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Arkansas PoliticsReadTaxes/Government Spending

How To Boil A Frog (or a taxpayer)

The old tale goes…

You can’t just put a frog into boiling water because the frog will just jump out, but if you put the frog in cold water and continue to turn up the temperature one degree at a time and the frog won’t realize it. Eventually the water is boiling and the frog is cooked without ever realizing what is happening.

That tale probably doesn’t work for frogs, but the same strategy has proven to work on Arkansas taxpayers.  Just consider how the Arkansas sales tax became one of the highest in the nation.

Arkansas’ first sales tax was a temporary 2% sales tax passed in 1935. The tax was sold as temporary but in 1937 when it was about to expire the legislature extended it. You will hear this line again, “We are not imposing a tax, we are just continuing it.

The current sales tax was passed in 1941 and was still at the rate of 2%. It increased to 3% in 1957; 4% in 1983; 4.5% in 1991; 4.626% in 1997; 5.126% in 2001; 6% in 2003; and 6.5% in 2012.[i]

ONE OF THE HIGHEST RATES IN THE NATION

Working one degree at a time, the politicians have increased the Arkansas state sales tax to 6.5% so it is now the ninth highest rate in the nation.

It gets even worse. The legislature authorized cities and counties to also impose sales taxes. The cities and counties have been adding to your sales tax burden one degree at a time and now the average local sales tax is 2.93%.

When the average local sales tax is combined with the state sales tax that produces a combined rated of 9.43%. Arkansas’ combined sales tax rate is the third highest combined rate in the nation.

What is the lowest state sales tax rate in the nation? Zero!

(The comparison of Arkansas rates to other states is from  State and Local Sales Tax Rates, 2019 by the Tax Foundation.)

TEMPORARY TO PERMANENT TAX

The last sales tax increase of ½% was a temporary tax to pay off a highway bond issue and it is scheduled to expire in 2023. But just like in 1937, now that the legislature is getting the money from a temporary tax, they don’t want to let it go, saying, “We are not imposing a tax, we are just continuing it.

The proposed new ½ percent sales tax will be on your November ballot. If passed the ½% sales tax is to be collected once the temporary tax expires in 2023. The politicians want to make sure you will never be able to end the new tax and are putting it in the Arkansas Constitution where it will be nearly impossible to repeal.

Want to see if your legislators voted for this new tax which will be on your November ballot? Here are links to the Senate votes and the House votes.

ONE DEGREE, ONE DEGREE, ONE DEGREE … MAY NOT WORK ON FROGS BUT ARKANSAS POLITICIANS ARE USING IT ON YOU.

 


[i] 1935 – Arkansas first imposed a sales tax in 1935. The rate was 2%. But this tax was TEMPORARY and was scheduled to expire on July 1, 1937.

1937 – Don’t trust temporary taxes! Before the temporary tax expired it was continued.  Can’t you just hear the politicians say, “We are not raising your taxes. We are just continuing the tax.”

1941 – Our current sales tax structure was passed in 1941 and the rate was still 2%

1957 – The rate was increased to 3%

1983 – The rate was increased to 4%

1991-  The rate was increased to 4.5% (increased the sales tax by 1/2 percent)

1997 – The rate was increased to 4.626%. This increase of 1/8th percent (0.125%) was approved as Amendment 75 to the Arkansas Constitution and was sold as a “Conservation Tax.” Most of the revenues from the additional tax go to Arkansas Game and Fish and Parks and Tourism. Heritage and Keep Arkansas Beautiful Funds receive smaller amounts.

2001 – The rate was increased to 5.126%. The additional ½ percent was added as s trade off for a $300 homestead property tax credit. The sales tax increase was also conditioned on voter ratification of Constitutional Amendment 79 related to property tax at the November 2000 general election.

2003 – The rate was increased to 6%. Act 107, Second Extraordinary Session of 2003 increased the sales and use tax rate 7/8 percent effective March 1, 2004. The additional tax shall be special revenue and credited to the Educational Adequacy Fund.

2012 – The rate was temporarily increased to 6.5%. The additional ½% sales tax was triggered by voter approval of highway bonds. The bonds are scheduled to be paid off in 2023.

3 Comments

  1. I am so sick of all the taxes. My goodness what do the think we’re going to do? Then they rise minimum wage Then very thing else goes up. What about the people on social security? My parents can’t make it now

  2. The public is quite aware of this but the politicians know we are aware but they simply don’t care and instead want to continue their slushpot. ONCE A TAX IS INSTITUTED IT BECOMES IMPOSSIBLE TO GET RID OF BECAUSE THEY ARE UNWILLING TO BE ECONOMICAL WITH OUT PRECIOUS TAX MONEY. WE DESERVE A VOICE BUT OUR LEADERS GO OUT OF THEIR WAY TO MAKE SURE THAT WE NEVER AFFECT ANY OF THE LEGISLATURES APPROPRIATIONS AND INSTEAD YOU SEE THE RESULT IN THE GRAFT BY MANY ELECTED OFFICIALS USING OUR MONEY FOR THEIR OWN NEFARIOUS NEEDS.

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