Arkansas Governor Reworks Plan To Cut Top Income Tax Rate

LITTLE ROCK, Ark. (AP) — Arkansas' Republican governor on Wednesday said he's reworked his proposal to cut the state's top income tax rate, unveiling a $97 million plan that Senate leaders say they expect to take up next week.

Gov. Asa Hutchinson said his latest proposal would cut the state's top marginal income tax rate from 6.9 percent to 5.9 percent over the next two years. Hutchinson had initially backed a proposal that would have cost the state $192 million once fully implemented.

"We have come up with the 5.9 plan that works better for the budget (and) allows us to get to the 5.9 percent in two years instead of four years," Hutchinson at a news conference with legislative leaders.

Hutchinson had reworked his proposal after finance officials said it would have raised income taxes for some Arkansas residents. Hutchinson says that under the latest proposal no taxpayers would see a net increase in taxes paid. Finance officials said taxpayers with $38,200 or more in taxable income would receive a cut.

Unlike the previous proposal, the measure no longer increases the standard deduction for taxpayers and no longer tries to combine the state's three tax tables into one. Hutchinson's last plan had called for increasing the deductions to offset any tax increases some taxpayers would see.

Hutchinson was re-elected in November after campaigning on a promise to push for more tax cuts. Lawmakers in his first term backed Hutchinson's push for tax cuts for low- and middle-income earners.

The proposal will still need the support of three-fourths of the predominantly Republican House and Senate since it does raise some tax rates. The legislation detailing Hutchinson's revised proposal was co-sponsored by the House Speaker and Senate president, as well as the chairman of both chamber's tax and revenue committees.

The plan still faces resistance from Democrats and advocacy groups who have said they're worried about the impact the cut will have on state services, and who have been pushing for relief aimed more at lower-income taxpayers.

"I still have a concern about who is being impacted and ... what kind of services are going to be underfunded to make sure the richest Arkansans are getting a tax break," said House Minority Leader Charles Blake, a Democrat from Little Rock.

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