We oppose cutting capital gains taxes

If there’s room for tax relief in the state budget next year, it should go directly into the hands of working families who’ll spend it locally on the housing, food and transportation that helps them keep our economy working.

That’s why we oppose proposals to cut the capital gains tax. This week we’re analyzing which top tiers of wealthy Arkansans would be in a position to reap a bounty from cutting the capital gains tax. We hope to have that ready in a few days.

We oppose proposals to cut the capital gains tax or corporate income taxes because our research shows they don’t provide tax relief that directly benefits working Arkansas families. Survey after survey of business leaders also show that there’s a lot more to a vibrant state economy than low taxes. A healthy, skilled workforce and high quality of life weigh heavily in relocation and expansion decisions.

With revenues so tight it’s important to make sure we have enough income to pay for the systems that are helping working families stay afloat through the recession. At the top of that list are Medicaid and ARKids First, child care assistance and high-quality preschool programs.

If there is room for tax relief, we think it should target the working families who have jobs but are barely hanging on. We need to fix an error that prevents low-income single parents with more than two children from taking advantage of tax breaks passed in 2007.

Also, a state Earned Income Tax Credit would be an effective, targeted tax break. It would be based on the federal EITC, proven to be one of the most successful tools to help relieve poverty.

We’re a lot luckier than other states with much larger budget problems, but we also have a lot more ground to make up to be competitive in the business and education worlds. A flat budget won’t meet the growing needs of Arkansans who’ve lost jobs and homes in the past few years.

A balanced approach to the budget that includes cuts and new revenue would help Arkansas meet those needs now.