Gov. Hutchinson proposes reduction in state’s top income tax bracket

by Talk Business & Politics staff ( 1,445 views 

Gov. Asa Hutchinson called Monday (Feb. 12) for a reduction of the state’s top income tax bracket from 6.9% to 6%. The proposal, made during his address to the Arkansas General Assembly to begin the fiscal session, did not include an estimated reduction in state revenue, but members of the Joint Budget Committee said it would be roughly $180 million if done all at once.

Also, the Arkansas Department of Finance and Administration (DFA) estimates that 162,000 Arkansans would be eligible for the top tier reduction. (Update: On Wednesday the DFA adjusted the estimate to 147,000 Arkansans who would benefit from the income tax cut.)

The governor said the fiscal session is simple in focus, but “the opportunities are significant” in terms of addressing a range of issues that include the growing opioid crisis, support for rural broadband, and the top rate tax cut.

Hutchinson, who faces primary opponent Jan Morgan, who frequently alleges Hutchinson is not a conservative and has expanded government, used a significant portion of his speech outlining tax cuts, efforts to reduce regulations, and reduction in government spending since his election in 2014.

“As I mentioned earlier, we’ve cut the income tax in our state by more than $150 million. In 2015, we cut $100 million from the income tax for middle class Arkansans. In 2017 we again cut taxes, focusing on Arkansans with lower incomes, by cutting an additional $50 million. The 2019 General Session will be no different,” Hutchinson noted in the text of his speech.

He said the income tax cut “is the necessary next step in lowering our income tax, and it will make our state more competitive with our surrounding states.”

Hutchinson told the gathered legislators the proposed budget reduced taxes, addressed government efficiencies, found ways to shrink the size of government and did all of that without threatening education, healthcare and other critical safety net programs.

“Together, as we have done so many times before, we can provide for the needs of education and public safety, while maintaining necessary safety nets for our struggling citizens. We can do all of this and still create a climate of economic growth and opportunity,” noted the copy of Hutchinson’s speech.

Following are other topics addressed by Hutchinson:
• Touted economic growth in Arkansas, and the ongoing push to “reduce the burden of unreasonable regulations on our businesses.”

• On regulations, Gov. Hutchinson will appoint a “working group” to propose regulatory reductions. The group is expected to report findings later this year.

• Lower growth in Medicaid spending, primarily by 117,000 fewer Arkansans on the Medicaid roll in 2017.

• Addressing the insufficient reimbursement for pharmacists in rural communities.