of a critical point. The Senate currently has only 34 members and a replacement for Michael Lamoureux may not be completed until after critical votes. At that point, only eight votes would be necessary to defeat an appropriation.

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