Stark Contrast In Asa, Beebe Tax Records

By Seth Blomeley, Arkansas Democrat-Gazette

Republican gubernatorial nominee Asa Hutchinson voted consistently to cut taxes while a member of Congress.

Democratic gubernatorial nominee Mike Beebe, Arkansas' attorney general, has a varied tax vote record. While in the Legislature, he voted for tax increases, tax cuts and tax credits.

The candidates tout their record on fiscal matters as they seek to succeed Gov. Mike Huckabee, a Republican who has held the office the past 10 years.

Beebe's tax votes in the Legislature include sales-tax increases, an income-tax cut and a capital gains-tax cut.

Hutchinson's tax votes in Congress include incometax cuts capital gains-tax cuts and estate-tax cuts.

Neither candidate, citing a state surplus of $400 million through fiscal 2006 and a $721 million surplus expected by the end of f iscal 2007, envisions a tax increase on the horizon.

Each is calling for eliminating most of the state sales tax on groceries and for exempting utility purchases by manufacturers from the sales tax. They are vague, however, on how soon these taxes would go away.

Their tax votes were cast under very different sets of rules. The Arkansas Constitution requires a balanced budget, meaning state spending isn't supposed to exceed revenue each year. The federal government allows deficit spending, meaning Congress can spend more than it takes in and leave the debt to be paid later.

Beebe said it's more difficult to vote for tax cuts in the Legislature than in Congress.

"This isn't Washington: We can't just print more money whenever we want to or operate in the red," Beebe said.

He said his votes for tax increases were necessary because of specific needs at the time.

"I voted to improve the quality of public education, provide health care for people who cannot otherwise obtain it, ensure adequate public safety including prison cells, meet transportation needs so that all areas of the state have an opportunity for economic growth, and meet various mandates passed on to the state by the federal government," Beebe said.

Hutchinson described himself as a being a "champion of tax relief" throughout his political career.

"The tax cuts I voted for caused growth, increased revenues, and when I left Con- gress in 2001, we had balanced the budget for the first time in a generation," Hutchinson said. "It proves that the way to increase government revenues is to scale back taxes and broaden our tax base rather than continually raising taxes.

"My opponent spent 20 years in the Senate voting for tax increases, and we've seen how that has stifled jobs growth."

Beebe of Searcy was a state senator from 1983-2003. His record includes yes votes on the following measures, each of which became law:

In 1983, a sales-tax increase from 3 percent to 4 percent for education.

In 1991, a sales-tax increase from 4 percent to 4.5 percent and sales tax imposed on used motor vehicles, mostly to raise teacher salaries.

In 1995, a constitutional amendment placed on the ballot in 1996 for a one-eighth percentage point sales tax for conservation measures.

In 1995, a constitutional amendment placed on the ballot in 1996 to require school districts to have a property tax of at least 25 mills for maintenance and operation for schools.

In 1997, a state income-tax cut of $71 million by raising the standard deduction and exempting the lowest income earners from paying income tax, among other things.

In 1999, a capital gains-tax cut by exempting 30 percent of a taxpayer's capital gains from being taxed.

In 1999, a constitutional amendment placed on the 2000 ballot to create a $300 homestead property-tax credit and limit property-tax bill increases to 5 percent annually.

In 2000, a state sales-tax increase from 4.625 percent to 5.125 percent to make up for the homestead property-tax credit.

Hutchinson said he particularly opposed Beebe's 1991 vote for the sales tax on used cars because it "placed an additional burden on working Arkansans."

Hutchinson added, "It's important to understand that he and I have a fundamental difference in our approach to government, and how to meet the needs of the state. Just last year, for example, when asked how we might address possible new funding needs related to [court-ordered school funding], Mr. Beebe suggested we could raise property taxes. He actually boasted that, if necessary, he would provide the ‘leadership' to implement those new taxes."

In an Associated Press article in June 2005, Beebe said that revenue growth should cover education needs, but if the state Supreme Court requires more than is available, the state's first option should be to increase the property tax, which would require a vote of the people.

"You don't shove that down people's throats. You lead them," Beebe said in that article. "If you're going to have to have more money for schools ultimately, if you show the people that need, then it will be incumbent upon me or anybody else in a leadership position to go sell it."

Hutchinson also cited October 2004 comments by Beebe in the Arkansas Democrat-Gazette critical of Republican-driven tax cuts in Congress.

"You can't continue to tell folks just what they want to hear, make them believe you can pay for every program in the world and cut all their taxes and not reap the whirlwinds," he said, citing record federal deficits.

Hutchinson said, "My opponent has said that the Bush administration's tax cuts are irresponsible, but I couldn't disagree more."

Hutchinson of Little Rock lived in Fort Smith when he served as a congressman for the 3rd Congressional District of Arkansas from 1997 to 2001. His record in Congress includes votes for:

In 2001, income tax-cuts estimated to cost $1 trillion over 10 years by gradually reducing and condensing income-tax rates, among other things. Approved.

In 2001, repeal of the estate tax by 2011. Approved.

In 2000, repeal of the marriage penalty on income tax for 25 million dual-income couples who pay more than they would if single. Vetoed.

In 1999, a constitutional amendment to require twothirds majorities in the House and Senate for approval of any bill containing a tax increase. Defeated.

In 1999, income-tax cuts of $792 billion over 10 years. Vetoed.

In 1998, allowing parents to save up to $2,000 a year for each child without paying taxes on the interest if the money is used for education expenses for a maximum savings of $37 a year. Defeated.

In 1997, a $500 child tax credit and reducing the top bracket for capital gains from 28 percent to 20 percent, among other things. Approved.

Hutchinson is calling for the Legislature to propose a constitutional amendment under which a supermajority vote would be necessary to increase the state sales tax. He hasn't said what that supermajority should be.

Beebe opposes this idea.

Currently the sales tax can be raised by a simple majority of the House and Senate, but a three-fourths majority is necessary to raise some other taxes, such as income tax.

Regarding how they would handle the state budget in times of severe revenue shortfalls, neither would say whether they would raise taxes or cut programs.

Each preferred to think positively about state revenue.

"We don't need any more taxes in Arkansas," Beebe said. "In fact, I believe the first priority for the current budget surplus should be tax relief. As governor, I will use part of the surplus to begin a complete phaseout of the grocery tax and the tax on utilities for manufacturers. I would also look at investing a portion of the surplus in a rainy day fund. I have seen lean times in our state. But for many families, it's a lean time right now, and that's why a permanent tax decrease, in the form of a complete phaseout of the grocery tax, is an integral part of my plan."

Hutchinson said, "In the foreseeable future, I don't see a need for tax increases. We're sitting on a current surplus projected to be over $700 million. If some people don't think we can implement tax reform now, with records surpluses in the bank, then they never will. I've stated consistently that at least half of that surplus should go toward tax relief, in the form of eliminating the sales tax on groceries, which would benefit Arkansans at every income level, and eliminating the energy sales tax for manufacturers, which would spur jobs growth."

Neither would give specifics as to how soon those taxes would be removed. The state sales tax on groceries brings in about $195 million a year, and the state sales tax on utilities for manufacturers about $54 million a year.

Regarding the sales tax on groceries, Beebe wants to remove all but the portion the constitution requires for conservation measures and the local portions.

Hutchinson hasn't specified how much of the tax he prefers to remove, saying that would be up for debate in the Legislature.

Independent candidate Rod Bryan of Little Rock, a sandwich shop worker, is also on the ballot for governor.

He has no record on tax issues because he hasn't held office. He has proposed a state income-tax credit for the full purchase price of new or used bicycles as a means of encouraging people to make greater use of bikes.

The general election is Nov. 7.

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