Panel Reviews Individual, Corporate Income Taxes
by May 16, 2012 6:01 pm 106 views
The Joint Revenue and Tax Committee held its second meeting to review Arkansas' tax code this time focusing on corporate and individual income taxes.
The committee is reviewing the entire state tax code to assess Arkansas' competitiveness with surrounding states and to determine if meaningful tax reform can be shaped for the 2013 legislative session.
Last month, lawmakers looked at more than 121 sales tax exemptions.
Rob Moritz with our content partner, the Arkansas News Bureau, reports on today's meeting:
During Wednesday’s meeting, John Theis, deputy commissioner for policy and legal with the state Department of Finance and Administration, told lawmakers individual income taxes generate about $2.6 billion annually and corporate taxes generated about $423 million during the 2010 fiscal year. He said corporate tax revenue fluctuates from year to year.
Corporate taxes and individual income taxes generate about 55 percent of the state’s general revenue, Theis said.
Theis and DF&A Deputy Director Tim Leathers said taxes for multi-national state
corporations are apportioned based on a formula that takes into account the property, payroll and sales tax generated by the corporation in the state.
Rep. Stephen Meeks, R-Conway, asked about the Texarkana border city tax exemption. The Legislature in the mid-1970s exempted Texarkana residents from paying the state income tax because the state of Texas — the Texas-Arkansas state line cuts through the city — does not have an income tax.
Along with eliminating the state income tax for city residents, the state did assess an additional 1 percent sales tax.
Theis said the income tax exemption costs Arkansas just under $20 million a year, while the 1 cent additional sales tax generates about $4 million annually.
You can read more at this link. Revenue and tax committee members meet next month to review economic incentives used by the state to recruit business prospects.