They call it “revenue neutral” but your Arkansas taxes are going up!

When a politician calls legislation “revenue neutral” it doesn’t mean, your taxes are not going up. Sometimes when a politician says “we are not raising taxes”, your taxes are going up.

Politicians have their own lingo that doesn’t always mean what the public thinks. The public gets deceived.

Let’s look at what the Arkansas Democrat Gazette reported Senate President Pro Tempore Jonathan Dismang as saying, and what it really means. He was talking about the tax plan in SB120 which is identical to  HB1162.

… Senate President Pro Tempore Jonathan Dismang, R-Searcy, told the Senate Revenue and Taxation Committee that “we are not raising taxes.” “It’s a revenue-neutral bill. It’s do you believe this is the right way to reorganize or reprioritize our state tax code,” he said.[i]

What these tortured words really mean:

  1. Revenue neutraldoesn’t mean your taxes aren’t being raised. The plan raises taxes on most Arkansans while giving a tax break to only a few, but because the state won’t collect more tax money the overall plan is considered “revenue neutralfor state government but not for you.

Legislation being “revenue neutral” has nothing to do with whether your taxes are being raised.  For example, if the state raised taxes by $100 million dollars and gives all the money away to a corporation or uses it for a program to try to convince us not to eat bacon, the $100 million tax increase would still be considered revenue neutral because the state spends it all. If you increase state spending and increase state taxes by the same amount, it is “revenue neutral” to state government.

  1. We are not raising taxes” is being used in an extremely deceptive way. Since the state will not receive more tax money overall, he claims “we are not raising taxes”. Like the first statement, this is all about what state government receives and is not about what is being done to ordinary taxpayers. For example, if the legislature gave a $100 million tax break that only applied to Walmart, and then raised taxes on the rest of us by $100 million, he would also call this “not raising taxes.”

So while the legislature is supposedly being busy being “revenue neutral” and supposedly “not raising taxes”, the legislation actually raises taxes on:

  • Imposing Arkansas’s sales tax on digital downloads. Digital downloads include items such as software and digital books, music, and movies.
  • Raising the sales taxes on soft drinks and candy.
  • Imposing income tax on unemployment compensation.

Using tortured words to mislead the public is nothing new. That is how we got Obamacare.


[i] Tax-cut measures sent to Hutchinson Also, military-retiree bills advance, Arkansas Democrat Gazette, 1/31/2017