Arkansas Taxes – On road to becoming the worst in country

Updated 11/29/2018 @ 1:16 pm

Arkansas politicians always brag about passing tax cuts. In fact, every election cycle they brag on how much they have cut taxes. The Arkansas news media routinely echoes the politicians spin about tax cuts. With all we hear about Arkansas tax cuts you would think by now Arkansas would be a very attractive place for businesses and families.

Yet according to studies by the Tax Foundation on State Business Tax Climate, Arkansas is a high tax state and Arkansas’ ranking has gotten dramatically worse, despite politicians bragging on tax cuts. In their 2018 report  Arkansas was among the high tax states ranking a miserable 39th 43rd in the nation.* Of the surrounding states, only Louisiana was worse at 42nd. In their 2019 report Arkansas’ taxes ranks worse than all our neighboring states. Even worse…

Arkansas went from 43rd* to 46th in the nation. Only four states rank worse than our state: Connecticut (47), New York (48), California (49), and New Jersey (50)

Note: The Tax Foundation is apparently one of the national organizations to track Conduit For Action. A representative of the foundation asked CFA to note they changed how they scored states and Arkansas’ 2018 ranking was downgraded from 39th to 43rd.  In any event, the 2019 ranking is now 46th in the nation.  While this means Arkansas only became worse than three more states, we see nothing but bad news in the direction Arkansas is moving!

How is this horrible ranking possible considering all the bragging on tax cuts by Arkansas politicians and the media? The simple but sad answer is every two years Arkansas politicians propose some tax cut but at the same time raise taxes, broaden what items are covered by the taxes, increase fees, and continue to grow government. The political spin accentuates the positive and minimizes the negative, even though the negative (tax increases) outweighs the positive.  In other words, they BS us.

Looking at the upcoming legislative session in 2019 it appears Arkansas will be continuing down the road to becoming the highest tax state in the nation. That is where we are headed unless your state Representative and Senator suddenly become brave enough to stand against the Arkansas establishment and say “NO, we will not raise the tax burden!

While we are hearing much in the press about the proposed cut in the Arkansas income tax rate, that is only part of the picture. First, legislation has already been filed to impose an Internet sales tax (which is not a tax on out-of-state sellers but a tax on Arkansas consumers). Governor Asa Hutchinson is so confident about passing the tax he presented his budget to a legislative committee based on passage of the Internet sales tax. Second, the Governor is discussing his idea to repassing a half cent sales tax that is scheduled to expire, and using the new tax for highways. Third, a substantial increase in gasoline and diesel taxes is still being pushed. The legislative session has not even started so what other legislation will be proposed to take more of your money?

Forget about the promised income tax cut putting money in your pocket.  Politicians are looking to take it all back plus more. The question is how much more the state will rob you through other taxes being considered.

The legislature’s tax task force headed by Senator Jim Hendren (nephew of Governor Hutchinson) has been studying taxes for over a year. They have worked hard but with no standard they have wandered aimlessly.  They could have done great things if they had just started with a goal of reducing Arkansas’ tax burden so that it is less than that in at least one more state. That is a very low goal considering beating one more state would still mean Arkansas would rank as the 45th worst tax state. Instead, because politicians love spending, it was a year of smoke and mirrors. We are still headed down the road to becoming the highest tax state.

You have two options. You can sit back and watch Arkansas’ tax burden get higher, or get busy and insist that your state Representative and Senator quit playing games and refuse to increase the Arkansas tax burden.

And the special interests say, “Woo-hoo! Increase spending!