Arkansas Blog

Could Max, or someone else in the know, please explain why it is Texarkana workers don't pay the state income tax?

Texas does not assess a state income tax, so residents of Texarkana, Arkansas, are exempt from Arkansas income tax, though they must file a return and claim the exemption.

mag. my bet is that income tax exemption could be challenged in court.

Anyways if eLwood wins the Ark Scholarship lottery Texarkana here I come.

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Again, the American Corporate State is alive and well, modeled after Mussolini's Corporate State 1928-1945.

The last time this subject was discussed here, I called an old UA buddy who's lived in Texarkana since we got out of school approximately a hundred years ago. He sent an article from the Texarkana Gazette wherein Jerry Sparks, economic development director of the Texarkana Chamber of Commerce, described Cooper Tire's impact on the community.

According to Sparks, Cooper annually pays between $90 million and $100 million in direct wages. I repeat, a payroll of up to $100 million EVERY YEAR! That's based on 1,500 workers with an average wage of $60,000 per year. Cooper has a good benefits package on top of that. And, beyond employing all those people with all those good benefits, the plant is a major player for those who rely on the property tax it pays, especially the schools on the Arkansas side.

Why does Cooper Tire need to shut down a plant in Texarkana or elsewhere? In 2007, Cooper put into action a strategic plan that anticipated 3 percent growth in earnings per year, but its forecasts now indicate that the replacement tire market will shrink by 1 percent to 2 percent per year over the coming three years. The company also said that about 75 percent of its tires are produced in the U.S., while more than half of all light vehicle replacement tires in the industry are imported.

It'll be interesting to see if Rep. Harrelson, the governor, and others under the dome think retaining Cooper is worth launching a truly aggressive effort to outfox Mississippi and the other states.

100 million per yr x 4% Ark tax = $400,000 per year income tax, but probably less.

$35 million/$400k =87.5 years to recover

Likely the state would take in more on sales taxes combined with all property taxes.

With border towns its hard to determine without an official count where most of the workers
live.

We need to get over ourselves... and both preserve what industry (jobs) we have. Especially jobs worth preserving.. and I would think the tire industry fits into a long term American need. We need electric and hybrid cars, but I have yet to hear anything about replacing the tire. All while developing new industry... hopefully in areas of renewable energy to name one. That doesn't mean we should help everyone with their hands out.. especially when they do it like Paulson and Bernake did.. Playing the ear fear fear card..... Screaming the world is coming to and end with a six shooter shock doctrine style of bailout proposal in their hands.

And Cooper tires troubles are the same reason America needs to bailout the big three.... while insisting they change their ways... making the kind of cars Americans should have insisted upon in the late 70's.

But bailout loans, nationalization of the big company failures and so on.. are the new black!

It's how we bailout, and what demands / accountability we place along the way which should define whether or not we make or break the country, through trying times which definitely lie ahead.

I was born and raised in Texarkana and returned there for a while during my adult years and was involved in Texarkana, Arkansas city government. Unless you have lived in Texarkana, you cannot appreciate the unique situation that Texarkana, Arkansas finds itself in on the border with Texarkana, Texas. Due to some historical quirks, the majority of the retail base in the two cities is located on the Texas-side. And when new development comes to town, it wants to be where the people and the traffic already are, so Texarkana, Arkansas finds itself in a bit of a catch-22. The city has made huge strides and put their money where their mouth is in efforts to lure retail and other development to the Arkansas-side, but it takes time. In the meantime, they are running a city of a population of 26,000 with a retail sales base of a city about half that size. (And, despite the misconception, property taxes are a very small part of city government budgets, Most property taxes go to the school district.)

And you also cannot underestimate the importance of the Cooper TIre plant. It is the largest property taxpayer in the city of Texarkana, Arkansas, paying over $1 million per year in property taxes, and about 2/3 of that goes to the Texarkana, Arkansas school district. It is the largest employer in the City of Texarkana, Arkansas. You cannot just look at it as a mathematical equation of whether the incentives exceed the income taxes paid by the employees at Cooper Tire. If that plant were to close, there would be a huge ripple effect throughout Texarkana and Miller County in terms of loss of jobs, loss of ancillary economic activity, home foreclosures, etc.

The residents of Texarkana do not pay the state income tax, but they do pay an extra one-cent state sales tax. Also, people who live outside the Texarkana city limits still have to pay the state income tax, and there are a lot of Cooper Tire employees who live outside the city limits.

The income tax exemption has been challenged in court and was found to be constitutional.

And, although it's not a huge amount, the Texas-side city council is kicking in some money as part of the package to fund worker training programs at the local college and university. They, of course, are limited in what they can do for an entity that is located in another state.

If the state ponies up $35 million and the Texarkana Cooper Tire plant stays open, it's a great investment and one the state should be proud of.