Favorite

Tax breaks for the deserving 

I've credited Gov. Asa Hutchinson for a measure of progressivity in his income tax cut.

The graduated income tax is out of whack in Arkansas because of failure to index it for most of its 40-year run.

So Hutchinson knocked the top brackets down for taxpayers in categories between $21,000 and $75,000. And he proposed initially to take back a 2013 capital gains tax break that primarily benefitted wealthy people. He gave up on part of the capital gains takeback, however, and legislation introduced this week would give it all back, including the total exemption for gains over $10 million.

So, though the super wealthy will be served, one category of taxpayer has been left out — the working poor, those making less than $21,000 a year. Roughly a third of Arkansas taxpayers — maybe 400,000 tax filers — report earned income in that category.

The Times' Benji Hardy asked Hutchinson about the omission of low-income workers at his bill signing ceremony. He responded: "Because this focused on the middle class. Obviously, we have Arkansans that make less than that, and Arkansans that make more than that. This focused on those who have really been extraordinarily strained, and did not have some of the social program protections we have [for low-income people]."

Sen. David Sanders (R-Little Rock), defending the governor further, said the poor had been helped by the private option expansion of Medicaid, an increase in the minimum wage and the federal earned income tax credit.

They are simply wrong, first in asserting people making $75,000 are more "extraordinarily" strained than those making less than $21,000 and then in invoking "social program protections."

Republican faith holds that poor people dine from a buffet of welfare benefits. But let's look.

The earned income tax credit — a federal, not state benefit? A working couple earning about $20,000 a year isn't eligible if they have no children. A single taxpayer earning $8 an hour makes too much to qualify.

The minimum wage, just raised by voters, over opposition from most Republicans to $7.50 an hour? It provided no benefit to anyone making less than $15,600. About 20 percent of Arkansas taxpayers earn between $17,000 and $30,000.

The tax cliffs in Hutchinson's bill also present problems under Arkansas's income tax, which encourages married couples to file separately to double the standard deduction. A married couple — each making $10 an hour for a household income of around $40,000 — realize no benefits from the Hutchinson tax cut, though they are presumably as strained as a single wage-earner making $40,000.

Expanded health insurance? Many of the working poor don't qualify for the private option Medicaid expansion. A family of two's eligibility cuts off at roughly $21,000. There are some discounts on health insurance through the health marketplace for poorer workers, thanks to federally funded Obamacare, not an expenditure of state dollars.

Food stamps? A two-income household is disqualified over $20,000 in gross family income.

In short, there are a number of federally financed programs to help poor people. But all don't qualify for the sometimes meager benefits.

The governor's own chart showed an average tax cut benefit from his bill of $3 for those making $17,000 to $30,000, all to those making more than $21,000. The restoration of the full capital gains tax cut is worth $3.50 for every $1,000 in capital gains (unearned income on sale of appreciated assets).

During the campaign, Hutchinson demonstrated his fear of "welfare" when he resisted opponent Mike Ross' push for universal pre-K education. Hutchinson suggested it smacked of a welfare program, as opposed to a proven way of lifting people out of future poverty.

Hutchinson has a thoughtful side. He should dig into the numbers. He'll find working families exempted from his tax cut with modest to no "welfare" assistance, certainly none paid by the state of Arkansas. He might decide they are "extraordinarily strained," too.

Democrats are backing legislation for the equivalent of a state earned income tax credit for lower income workers. With the governor's support, it might even pass.

Favorite

From the ArkTimes store

Speaking of...

Comments

Subscribe to this thread:

Add a comment

More by Max Brantley

Readers also liked…

  • Neighborliness, in Little Rock and beyond

    I had a parochial topic in mind this week — a surprise plan by Mayor Mark Stodola to address the Arkansas Arts Center's many needs.
    • Nov 19, 2015
  • Bootstraps for me, not thee

    Mean spirit, hypocrisy and misinformation abound among the rump minority threatening to wreck state government rather than allow passage of the state Medicaid appropriation if it continues to include the Obamacare-funded expansion of health insurance coverage for working poor.
    • Apr 14, 2016
  • Trump: The Obama of 2016?

    Conner Eldridge, the Democratic challenger to incumbent Republican U.S. Sen. John Boozman, launched an assault on Boozman Monday morning rich with irony and opportunity.
    • May 5, 2016

Most Shared

  • Hutchinson lobbyist moves to Teacher Retirement System

    Rett Hatcher, director of legislative affairs for Gov. Asa Hutchinson, has left the governor's staff to go to work Wednesday as deputy director of the Arkansas Teacher Retirement System.
  • Obamascare

    Republicans at long last may be about to see their most fervent wishes and wildest predictions materialize — millions of people losing their medical and hospital coverage, unaffordable insurance, lost jobs, a Medicare financial crisis, mushrooming federal budget deficits and fiscal crises across state governments.
  • Megyn vs. Alex

    As vigorously hyped broadcast events go, Megyn Kelly's televised confrontation with internet conspiracy cultist Alex Jones proved something of a dud.

Latest in Max Brantley

  • A tax for NLR

    North Little Rock Mayor Joe Smith pitched me this week on a city sales tax increase. If still a resident, I'd be favorably inclined.
    • Jun 15, 2017
  • Separate and unequal

    Faced with a solid recommendation by a panel of state employees to revoke the charter of Covenant Keepers charter school in Southwest Little Rock, the state Board of Education voted again last week to forgive the school's poor academic and financial record.
    • Jun 8, 2017
  • Political ups and downs

    Liberals have to look hard for bright spots these days, unless they take comfort from a president who's become a global laughingstock. Hard to laugh at the prospect of 44 more months of it.
    • Jun 1, 2017
  • More »

Event Calendar

« »

June

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 Viewed

  • Cops and juries

    I try not to second-guess jury verdicts in trials I do not watch, as I know from the past decade as a criminal defense lawyer that what the jury sees and hears inside the courtroom is not always the same as what the public sees and hears outside the courtroom.
  • War reporter

    Ray Moseley: Native Texan. Naturalized Arkansan. Reporter, world traveler, confidant of Queen Elizabeth II.
  • Megyn vs. Alex

    As vigorously hyped broadcast events go, Megyn Kelly's televised confrontation with internet conspiracy cultist Alex Jones proved something of a dud.
  • Obamascare

    Republicans at long last may be about to see their most fervent wishes and wildest predictions materialize — millions of people losing their medical and hospital coverage, unaffordable insurance, lost jobs, a Medicare financial crisis, mushrooming federal budget deficits and fiscal crises across state governments.

Most Recent Comments

  • Re: Megyn vs. Alex

    • And I quote: "the absurd allegation that Hillary Clint would show up for a presidential…

    • on June 22, 2017
  • Re: Cops and juries

    • And I quote, "You're okay with authority doing whatever it pleases because of the fact…

    • on June 22, 2017
  • Re: Cops and juries

    • Wow, "Investigator of both sides" (clearly not), what a tasteless and useless comment. You may…

    • on June 22, 2017
 

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