Governor Sarah Huckabee Sanders signed a law Thursday that will cut the state’s top individual and corporate income tax rates and create a temporary income tax credit for low-income and middle-income taxpayers.
The Republican governor also signed a bill that would create the Arkansas Reserve Fund Set-Aside into a Restricted Reserve Fund and require the state’s Chief Financial Officer to transfer $710.6 million from the state’s General Revenue Allocation Reserve Fund to the Arkansas Reserve Fund Set-Aside . ,
The action came as the House and Senate wrapped up action during the fourth and final day of the special session, which Sanders called for lawmakers to consider tax cuts, changes to the Arkansas Freedom of Information Act and reinstating sanctions, among other items. Was called for. COVID-19 vaccine mandates for public entities ranging from schools to state agencies.
At a news conference in the governor’s conference room, Sanders said the Republican-dominated legislature enacted his goals in the special session with bipartisan support.
“We’ve cut taxes to put dollars back into the pockets of Arkansas taxpayers,” he said.
“This week’s latest inflation report shows that Joe Biden’s policies are driving up prices, making this tax relief more necessary than ever,” Sanders said, referring to the Democratic president.
The consumer price index, which measures the cost of a wide range of goods and services, rose 3.7% in August from a year earlier — off a 3.2% pace in July — the U.S. Labor Department reported Wednesday.
Sanders said his signature on the tax cut bill would mean “we have currently cut $250 million from annual income taxes and $58 million from annual corporate taxes.”
Additionally, “we would have provided up to $150 in one-time tax relief for middle-class taxpayers and created the Arkansas Reserve Fund to fully and responsibly phase out the state income tax,” he said.
Earlier Thursday, the Arkansas House of Representatives voted 84-10 to send the tax cut bill – Senate Bill 8 by Senator Jonathan Dismang, R-Searcy – to the governor. Now it’s Act 6.
According to the General Assembly’s website, the House voted 84-10 to approve a similar tax cut bill — House Bill 1007 by Rep. Les Ives, R-Sercy — which died in the House at the time of adjournment.
According to the General Assembly’s website, Democratic Representatives Deborah Ferguson of West Memphis, Ashley Hudson of Little Rock and Mark Perry of Jacksonville joined 81 Republicans in voting for the tax cut bill, while 10 other Democratic representatives voted against the bill. Three Democratic representatives attended and voted on the bills, and two Democratic representatives and one Republican representative abstained from voting on the bills.
Act 6 would reduce the state’s top individual income tax rate from 4.7% to 4.4% and the state’s top corporate income tax rate from 5.1% to 4.8%, effective January 1, 2024.
For tax years beginning on or after Jan. 1, 2024, the 4.4% individual income tax rate will cover Arkansans reporting more than $87,000 in net income and will apply to their income of $8,801 and above under the measure. That top rate would also include Arkansans reporting net income up to $87,000 and would apply to those earning between $24,300 and $87,000 for tax years beginning on or after Jan. 1, 2024.
The top corporate income tax rate of 4.8% under Act 6 will apply to net income of corporations over $11,000 for tax years beginning on or after January 1, 2024.
Act 6 would also create a temporary non-refundable income tax credit of $150 for individual taxpayers with net income up to $89,600 in Arkansas, and a temporary $300 non-refundable income tax credit for married couples filing jointly with net income up to $179,200. -Will create a refundable income tax credit, retroactive to January 1. , 2023. The income tax credit will phase out for individual taxpayers with net income up to $103,600 and married taxpayers filing jointly with net income up to $207,200.
Eves, who is the House sponsor of SB8, told the House that the individual income tax rate cut would affect anyone making more than $24,300 a year.
“We have to keep Arkansas competitive,” he said. “States across the country are lowering their income tax rates and becoming prosperous.
“I’ve heard this story that rich people get a tax cut and low-income people only get a $150 tax credit,” Eves said. “That’s simply not true. They get a $150 tax credit, but they’re also beneficiaries of the reduced rate.”
But Rep. Dennis Garner, D-Fayetteville, asked his colleagues to oppose the bill, saying it would benefit higher-income people without providing more assistance to lower-income people.
“It seems irresponsible to permanently cut taxes for our highest-earning people with a budget surplus due to a one-time federal stimulus, but giving a one-time $150 check to Arkansans most in need It’s brutal to commit to,” she says. Said.
Garner said she wants the state to support low-income families by ensuring all Arkansans have access to a livable wage, health care and affordable housing. He said Kansas residents are “living through a failed real-time experiment with tax cuts.”
But Rep. Aaron Pilkington, R-Knoxville, said, “Cutting taxes drives economic growth [and] When the economy grows, a rising tide lifts all boats.”
He said the proposed tax cut considered by the House on Thursday was a stark contrast to the tax cut enacted in Kansas, adding that it was “a massive tax cut that was not planned.
“We have never done anything like this. We have been very careful. We have not used an axe, we have used a scalpel,” he said.
Rep. Andrew Collins, D-Little Rock, described the tax cuts as “unbalanced,” saying previous tax cuts included lower rates for those with high, moderate and low incomes.
“It’s inadequate for middle-income earners, and it’s unnecessary for the very, very wealthy,” he said. “There’s a way we can cut taxes — and I think we should cut taxes right now — that will actually benefit the middle tax. This is not it.”
Rep. Howard Beatty, R-Crossett, said the $150 income tax credit represents half a week’s pay for a minimum wage worker.
He said, “I’m telling you that if you vote against this bill and your name is on that board, I hope that when it comes election time the voters of this state will recognize that.”
According to the state Department of Finance and Administration, about 1.1 million individual income taxpayers will get a tax cut and about 7,500 corporations with net taxable income of more than $11,000 will get a tax cut under the tax cut measure.
The state Department of Finance has estimated that Act 6 would reduce state general revenues by a total of $248.5 million in fiscal year 2024, which begins July 1 and ends June 30, 2024 – including the “Inflation Relief Income Tax Credit”. — and $184.5 million in fiscal year 2025, which begins July 1, 2024, and ends June 30, 2025.
Reducing the state’s top individual income tax rate from 4.7% to 4.4%, effective January 1, 2024, is projected by the Department of Finance to reduce state general revenues by $75 million in fiscal 2024 and $150 million in fiscal 2025 and to reduce the state’s Reductions have been estimated. Raising the top corporate income tax rate from 5.1% to 4.8%, effective January 1, 2024, is projected to reduce state general revenues by $17.2 million in fiscal year 2024 and $34.5 million in fiscal year 2025.
In the regular session earlier this year, the General Assembly and Sanders approved a $177.7 million increase in the state’s general revenue budget to $6.2 billion in fiscal year 2024, with most of the increase allocated to education and corrections programs. .
In May, the Finance Department projected a $423.3 million general revenue surplus at the end of fiscal year 2024 through June 30, 2024. Enactment of Act 6 is expected to result in approximately $174 million remaining from the projected FY 2024 surplus.
On Thursday, the Senate voted 27-4 to send the Governor House Bill 1004 by Rep. Lane Jean, R-Magnolia, to create the Arkansas Reserve Fund set-aside and transfer $710.6 million in general revenues to the state’s restricted reserve fund. . Allocation of reserve funds to the Arkansas Reserve Fund set-aside.
That $710.6 million is what is left from the state’s $1.161 billion general revenue surplus in fiscal year 2023, which ends June 30.
HB1004 would specifically require a two-thirds vote of the Legislative Council outside of a legislative session or the Joint Budget Committee in a legislative session to transfer funds from the Arkansas Reserve Fund set-aside upon request of the State Fiscal Officer. Program. The bill is now Act 1.
According to the General Assembly’s website, the House voted 89-3 on Thursday to approve a similar bill — Senate Bill 1 by Sen. Jim Hickey, R-Texarkana — which was sent to the governor. Now it’s Act 11.
Scott Hardin, a spokesman for the state Department of Finance and Administration, said Thursday that the law establishing the Arkansas Reserve Fund does not include an emergency clause.
“As a result, [state Department of Finance and Administration] will fund and create [$710.6 million] “The transfers will take place 90 days from now when the law takes effect,” he said in a written statement.
According to Hardin, there is a $1.529 billion balance in the state catastrophic reserve fund, and a $1.478 billion balance in the restricted reserve fund with separate funding for different projects.
The state’s general revenue surplus of $1.161 billion in fiscal year 2023 is the second largest general revenue surplus of a state government in any fiscal year, behind the $1.628 billion surplus accumulated in fiscal year 2022, ending June 30, 2022. The state government has the third-largest general revenue surplus overall at $945.7 million in fiscal year 2021, ending June 30, 2021.
In April, Sanders signed a bill that reduced the state’s top individual income tax rate from 4.9% to 4.7% and the state’s top corporate income tax rate from 5.3% to 5.1%, effective January 1, 2023. Is retrospective.
The top individual income tax rate of 4.7% covers Arkansans reporting net income over $87,000 and applies to any income over $8,800 for tax years beginning on or after January 1, 2023. That top rate covers Arkansans with net income up to $87,000 and is applied to their income between $24,300 and $87,000 for tax years beginning on or after Jan. 1, 2023.
The top corporate income tax rate of 5.1% applies to corporations with net income over $25,000 for tax years beginning on or after January 1, 2023. The tax cut legislation signed into law in April is projected by the Treasury Department to reduce state general revenues. $186 million in fiscal year 2024 and $124 million in fiscal year 2025.
In April, Sanders also signed into law a bill that would gradually phase out the “throwback rule” on the income of multi-state corporations over a seven-year period, in tax years beginning on or after January 1, 2024. Will end it. The tax will be completed in the year 2030. The legislation is estimated by the Department of Finance to reduce general revenues by $10.6 million in fiscal year 2024 and ultimately by $74 million per year in fiscal year 2030 and beyond.
In a special session in August 2022, the General Assembly and then-Republican Governor Asa Hutchinson created a four-pronged tax cut package that the Treasury Department estimated would reduce state general revenues by $500.1 million in fiscal year 2023, There would be a $166.6 million shortfall in fiscal year 2024. $69.5 million in fiscal year 2025, $18.4 million in fiscal year 2026 and $8.4 million in fiscal year 2027.
The package includes reducing the state’s top individual income tax rate from 5.5% to 4.9% by January 1, 2022, and reducing the state’s top corporate income tax rate from 5.9% to 5.3%, effective January 1. 1, 2023. It also includes a $150 income tax credit for taxpayers earning up to $87,000 and a $300 income tax credit for married couples filing jointly earning up to $154,000.
The August 2022 special session came after the state reported a record general revenue surplus of $1.628 billion in fiscal year 2022.
Information for this article was provided by Will Langhorne of the Arkansas Democrat-Gazette.
Source: www.bing.com
