Speaker Shepherd defends tax cuts amid criticism to invest more in education, health care

Speaker of the House Matthew Shepherd, R-El Dorado, believes the tax cut package implemented in this past week’s special session builds on previous efforts to reform the state’s tax code, and he suggested opponents of the cuts will see money focused on critical programs in the upcoming fiscal session.

Appearing on this week’s Talk Business & Politics, Shepherd said the tax cuts had more broad-based input than any legislation he’s seen in his decade in the House.

“What you see in this tax cut bill, that is now a law, is you see ideas both from the House, the Senate, the governor’s office – it all came together and it gives us broad-based and a comprehensive reduction from lower earners to higher earners. And I think that’s a positive step, but we’re doing so in a responsible fashion where we’re still able to provide the services that the people of Arkansas deserve,” he said.

Shepherd reminded that in previous sessions there have been targeted low- and middle-income tax cuts, a reduction in the used car tax, and the elimination of the sales tax on back-to-school items.

“Going back to my first term, we passed the [school] sales tax holiday, which I was the lead sponsor on that. People were critical of this, … but for those individuals that are sending kids back to school in August, that’s a big deal,” he said. “You can’t evaluate this tax cut just in a vacuum. You have to look at what’s been done over the last number of years.”

Lawmakers have reduced the top income tax rate from 7% at the start of Gov. Asa Hutchinson’s first term in 2015 to 5.5% today. The measure just passed outlines a path to lower the individual income tax rate to 4.9% over the next four years. The legislature also reduced tax brackets from three to two and implemented a lower corporate tax rate, which will eventually drop to 5.3%.

Many Democrats and advocacy groups argued the state should have invested the roughly half-billion dollars set aside for tax cuts into early childhood, child care, foster care, and developmentally disabled programs. Shepherd said there have been significant investments made in some of those areas and he predicted there would be a focus on them in the upcoming fiscal session, which starts in February 2022.

“Fundamentally, we [Republicans] believe that Arkansans make better decisions with their dollars than the government ever can. But, you know, I also am reminded that, in the in legislature we have done things through the private option and through Arkansas Works. We’ve done things that, sometimes we get criticized from the right. But I think that demonstrates that what you see with the House and the Senate is, that we’re interested in doing what’s best for the people of Arkansas,” Shepherd said.

Shepherd, who has served two terms as Speaker of the House, is planning to run for re-election to his House seat and will seek a third term as speaker.

“Honestly, just the number of House members that have come to me and have asked that I consider making another run is what made the difference. At this point I’m a known quantity ever that people will know for better or worse. They know what they get with Matthew Shepherd as Speaker of the House,” he said.

Watch his full interview in the video below.