Left behind in Arkansas: Who didn't get income tax cuts | Arkansas Blog

Saturday, April 4, 2015

Left behind in Arkansas: Who didn't get income tax cuts

Posted By on Sat, Apr 4, 2015 at 7:56 AM

click to enlarge HAPPY DAY: Smiles abounded when Gov. Asa Hutchinson signed his income tax cut bill. Perhaps not at the homes of 500,000 working poor families who got nothing.
  • HAPPY DAY: Smiles abounded when Gov. Asa Hutchinson signed his income tax cut bill. Perhaps not at the homes of 500,000 working poor families who got nothing.

The Kansas tax cut plan reminds me again of the unfairness of the tax cuts enacted by the 2015 legislature.

Gov. Asa Hutchinson and the legislature gave income tax reductions to people making between $21,000 and $75,000 a year in net income. This is described as a middle class tax cut, but the unique nature of Arkansas tax  law expands this cut to higher income families with two working spouses because married people can file separately on the same return and capture the tax break for both workers, even though the combined daily income theoretically could be as high as $150,000.

The legislature also extended a whopping 2013 tax cut on capital gains income from the profit on sale of assets. This is a gain overwhelmingly enjoyed by the highest income people in Arkansas. In addition to putting the capital gains rate at 3.5 percent — half the top tax rate paid on income from toil  — the measure gives a total exemption to any gain over $10 million dollars.

To illustrate:  An investor in a company who got stock free in a startup or through stock option plans, could reap, say, a $25 million return on sale of that stock and get a tax-free ride on $15 million of the gain, along with a one percent reduction in the tax on the first $10 million. Altogether, that sale (not hypothetical based on some transactions I've seen reported in Arkansas this year),  would produce a tax savings of some $600,000.

All this is a setup for some updated figures on those left behind in the tax cut plan, the working people who make less than $21,000 a year. Hutchinson and legislative leaders said they simply couldn't afford to give the poorest, most struggling Arkansas workers a tax break. They could afford a break for millionaires, though it's being paid by cuts in library, health center and other spending that tends to help the struggling more than the wealthy.. (No, poor workers don't get a bunch of free "welfare." Many earn too much to qualify.) The legislature also refused a low-cost plan for a state earned income tax credit for the working poor offered by Rep. Warwick Sabin.

The Arkansas Department of Finance and Administration has compiled for me a breakdown, by income level, of 2013 tax returns that illustrates how many people were left behind.

The figures show tax returns filed for every $1,000 of income by full-time residents. The chart shows  total net income after exemptions for retirement and other income and then the tax liability on those returns

It should — but probably won't — disabuse legislators of the notion that the working poor don't pay taxes. 

The list below is a snapshot of the numbers, by $1,000 increments, between $1 and $20,999 for tax filers in 2013.

In sum, these are roughly 540,000 Arkansas families who paid some $115 million in income taxes on net income less than $21,000. The state legislature couldn't afford to give them an income tax cut. Just about everybody else got some help if they have any capital gains income. The working poor are, apparently, the least deserving of Arkansas citizens.

screen_shot_2015-04-04_at_7.45.29_am.png



Look down the list and you'll see the working poor shouldered way more of the state income tax burden than the 44 taxpayers who reported income between $5 and $10 million in 2013. They paid $66 million in taxes. I'd wager all of them had some capital gains income in those totals. Lucky them. They'll get a tax break this year.

Tags: , , , , ,

From the ArkTimes store

Favorite

Comments (12)

Showing 1-12 of 12

Add a comment

 
Subscribe to this thread:
Showing 1-12 of 12

Add a comment

More by Max Brantley

Readers also liked…

  • Federal judge wants John Goodson to explain class action maneuvering

    A show-cause order filed Monday by federal Judge P.K. Holmes of Fort Smith indicates class action attorney John Goodson has some explaining to do about the move of a class action complaint against an insurance company from federal to state court with an instant pre-packaged settlement that has been criticized as a windfall for Goodson.
    • Dec 22, 2015
  • Donald Trump declares war on Hillary Clinton's marriage

    Donald Trump gave a remarkable interview to the New York Times yesterday in which he declared open season on the marriage of Bill and Hillary Clinton and Bill Clinton's past infidelity. Seems like a loser, but I've been wrong before.
    • Oct 1, 2016
  • Jason Rapert vs. Wikipedia

    Sen. Jason Rapert against the world: Wikipedia edition.
    • Jan 23, 2016

Most Shared

  • So much for a school settlement in Pulaski County

    The Arkansas Democrat-Gazette's Cynthia Howell got the scoop on what appears to be coming upheaval in the Pulaski County School District along with the likely end of any chance of a speedy resolution of school desegregation issues in Pulaski County.
  • Riverfest calls it quits

    The board of directors of Riverfest, Arkansas's largest and longest running music festival, announced today that the festival will no longer be held. Riverfest celebrated its 40th anniversary in June. A press release blamed competition from other festivals and the rising cost of performers fees for the decision.
  • Football for UA Little Rock

    Andrew Rogerson, the new chancellor at UA Little Rock, has decided to study the cost of starting a major college football team on campus (plus a marching band). Technically, it would be a revival of football, dropped more than 60 years ago when the school was a junior college.
  • Turn to baseball

    When the world threatens to get you down, there is always baseball — an absorbing refuge, an alternate reality entirely unto itself.

Most Recent Comments

Blogroll

 

© 2017 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation