The legislative session is on the verge of seriously debating various tax cutting bills. One tax cut bill legislators should pay close attention to, and support, is a proposal by State Representative Warwick Sabin.
House Bill 1926, sponsored by Sabin, is a tax cut bill that provides tax relief to low-to-middle income Arkansans by adjusting the tax brackets and by increasing standard deductions for tax filers. One of the best parts of Sabin’s tax cut proposal is that it is revenue-neutral.
Sabin’s tax cut proposal for low-to-middle class Arkansans is in direct contrast to various Republican proposed tax cut bills which give the majority of the tax cuts to upper-income individuals. Republicans often believe in tax cuts for the wealthy, or, as they refer to them, job creators.
Sabin’s bill is a prime example that the true job creators are in fact consumers. If consumers don’t purchase good and services, then there are no jobs. Give middle-class Arkansans a little more money in their pocket, as Sabin proposes, and it directly will help Arkansas’s economy since they’ll purchase goods and services.
Sabin’s tax cut proposal is on the right-track. Hopefully legislative Democrats will fight for middle-class tax cuts and oppose tax cuts that only benefit the wealthy.
Below is a complete description from Representative Sabin on HB 1926:
HB1926 is an income tax cut measure targeted to provide relief to low-to-middle income taxpayers in two basic ways: It updates the Low Income Tax Tables and then adjusts other tax brackets accordingly, and it increases the Standard Deduction from $2,000 to $5,000 for single filers and from $4,000 to $10,000 for married couples.
Many taxpayers at all levels take the Standard Deduction, so the tax relief will be widespread. The Arkansas Department of Finance & Administration estimates that 32.4 percent of taxpayers utilize the Standard Deduction.
By updating the Low Income Tax Tables and adjusting the other tax brackets accordingly, we will completely eliminate the income tax burden for Single taxpayers with taxable income up to $12,800; Heads of Households with one or less dependents with taxable income up to $18,600; Heads of Households with two or more dependents with taxable income up to $21,200; Married couples with one or less dependents with taxable income up to $23,600; and Married couples with two or more dependents with taxable income up to $26,200.
Furthermore, it potentially provides at least some tax relief for Single/Head of Household taxpayers with taxable income up to $121,600; Married couples with one taxable income up to $164,715; and Married couples with two incomes with a combined taxable income of $244,000!
This kind of targeted tax relief is important for several reasons. First, our current income tax brackets were set in 1971, and they were not indexed for inflation until the late 1990s. Even then, the indexing was not retroactive, which means that Arkansas tax brackets are extremely regressive and therefore disproportionately hurt low-to-middle income taxpayers.
Second, these taxpayers are most likely to use this tax relief for in-state economic stimulation. They will direct their spending toward immediate needs at local businesses, at grocery stores, at Walmart, etc. Therefore, this tax cut will have a big positive impact on the Arkansas economy.
Perhaps most importantly, this tax cut proposal is revenue neutral, which means that it will not impact other fundamental state needs, like education, health care, and human services.
For this reason, it preserves the ability for us to follow through on Gov. Beebe’s goal of finally eliminating the Grocery Tax. And in this way, my bill can provide tax relief for all Arkansans and be a Double Tax Cut for those who need it the most.
UPDATE: Sabin passed along this note on Friday morning after making an amendment to his bill.
Latest posts by Michael Cook (see all)
- Cook: Leslie Rutledge Lacks Campaign Cash To Compete - September 16, 2014
- Cook: New Poll Encouraging For Democrats - September 15, 2014
- Cook: Arkansas Debates And The Pryor Brand - September 11, 2014