LITTLE ROCK, Ark. (AP) — Arkansas officials are proposing income tax changes estimated to reduce state revenue by nearly $192 million a year.
The Arkansas Department of Finance and Administration unveiled the proposed tax relief package Wednesday to the Legislative Tax Reform and Relief Task Force, the AP reports.
The proposal this week seeks to simplify rates and tax brackets by turning Arkansas’ three individual income tax tables into a single table. The top rate would also gradually be cut from 6.9 percent to 5.9 percent, making a total reduced revenue of $191.7 million a year.
“When you look at this thing fully phased in at 5.9 percent, it seems like an extremely effective way to get $200 million in income tax relief, where nobody pays more taxes, everybody sees some benefits,” said Republican Rep. Charlie Collins. “It is a very simple (income tax) code. There are a few brackets, and it is well-structured for future tax relief.”
Lawmakers enacted Gov. Asa Hutchinson’s plans in 2015 and 2017 to cut the income tax rate for individuals with taxable incomes below $75,000 a year. Those cuts are projected to reduce the state’s tax revenue by $150 million a year.
The previous cuts positively affected about 90 percent of the state’s taxpayers and have the opportunity to continue to lessen residents’ tax burden, Hutchinson said.
“Over the last several months, legislators expressed their views and provided significant guidance that played a key role in the development of this proposal,” wrote Gov. Asa Hutchinson. “I look forward to working closely with the Legislature and the DF&A in order to fine tune this tax relief and reform package to be presented next January in bill form.”