Earned-income tax credit plan fails in House | Arkansas Blog

Tuesday, January 24, 2017

Earned-income tax credit plan fails in House

Posted By on Tue, Jan 24, 2017 at 2:32 PM

click to enlarge SABIN: "Why wouldn't we do this for the state of Arkansas?"
  • SABIN: "Why wouldn't we do this for the state of Arkansas?"
Rep. Warwick Sabin's bill to enact an earned-income tax credit (EITC) aimed at low-income workers in the state was rejected today in the House. The measure failed 66-28 on a mostly party-line vote, although a scattering of Republicans backed it.

Sabin's bill is a $40-million alternative to the governor's proposed $50 million tax cut on low-income earners, which passed easily in the House yesterday. The EITC approach is more targeted toward low-income earners than the Governor Asa Hutchinson's bill. The way the governor's tax cut is structured, it would also apply to certain higher-income people and would not provide any relief to certain low-income workers (only 12 percent of those who make less than $18,000 a year would benefit at all from Hutchinson's plan). Sabin argued that the EITC would better incentivize work and be more efficient. He said that it was a proven policy that would be more effective at moving people out of poverty and stimulating the economy.

Rep. Charlie Collins spoke against the bill, arguing that the focus should be on reducing the marginal tax rate as opposed to the EITC, which he characterized as "welfare." Collins said that the coming task force on tax cuts could take up the EITC down the road (although Collins himself will surely be focused on cutting taxes for the rich).

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