Editor’s note: Randy Zook, President and CEO of the Arkansas State Chamber of Commerce and Associated Industries of Arkansas, is the author of this op-ed article. You can reach him by e-mail at email@example.com.
“Jobs and the economy.” Those words are gaining notoriety for being the number one priority in nearly every public issue poll conducted in recent months. While everyone recognizes just how important job growth is right now, the real question is, how exactly do we create new jobs, and more importantly how do we make sure they’re created in Arkansas?
The good news is that our state already has the potential for world-class growth and the building blocks are in place. We have a workforce with a strong work ethic, an infrastructure of interstate highways and navigable rivers, a location that places us just hours away from many of the nation’s population centers and a favorable climate. What we need in order to jumpstart our economy and to create jobs, is for our elected officials to step up, grab the bull by the horns and take necessary steps to make our state more business-friendly.
With some important legislative changes to our tax code, Arkansas could take some giant steps forward in improving our business climate, which will help us attract new industry and create new jobs.
Currently, there are a number of legislative proposals being introduced in the General Assembly – many of them tax-related. One important bill would complete the sales tax exemption for energy used in industry and manufacturing. The Arkansas State Chamber of Commerce/Associated Industries of Arkansas has been instrumental in previous Legislative Sessions in helping to get this regressive tax rate reduced, and we applaud members of the legislature who are working to complete this important task. Energy is a major component of the manufacturing process. By completely eliminating the sales tax on energy used in industry and manufacturing, Arkansas industry would be on a level playing field with its neighboring states and have one more card in its deck to attract new business.
Another area for improvement lies in our state’s tax on capital gains. Arkansas has adopted federal law concerning individual income tax on capital gains. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Reducing or eliminating this onerous tax would not only help businesses, but also consumers. First, consumers would be re-incentivized to invest their capital, and businesses would reap the benefits of those investments. Second, companies would be free to re-invest their capital gains into their businesses, thus helping to grow existing industry and create new jobs.
Arkansas has made some major strides in recent years under the leadership of Governor Mike Beebe and various state legislators, particularly in the realm of education. Our state is now one of the leaders in various educational achievements, ranking in the top tier of states that have adopted innovative strategies. So let’s not even mention Mississippi at this point.
But we can do so much more. We can eliminate or at least significantly reduce regressive and onerous taxes like the sales tax used in energy and manufacturing and the capital gains tax. We can also continue to maintain and enhance the partnership between the Arkansas Economic Development Commission, the Arkansas Economic Developers and the Arkansas Chamber of Commerce Executives to attract and grow new business. We can support proactive legislation that will attract and keep jobs in Arkansas. And we can support legislation that encourages venture capital investment in Arkansas.
As Arkansans, we are all in this together – to work to make our great state even better for our children, our grandchildren and generations to come. Reducing or eliminating uncompetitive taxes on job-creating businesses is a major step in this direction. I encourage all Arkansans to contact their legislators and urge them to support a complete sales tax exemption for energy used in industry and manufacturing, and to reduce or eliminate the capital gains tax. Our future is at stake and there’s no time to waste.