Republican gubernatorial candidate Asa Hutchinson unveiled details of his plan to reduce Arkansas’ individual income tax rates, a cornerstone of his tax cut platform for Governor.
“Arkansas is not competitive in its income tax structure,” said Hutchinson. He cited surrounding states with lower or no individual income tax rates.
“Why is this important? It impacts the recruitment of industry,” he said.
Hutchinson laid out a first-year plan as Governor to reduce the income tax rate from 7% to 6% for those earning between $34,000 to $75,000 a year, and from 6% to 5% for those earning between $20,400 to $33,999 annually. He said the reduction would result in approximately $300 a year savings for up to a half-million taxpayers.
The estimated cost of the tax cut provided by Hutchinson would be in the $100 million range, he said. Hutchinson pointed out the state finished its last fiscal year with a $299.5 million surplus. He emphasized that the tax reduction would come from growth revenue and surplus funds.
The GOP gubernatorial candidate said he would push for this initiative in his first year in office. He said that he would not jeopardize the state’s balanced budget and he added that any reductions to public education would be “off the table.”
Hutchinson said he would work the state legislature to further reduce the 7% tax bracket in future years. Hutchinson provided information that Arkansas’ individual income tax accounted for roughly $2.895 billion in 2012.
“My number one priority as Governor will be job creation,” Hutchinson said. “One way to spur job growth is through tax reduction and I am committed to providing across the board relief to all Arkansans.”
Hutchinson also said he felt the income tax reduction would be his top and possibly only tax cutting priority. If the opportunity to cut additional taxes further – such as targeted business tax cuts – Hutchinson said he would rather accelerate individual income tax cuts to more Arkansans.
A statement from the Hutchinson campaign included endorsements from Arkansas Senate President Michael Lamoureux, R-Russellville, and Larry Walther, former director of the Arkansas Economic Development Commission.
“As a leader in the Arkansas State Senate, I am confident that we can fully fund education and services in Arkansas and still be supportive of this type of income tax reduction,” Lamoureux noted.
“Having been directly involved in recruiting industry and employers to Arkansas, I can tell you first hand that the high income tax rates play a significant factor in new jobs moving to Arkansas and creating jobs in the state. I support Asa’s plan and believe it is the right direction for Arkansas,” Walther said in the statement.
Hutchinson faces a GOP primary challenge from Rep. Debra Hobbs, R-Rogers, and Curtis Coleman. Mike Ross is the only announced Democrat in the race for Arkansas Governor.
Mike Ross’ campaign spokesman Brad Howard offered this response: “Since launching his campaign, Mike Ross has said he would implement income tax cuts that target working families who need it the most, and we are pleased to see Asa Hutchinson has come around to Mike Ross’s position. However, as a proven fiscal conservative, Mike Ross has pledged to cut income taxes in a fiscally responsible way that maintains our state’s balanced budget and protects essential state services like education, public safety and Medicaid for working families and seniors.”
The Coleman campaign issued this response: "While I absolutely support a bold reduction in Arkansas' income tax for middle-class wage earners, Secretary Hutchinson's proposal does not go far enough. In my view, it reveals an unfortunate lack of understanding of what it will take to make us truly competitive with surrounding states for jobs and business. Cutting personal state income taxes will help – and most importantly provide much needed relief to most hard-working Arkansans – but in order to create a pro-jobs, business-friendly economic environment right here in Arkansas, it is crucial that we also reduce our corporate tax rates and eliminate our capital gains tax. Furthermore, Hutchinson's proposal does nothing to address the real business killer in Arkansas: extreme overregulation. Whether it is small businessmen, entrepreneurs, hospital administrators, or school administrators and teachers, they are all telling me the same thing about state government: 'Get off my back and get out of my way!'"