Issue Position: Tax Cuts

Issue Position

Income Tax Cuts

Did you know that today, in Arkansas, a single mother making $34,000 a year pays the same income tax rate as a person making $340,000 a year? This is simply not fair.

Arkansas's income tax code is unfair and morally wrong because it disproportionately punishes lower- and middle-class families.

In fact, our income tax code hasn't fundamentally changed since 1971 -- when the average family was making $8,000 a year. Today, the average family in Arkansas makes $40,000 a year.

That's why my tax cut plan will create a modernized income tax code that will result in lower, fairer taxes for nearly every single working Arkansan. And, it won't raise taxes one penny on anyone.

My plan cuts taxes for those families who need it most. In fact, when my plan is fully implemented, it will cut income taxes by as much as $465 for incomes at $30,000; $665 at $40,000; $880 at $50,000; and, $1,148 at $75,000 and up.

The fundamental structure of our state's income tax brackets has not changed since 1971. With Act 328 of 1997, state law began tying the brackets to inflation with a 3 percent cap on indexing, but did not make it retroactive -- my tax cut plan essentially makes Act 328 retroactive.

Currently, the state's top income tax bracket of 7 percent starts at $34,000, meaning every taxpayer who makes more than $34,000 pays the same top tax rate. My tax cut plan sets the state's top tax bracket at $75,100 and lowers the tax rate for nearly all income under $75,100 -- reducing the tax burden for nearly every working Arkansas family and many small businesses. Compare the two tax codes below:

As your next governor, among my top priorities will always be to maintain our state's balanced budget and to protect essential state services like education, Medicaid, and public safety. That's one reason I'm so proud of this tax cut plan, because I will implement it in a gradual, fiscally responsible way -- as the state can afford it -- just like Governor Beebe has done with the sales tax on groceries.

Unlike my opponents, I will not bankrupt this state or slash essential state services, and I will not make campaign promises I cannot keep just to win an election.

Manufacturing Sales & Use Tax

I will also gradually phase out the state's sales and use tax on partial replacements and repairs of manufacturing machinery and equipment. As I've toured manufacturing plants across the state, I've heard this is a top priority so that we can modernize plants and create new jobs.

Currently, manufacturers face a sales and use tax of 6.5% on partial replacements and repairs of manufacturing machinery and equipment, but new plants and expansions are exempt. Phasing out this sales tax would make the state's tax structure fairer for businesses already in the state.

This tax cut will also encourage our current manufacturers to upgrade their facilities so they can modernize, remain competitive and continue to grow and hire more workers. And, finally, it will make us more competitive with our surrounding states who don't tax this type of investment.

Conclusion

Lower, fairer taxes for working families and small businesses in Arkansas is key to creating good-paying jobs and giving every Arkansan the opportunity to get ahead. My tax cut plan will create more good-paying jobs and help save the ones we already have; it will help our small businesses grow; it will encourage more investments in manufacturing jobs; it will help keep the next generation right here in Arkansas working at good jobs and raising their families here; and it will put more of people's hard-earned money back into their pockets.

As a proven fiscal conservative, I will gradually implement these tax cuts as the state can afford to do so. My top priority will always be to maintain our state's balanced budget while funding essential state services like education, Medicaid and public safety.

As your governor, I will work day and night to be this state's biggest economic ambassador and I will put jobs first, because I believe in the future of Arkansas and I believe in its people.

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