Favorite

Asa's blunders 



Asa Hutchinson, the presumptive Republican nominee for governor, made another embarrassing blunder last week when he was telling a State Chamber of Commerce audience what he thought would be music to their ears. As governor he would cut business taxes.

Hutchinson said he wanted to make the tax code more friendly to industry. Specifically, he would let manufacturers skip the sales tax on their electricity and natural gas. Mind you, Hutchinson would not exempt homeowners from the sales taxes on their heating and light bills. The utility tax is the unfairest tax of all because it lands most heavily on the poor, who live in energy-inefficient houses.

But Hutchinson said manufacturing concerns shouldn’t have to pay. Arkansas lost a big steel mill to Mississippi this year, he said, because the company would have to pay sales taxes on its electricity in Arkansas.

Hutchinson told an Arkansas Democrat-Gazette reporter that he had a good source on the mill’s real reason for building in Mississippi: no taxes on electricity.

His source was not the mill’s owner, who said the next day that the tax was not a factor. For a very good reason: Arkansas already exempts steel mills from sales taxes on energy and his mill would have been exempt from the tax. That has been the law for nearly 20 years, thanks to Gov. Bill Clinton. Hutchinson acknowledged then that he did not know that. But he will extend the tax exemption to all manufacturers, he said.

Hutchinson can be forgiven for not knowing an intricate little bit of recent history.

No, his shortcoming is more serious. He honors the hoariest and most thoroughly discredited and laughable myth in Arkansas history, which is that Arkansas’s economic development has been held back these many decades by high taxes. Hutchinson is not the first politician to promise to attract industry by exempting industry from taxes on assets or commercial activity that others have to pay. It has been a political staple since the Redeemer Democrats wrested control from the tax-and-spend Republicans after Reconstruction.

One more time, a little primer is in order.

From the day it won statehood in 1836 until Mike Huckabee became governor, Arkansas ranked at the bottom of the states in the combined state and local taxes per person, rising every few years to 49th or 48th for a year before falling back to 50th. Its taxes were so far below all the other states during the Great Depression that the federal government singled out the state. If Arkansas did not levy some taxes for the relief of its starving and to educate its children (Roosevelt had Arkansas teachers, janitors and bus drivers on the federal payroll), Washington was going to cut off all aid. Fearing riots from desperate citizens, Gov. Futrell and legislature in 1935 legalized and taxed whiskey and racetrack betting and levied the first temporary sales tax.

But three years later, leaders were still convinced that even Arkansas’s paltry taxes must be driving industry away, so they passed a constitutional amendment eliminating for up to 10 years the property taxes on any manufacturing or processing company that built or expanded in Arkansas. The property tax was the stiffest tax Arkansas had, although it was the lowest in the United States.

If low or nonexistent taxes were really a draw, Arkansas by World War II would have been the manufacturing hub of the world, a phalanx of smokestacks from Blytheville to Texarkana.

And so it would be today because the tax philosophy changed little until the last 10 years. According to the compilations of the Bureau of the Census, in 1965 state and local taxes per capita in Arkansas were 60 percent of the national average, the lowest among the states. Arkansas was still dead last in 1975. It eased past Mississippi and Alabama by a single percentage point in 1980, after Bill Clinton raised a few highway taxes and got beat for it. By 1982, when he was elected again, the state was back comfortably in 50th, where it pretty much stayed until near the end of the decade, when Clinton pushed a few more taxes through the legislature and cities and schools raised local taxes. The legislature raised the income tax on corporations by half a percent on incomes above $100,000 and hiked sales, cigarette and motor-fuel taxes.

So did economic development slump? No, for a time Arkansas was a national leader in the creation of manufacturing jobs. How do you account for such a perverse combination as rising taxes and job growth? It was not an anomaly. When Gov. Dale Bumpers slightly raised just about every tax on the books except the sales tax rate early in 1971 and said the state should move aggressively against industrial pollution and quit chasing smokestacks, Arkansas enjoyed four years of unprecedented job growth.

Hutchinson missed the real message of the steel-mill story. The entrepreneur said a big reason he did not build in Arkansas was the high cost of energy in the state. Not so long ago Arkansas had some of the cheapest energy in the country but now it is higher than nearby states. Arkansas is a rich gas-producing state and imposes the lowest severance tax on natural gas in the nation, by far, but homeowners and businesses would not deduce that from their gas bills. Now that is something that a governor can influence.


Favorite

From the ArkTimes store

Comments

Subscribe to this thread:

Add a comment

More by Max Brantley

  • Executionpalooza

    Appearances count. I was struck by a single sentence over the weekend in a full page of coverage in The New York Times devoted to the killing spree in Arkansas, beginning with a front-page account of the recent flurry of legal filings on pending executions and continuing inside with an interview with Damien Echols, the former death row inmate.
    • Apr 20, 2017
  • Death Row inmates argue to keep stay of execution in place; urge 8th Circuit not to 'rush' analysis

    Early this morning, attorneys for nine Death Row inmates, filed an argument with the 8th United States Court of Appeals contesting the state's effort to override Judge Kristine Baker's order Saturday that halted executions scheduled this month.
    • Apr 17, 2017
  • Federal judge denies execution stay for Don Davis but larger stay continues

    Don Davis, who's been moved to the killing facility of the state prison for killing tonight at 7 p.m. if a stay of execution is lifted in another federal suit, sought a stay in another federal court Sunday, but the request was denied.
    • Apr 17, 2017
  • More »

More by Ernest Dumas

  • Coal is over

    The free market's natural search for cheaper and more efficient energy has taken over and even President Trump and a governing party heavily in denial about climate change cannot stop it.
    • Apr 13, 2017
  • Race to kill

    You wonder if Attorney General Leslie Rutledge would be so eager to execute if her grandpa, Leslie Rutledge, who was imprisoned for killing neighbor Joe Beel and mortally wounding his brother Frank, had been sentenced to death in 1952.
    • Apr 6, 2017
  • Repeal charade

    The debacle of the repeal-Obamacare movement left the president and the Republican Congress ruminating about the terrible lessons they had learned from the defeat — mainly that neither ever had a health plan or even a clue about how to frame one.
    • Mar 30, 2017
  • More »

Readers also liked…

  • Guns, God and gays

    Many more mass shootings like the one last week in Roseburg, Ore., will stain the future and no law will pass that might reduce the carnage. That is not a prediction but a fact of life that is immune even to Hillary Clinton.
    • Oct 8, 2015
  • AEC dumps ALEC

    No matter which side of the battle over global warming you're on, that was blockbuster news last week. No, not the signing of the climate-change treaty that commits all of Earth's 195 nations to lowering their greenhouse-gas emissions and slowing the heating of the planet, but American Electric Power's announcement that it would no longer underwrite efforts to block renewable energy or federal smokestack controls in the United States.
    • Dec 17, 2015
  • No tax help for Trump

    The big conundrum is supposed to be why Donald Trump does so well among white working-class people, particularly men, who do not have a college education.
    • Aug 11, 2016

Most Shared

  • Judge Griffen writes about morality, Christian values and executions

    Pulaski County Circuit Judge Wendell Griffen, who blogs at Justice is a verb!, sends along a new post this morning.
  • The Ledell Lee execution thread

    Arkansas Times contributor Jacob Rosenberg is at the Cummins Unit in Grady filing dispatches tonight in advance of the expected execution of Ledell Lee, who was sentenced to death for the Feb. 9, 1993, murder of Debra Reese, 26, who was beaten to death in the bedroom of her home in Jacksonville.
  • Former state board of education chair Sam Ledbetter weighs in on Little Rock millage vote

    Ledbetter, the former state Board of Education chair who cast the decisive vote in 2015 to take over the LRSD, writes that Education Commissioner Johnny Key "has shown time and again that he is out of touch with our community and the needs of the district." However, Ledbetter supports the May 9 vote as a positive for the district's students and staff.

Latest in Ernest Dumas

  • Coal is over

    The free market's natural search for cheaper and more efficient energy has taken over and even President Trump and a governing party heavily in denial about climate change cannot stop it.
    • Apr 13, 2017
  • Race to kill

    You wonder if Attorney General Leslie Rutledge would be so eager to execute if her grandpa, Leslie Rutledge, who was imprisoned for killing neighbor Joe Beel and mortally wounding his brother Frank, had been sentenced to death in 1952.
    • Apr 6, 2017
  • Repeal charade

    The debacle of the repeal-Obamacare movement left the president and the Republican Congress ruminating about the terrible lessons they had learned from the defeat — mainly that neither ever had a health plan or even a clue about how to frame one.
    • Mar 30, 2017
  • More »

Visit Arkansas

Haralson, Smith named to Arkansas Tourism Hall of Fame

Haralson, Smith named to Arkansas Tourism Hall of Fame

Chuck Haralson and Ken Smith were inducted into the Arkansas Tourism Hall of Fame during the 43rd annual Governor’s Conference on Tourism

Event Calendar

« »

April

S M T W T F S
  1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30  

Most Recent Comments

  • Re: Art bull

    • Well, when the Bull was first put up there, it meant one thing, and that…

    • on April 24, 2017
  • Re: Art bull

    • the nice thing about art is that it is what it is, but what it…

    • on April 22, 2017
 

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