Gov. Asa Hutchinson released his final plan for income tax cuts for in Arkansas. Tagged the “5.9 plan” it would lower income taxes by $97 million through fiscal year 2022. The top income tax rate would fall from 6.9% to 6.6% in the first year, and then down to 5.9% in the second year. The 6.0% top income tax rate for middle income filers would lower to 5.9%.
The reduction from 6.9% to 6.6% for top income earners plus the rate cut from 6.0% to 5.9% for middle income earners would cost $51.2 million, split between two fiscal years (FY2020 – FY2021). Cutting the top rate from 6.6% to 5.9% will cost an additional $45.8 million and be phased in from FY2021 – FY2022, according to the Governor’s office printouts of the plan.
The bill has no tax increases included. Previous draft legislation of the Governor’s plan included a new internet sales tax and federal conformity laws that would have raised taxes. At the press conference the Governor and legislative leaders said the internet sales tax bill would be ran separately.
The bill (SB211) was filed after the Governor’s press conference by Senate Tax and Revenue Chairman Sen. Jonathan Dismang (R – Beebe). Co-Sponsors include House Tax and Revenue Chairman Joe Jett (R – Success), House Speaker Matthew Shepherd (R – El Dorado), and Senate President Pro Tem Jim Hendren (R – Gravette).
One big change in the final plan from the previous “2-4-5.9 plan” is that the standard deduction is not increased for tax filers. This is likely one of the biggest reasons for the decline in revenue expected to be cut. The 2-4-5.9 plan was estimated to cut revenue by almost $200 million over three to four years.
You can watch the Governor’s press conference in it’s entirety below.[embedyt] https://www.youtube.com/watch?v=s7Tmj3pSFig[/embedyt]