Earlier this week, Governor Hutchinson proposed increasing the homestead property tax credit from $350 to $375. The problem? It’s a poorly designed tax cut that WON’T help most low-income households and the many middle-income households who RENT and need tax relief the most. It also comes on the heels of his proposed personal income tax cut for upper-income taxpayers (cost of $180 million) to be considered in 2019. It’s another tax cut Arkansas can’t afford (an $18 million hit to the state budget). We also don’t need to give wealthy taxpayers who own million-dollar homes another $25 in property tax relief.
Instead of increasing the property tax credit, it should be redesigned with an income limit–let’s target it to low- and middle-income taxpayers–and extended to include renters so they receive relief. Or, better yet, Arkansas should create a state earned income tax credit (EITC) which would be the most effective and efficient way to target tax relief to working families who need it the most. By the way, Nearly 80 percent of Arkansas voters support the creation of an EITC.