The next legislative session is just around the corner, and we already know there will be efforts to make major cuts to personal income taxes in Arkansas. Are those big tax cut ideas good for kids and families in our state? Not if you ask economic experts, and certainly not if you look at what major personal income tax cuts have done to public schools in Kansas.
You don’t need a crystal ball to see that another round of major tax cuts will hurt programs that help kids succeed. So far there have been $242 million in cuts over the last two legislative sessions. Arkansas is required to balance our budget every year, and without a miraculous economic boon, there just won’t be room left to make those cuts. Since we can’t put anything on credit, another $100 million or so in tax cuts has to come out of the budgets of other state services. The likely victims include community essentials like higher education, libraries, and after-school and summer programs.
Most tax cut plans also heavily favor higher income earners. The bottom 20 percent of workers in Arkansas were completely left out of recent tax cuts, and middle class earners saved only about $40 a year. If we are going to cut taxes, we should do it the smart, less expensive way with an Earned Income Tax Credit (EITC). Unlike broad tax cuts, EITCs are shown to strengthen local economies and help low-income working families get and keep jobs.
Check out our newest tax cut infographic to find out how more tax cuts will really affect the state and all Arkansans.