Gov. Asa Hutchinson’s legislative opening speech had little to offer with one exception: His “free beer tomorrow” gambit.
To applause, he announced his desire to cut the top marginal income tax rate — in 2019 from 6.9 to 6 percent. He said it would be a $180 million tax cut, the biggest ever, something approaching a 3 percent cut in state revenues.
UPDATE: Contrary to what I wrote previously, a 2017 law lifted the start of the top income tax bracket from $35,000 to $75,000 ($150,000 for married people filing separately on
It is easy to promise tax cuts when you won’t have to deliver until after your next election.
Also worth noting: this tax cut would be an enormous windfall to a tiny handful of the very rich while giving nothing to the poor (Asa will say the tiny scraps they got from earlier cuts were enough).
For example: In 2013, the most recent year I can get from DFA, about 670 returns reported taxable income of $1 million or more. They paid cumulative state income taxes of about $170 million. Reduce the top tax rate to 6 percent on those earnings and you’re talking a savings of $22 million for those 670 people, or about $32,000 each. Less than 1 percent of taxpayers would get 12 percent of the tax cut.
Something like $100 million in tax cuts would go to those making more than $100,000 — though they account for only about 39,000 of more than 1 million tax returns. Middle income? Not exactly.