Mike Ross: My tax cut ideas are better than Asa's | Arkansas Blog

Tuesday, November 12, 2013

Mike Ross: My tax cut ideas are better than Asa's

Posted By on Tue, Nov 12, 2013 at 12:22 PM

click to enlarge MIKE ROSS: Behind on political points today.
  • MIKE ROSS: Behind on political points today.
Democratic gubernatorial candidate Mike Ross fired back at Asa Hutchinson's idea for an income tax cut for middle income people through a statement from spokesman Brad Howard:


"Since launching his campaign, Mike Ross has said he would implement income tax cuts that target working families who need it the most, and we are pleased to see Asa Hutchinson has come around to Mike Ross's position. However, as a proven fiscal conservative, Mike Ross has pledged to cut income taxes in a fiscally responsible way that maintains our state's balanced budget and protects essential state services like education, public safety and Medicaid for working families and seniors."

The statement came with links to past statements in which he's talked about tax cuts for working families (generally) and (specifically) about an elimination of the manufacturing equipment sales tax to create jobs.

Instant analysis: On political points, score the sparring for Asa Hutchinson so far.

It's kind of mind boggling. The Democrat is talking specifically about tax breaks for big business and the Republican is talking about an initial tax break that provides no further relief to rich taxpayers. Ross talks repeatedly of targeting tax breaks for working people, but, if he means it, Hutchinson still beat him to the punch with a specific idea.

Hutchinson's plan is, as I wrote earlier, wildly misleading. The state does NOT have the surplus and sufficent current growth to pay for his tax cut. Not when you consider enormous needs, not to mention $150 million in already approved potential tax cuts taking effect through 2016. But politically it's a winner, if not mathematically. Hutchinson gave several hundred thousand people a promise today of a specific tax cut. So far, in terms of specifics, Ross has given those people a promise of a tax cut for their employers. And some trickle down.

Talking about responsible tax policy to taxpayers, I fear, is like talking about tuna with good taste, as opposed to talking about tuna that tastes good.

PS: I asked the Department of Finance and Administration to see, under most recent tax data, what the tax cuts outlined by Hutchinson would cost and how many taxpayers it would affect. My response from the office of income tax administration:

661,000 taxpayers

Cost: $148 million.

So Hutchinson's estimate of cost being "in the range of $100 million" was only off by almost 50 percent.

UPDATE: Hutchinson camp howls that DF&A has misfigured because it extended the marginal tax breaks to people who won't get them. For example, the Hutchinson people say people making over $75,000 won't get any tax break at all and DF&A gave them a 1 percent cut on the lower brackets up to $75,000. DF&A responds that, yes, they included lower marginal rates at the lower levels for higher income taxpayers because they had only the Hutchinson camp numbers to work with. The Hutchinson camp claims it would "phase in" the breaks to give some benefit to avoid the crazy outcome of, for example, a $300 charge on a taxpayer who went from $75,000 to $75,0001. But it has provided nothing in writing on this alleged phase-in. DF&A said it would be happy to work out new numbers if specifics were supplied. But if 600,000 people save $300 or so, it still sounds like more than $100 million.

And really: Would Hutchinson gave a lower tax rate on amounts earned between $50,000 and $75,000 for different classes of taxpayers? That would be a novel and somewhat chaotic approach to progressive tax policy.

Additionally, Hutchinson's use of the almost $300 million surplus figure for the last fiscal year is both misleading and irrelevant. In addition to stimulus help, the income tax number was swollen by some time-shifting of payments due to federal income tax changes. The projected budget surplus for this year, which ends June 30 is a fraction of that amount, about $13.8 million.

The Democratic Party issued a statement castigating Hutchinson's "fuzzy math," and said if he proposed a $150 million tax cut, he needed to show where he's going to get the money.

PPS — Republican opponent Curtis Coleman said Hutchinson's tax cut didn't go for enough.

PPS — IRONY ALERT. Here's a story about people hailing the passage in Florida of legislation to remove the sales tax on manufacturing equipment — the very thing Mike Ross has proposed — as a victory for Florida families. It was proposed by the Republican governor, Rick Scott.

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