Can Tax Cuts Capitalize On Arkansas’ Recession Strength?

Rep. Davy Carter (R-Cabot), chairman of the House Revenue and Tax Committee and regional bank president for Centennial Bank, says he wants to capitalize on Arkansas’ survival from the recession of 2009.

Claiming that Arkansas’ fiscal conditions didn’t suffer like other states, Carter thinks "broad-based, long-term" tax reforms could put Arkansas in a better position to strengthen its economy.

"The reality is that we’ve lived within our means, we’ve taken care of business, and we’re in much better shape than a lot of states around the country," said Carter on this week’s edition of Talk Business. "At least from my view, instead of keeping on with the status quo, let’s see how we take advantage of our position."

He claims there will be more tax cuts coming beyond the Governor’s grocery tax cut – which Carter praised as a long-term, systematic tax reduction – but how far the legislature goes is still in the air.

"I think there will be some additional tax cuts in addition to the grocery tax and I’m glad all of the proposals are there. The people of Arkansas expect this body to make the right decisions on which tax cuts need to be implemented," said Carter.

On the high end, he sees $60-$70 million in tax relief and on the low end, he suggests it may be around $30-$40 million. He also stresses that the baseline budget will be funded as well as the adequacy request for K-12 public education.

Carter says last week’s shutdown of tax cut bills in his committee was simply a case of House members not being ready to make a decision on what final tax cuts should be implemented.

He and Sen. Jonathan Dismang (R-Searcy) have filed shell bills that could possibly turn out to be a bigger picture alternative for tax relief over the smaller, more targeted tax cut measures currently presented.

House bill 1794 and Senate bills 796-801 look to restructure Arkansas’ income tax brackets. Carter and Dismang are waiting on cost impact analyses from the Department of Finance and Administration before moving forward.

Carter thinks long-term income tax reform could trigger relief for lower-income residents and encourage higher-income taxpayers to make larger investments in the state.

"It’s about being competitive, being responsible, creating jobs, and to create an environment in Arkansas that facilitates commerce and growth," Carter said, but he’s cautious to offer more on the subject until the income projections from DF&A are returned.

"A lot of that depends on what the impact numbers are."

You can watch Carter’s full interview in the video below.