The myth about Arkansas's 'high-tax' status | Arkansas Blog

Monday, November 14, 2016

The myth about Arkansas's 'high-tax' status

Posted By on Mon, Nov 14, 2016 at 10:34 AM

A Koch-paid lobbyist and the secretly funded economic arm at the University of Central Arkansas that got its start with Koch money are out at the Capitol today again pushing the Koch lobby line that Arkansas is a high-tax state.

You've  heard these figures before — 3rd highest sales tax, 14th highest income tax, 24th highest corporate income tax.

Ernest Dumas, who's been covering the legislature for a half-century, has written before about this misleading stuff from the Tax Foundation, a conservative ideological tool. (Its name is supposed to sound non-partisan. It has an agenda.)

Dumas explained all this in 2012, when the Koch's Arkansas chapter of Americans for Prosperity was pushing this same stuff.

The Tax Foundation doesn't rely on the actual taxes collected by each state; that's too simple. It constructs a theory about taxes and formulas to implement it so that states with income taxes tend to look worst.

If you add all the taxes actually collected by the state and local governments and divide the total by the population — you can do the numbers at home — Arkansas comes out not 14th but 47th among the states. All the surrounding states are higher. Now, the states distribute the tax burden in different ways, and Arkansas does it most unfairly, putting it most heavily on working folks with modest incomes with sales and excise taxes. But real numbers are the only way to measure each state's tax policy.

The Tax Foundation abuses poor states like Arkansas unmercifully. It says Arkansas levies a 3-percent surtax on corporation income, a brief tax that the Democratic Arkansas legislature repealed in 2005. It assigns to Arkansas taxpayers a share of the mineral severance taxes collected in other states like Alaska, Texas, Oklahoma and Wyoming. See, since Alaska's 22.5 percent production tax on oil and gas (thanks, Gov. Sarah Palin!) is paid by the producers and not by local people, the Tax Foundation assigns those taxes to people in other states, like Arkansas, that consume the petrochemical products. Florida levies a high sales tax but the Tax Foundation says tourists pay it so it doesn't count as much of a per-capita tax for Floridians.

You will note that states without income taxes show up as low-tax states in Tax Foundation rankings although the actual numbers show them as high-tax states.
I'd add that this analysis was done in 2012 — BEFORE two Arkansas income tax cuts that left out the lowest-income working people.

Here's the 2013 ranking on per capita tax burden figuring all state and local revenue. It's the most recent gross figure available. Arkansas edged up to 46th.

UPDATE: Here's the rich-get-richer Koch approach to taxes in Arkansas.

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