We see a lot of people struggling with the costs of rent, of getting to work, of taking care of their kids, and the Governor and state Legislature have a responsibility to help make sure Arkansas’s children thrive. But the tax cut bills passed this week won’t do that.
The previously passed tax cuts, which mainly benefit the wealthy, were designed to be phased in with a trigger clause for a reason. That reason is the likelihood of a recession in the next couple of years and wanting to make sure our state can continue to build and fix roads, support our public schools, and take care of the kids in our foster system.
Making the tax cuts retroactive and enacting new ones will cost another $750 million and eliminates this safeguard, putting these kinds of vital services at risk if we do have a recession. Even worse, there’s a chance the federal government could claw back hundreds of millions of dollars in ARP funds. That would further limit our ability to invest in the services children and families need.
The temporary $150 inflation credit is nonrefundable, which means it doesn’t do much to help many Arkansans with low-paying jobs and on fixed incomes. Most Arkansans pay more in sales and excise taxes than state income taxes. The only way to help struggling Arkansans deal with higher prices using our income tax system is by enacting a fully refundable credit, ideally something like a state-level EITC.