The Governor’s income tax plan failed by two votes on the Senate floor Tuesday (February 5) by a vote of 25 Yeas, 5 Nays, and 5 Non-votes. The legislation would drop the top marginal income tax rate from 6.9% to 5.9% and would save taxpayers $97 million per year once fully implemented. Senators Bill Sample and Terry Rice were the only republicans who did not vote for the measure. Larry Teague was the only Democrat to vote for the measure.
Senate Democrats spoke boldly against the bill. A motion by Sen. Will Bond (D – Little Rock) to gut the bill was easily defeated right before the bill was presented. Bill sponsor Jonathan Dismang (R – Beebe) then presented the bill noting a priority to provide a better tax environment in the region. Arkansas has the highest top rate among all bordering states, with Texas and Tennessee having no individual income tax.
Sen. Linda Chesterfield (D – Pine Bluff) questioned Dismang on whether the tax task force had recommended this bill. Dismang admitted it was more of a hybrid from the tax task force’s recommendation. The tax task force had recommended a version of what was called the 2-4-5.9 plan that would have reduce rates, increased the standard deduction, and saved taxpayers around $192 million once fully phased in. The task force met for over 18 months ahead of the legislative session.
Chesterfield then spoke against the bill. She expressed concern for reducing revenue and that by “reducing our income, we reduce our standard of living” for government. Chesterfield spoke last week on the senate floor sharing her position against limiting government.
Bond then rose again to attack the income tax cut plan. He advocated keeping the tax money to pay for increased salaries for police and teachers. He mentioned several stats at which Arkansas ranks at or near the bottom.
Sen. Jason Rapert (R – Conway) then spoke forthe bill, saying he had not planned to but remembered that there was live streaming for everyone to see the proceedings. He stressed that Republicans had been working hard the past few years to overcome the low rankings Bond mentioned. Rapert claimed the low scores were brought on by “138 years of Democrat control” in Arkansas.
These comments prompted Sen. Joyce Elliot (D – Little Rock) to denounce Rapert’s partisanship. She claimed her being a Democrat had nothing to do with why she didn’t support the bill and stressed it was not the bill the tax task force had approved.
Sen. Keith Ingram (D – West Memphis) discussed how a competing fiscal impact estimate showed that taxpayers would be able to keep more of their own money ($157 million) than what the state government estimate showed ($97 million).
This led President Pro Tem Senator Jim Hendren (R – Gravette) to comment that the official fiscal impact numbers lined up with how estimates were made for previous tax cuts. He pointed out how the competing estimate was from a left-leaning group. He stressed how the proposal was “one of the smallest” revenue cuts but could have “one of the biggest impacts” in attracting businesses to Arkansas.
The vote by which the bill failed was expunged, allowing the legislation to be run again in the future. The legislation requires a three-fourths majority (27 votes) due to constitutional restraints on income tax rate changes.
Full Vote Record: