Cook: Asa Likens Arkansas Chamber of Commerce Priority to Obama’s Plan

Last week, Asa Hutchinson dismissed an Arkansas State Chamber of Commerce tax reform priority and referred to targeted tax cuts that bring fairness to the tax code as part of Barack Obama’s plan. Hutchinson’s philosophy may explain why he’s having difficulty generating support among Arkansas’s business community.

Actually, it was Mike Ross who last week unveiled a tax cut proposal that also happened to be the same one the State Chamber of Commerce supports cutting. But Hutchinson dismissed it as a valid idea all the same.

Ross proposed cutting the state’s sales and use tax on the partial replacement and repair of machinery used in manufacturing.

Granted, it’s not a tax cut proposal that blows the hair back of average voters, but Randy Zook, CEO for the Arkansas State Chamber of Commerce, believes reducing this tax is critical for Arkansas’s economy.

In a September guest commentary on Talk Business, Zook listed reducing this tax as a way to make Arkansas’s tax code more fair.

Zook wrote in part:

“Most states exempt repairs and replacement parts of manufacturing machinery and equipment (M&E) from sales and use tax. Other states apply a reduced rate to repairs and replacements. Arkansas taxes repairs and replacements at the full tax rate of 6 percent.”

Ross, unlike Asa Hutchinson, agrees with the Chamber of Commerce that the tax unfairly punishes manufacturers already in Arkansas because state law already exempts new plants and plant expansions.

The Arkansas Democrat-Gazette asked Hutchinson his thoughts on Ross’s tax cut proposal and reported the following in their article:

Hutchinson said Ross’ tax cut philosophy is like Democratic President Barack Obama’s.

Moreover, in a Van Buren County Reagan luncheon on Saturday, Hutchinson again likened the Chamber of Commerce and Mike Ross plan to Barack Obama saying:  “That’s Obama’s plan. Special breaks, for special friends, for special industry rather than benefiting everybody in the room.”

I bet Randy Zook and the Arkansas Chamber of Commerce are not pleased that Hutchinson is likening their tax cut idea as President Obama’s plan.

Ross believes in gradual and targeted tax cuts that don’t disrupt the state’s balanced budget. Hutchinson has called for cutting the income tax across the board, but so far has refused to release a plan detailing how much he’d cut, over how many years, and how he plans to pay for it.

This is the second time, in his second run for Governor, that Asa Hutchinson started off on the wrong side of a tax cut debate. In the 2006 gubernatorial election, Mike Beebe first proposed gradually reducing the sales tax on groceries.

At first, Hutchinson said reducing the grocery sales tax was not a top priority of his, but then quickly reversed himself a few days later and also called for eliminating the sales tax on groceries.

Further, in 2006 Hutchinson criticized Beebe’s plan to gradually reduce the grocery sales tax as he believed it should be eliminated all at once. But earlier this year he praised Beebe for gradually lowering the tax without adversely impacting critical state services. I guess Mike Beebe was right along with this idea for a gradual and targeted tax cut.

There is a disconnect between Asa Hutchinson and Arkansas’s business community. The greatest proof of this is Ross’s gargantuan financial advantage over Hutchinson, with Ross’s funds coming heavily from Arkansas’ business community.

If Hutchinson keeps likening Chamber of Commerce’s ideas as “Barack Obama’s plan,” I don’t expect his support among the business community to grow. Call it an educated guess.