Military benefits tax exemption passes House despite complaints that governor using bill to "shove through" other policy | Arkansas Blog

Monday, January 30, 2017

Military benefits tax exemption passes House despite complaints that governor using bill to "shove through" other policy

Posted By on Mon, Jan 30, 2017 at 4:49 PM

click to enlarge BALLINGER: Accuses the governor of using "veterans to do some hard things because it gives us cover." - DAVID RAMSEY
  • David Ramsey
  • BALLINGER: Accuses the governor of using "veterans to do some hard things because it gives us cover."

The House today passed a bill to create a tax exemption for military retirement pay, 75-14 (a Senate committee passed a twin bill today by voice vote; the two bills will now flip-flop chambers before heading to the governor's desk). The bill would provide tax relief for an estimated 29,000 veterans (there are around 250,000 total veterans in the state).

As I explained at length earlier today, the $13 million tax cut for military retirement pay is paid for by an equivalent increase on the sales tax on candy and soft drinks.

Completely separately, the bill, part of the governor's tax package, includes a $6 million tax cut on the wholesale tax on soft-drink syrup — a sweet-as-soda-pop gift to industry lobbyists — paid for by a tax hike on unemployment benefits and digital downloads. It's a sneaky bit of maneuvering to sneak this package — a corporate giveaway and unpopular tax hikes — into a bill enacting a tax cut for veterans that legislators are going to be loathe to vote against.

As could be expected, sponsor Rep. Charlene Fite spoke at length about the value of cutting taxes on military retirement benefits without bothering to defend the $6 million giveaway.

Numerous legislators complained about the governor's ruse; Fite basically dodged the questions and said the governor's Blue Ribbon commission on tax cuts would make things better and more fair some time later on down the road.

Rep. Bob Ballinger, a right-wing Republican, called shenanigans.

"It's hard to take a stand against the governor's office," Ballinger began. He said that he thought that the tax exemption for military retirement pay was a good policy. But he accurately noted that the exemption is already paid for — in fact creates a surplus — via the sales tax increase on soda and candy.

"We don't have to use our veterans to make some other reforms that may be a little more difficult for us to do," he said. "We don't have to lump all those together." Ballinger spoke at length against the digital download tax. He said he was more open to taxing unemployment benefits, but added: "However, I think we really ought to talk about that issue — I think that should be vetted by a task force."

As for the wholesale soda-syrup tax cut, he said that he liked the idea of cutting it but it should be vetted by the task force and put up for debate. "That's a very complicated thing that deals with Medicaid and a bunch of other things," he said.

Ballinger closed with tough words on the governor's tactics:

That's something that shouldn't just be thrown in together with another piece of legislation — and shoved through because it's the veterans. And that's what's happened. We're going to use the veterans to do some hard things because it gives us cover.  
Looks like all, or nearly all, of the No votes were conservative Republicans who objected to the new tax increases in the bill (or perhaps objected in principle to larding up the bill with a slate of irrelevant policies).

Democrats have raised objections about the bill's irrelevant add-ons — particularly the new tax on unemployment benefits — but clearly saw no upside in voting No today.

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