I announced the details of my 5.9 Tax Cut at a news conference this week, and a few hours later, Senator Jonathan Dismang filed Senate Bill 211, the first step in making the tax cut law. Representative Joe Jett is the lead sponsor on the House side.
This is the third phase of my three-part plan to reform Arkansas’s tax code. In 2015 and in 2017, I signed into law the two biggest income tax cuts in the state’s history.
This is important for several reasons. The most important reason is to allow Arkansans to keep more of the money we earn. This also is necessary because our tax rate is higher than many of our neighboring states. The state tax rate is one of the top considerations for a CEO who is looking to expand to another state.
Legislators, members of my staff, and financial experts at the Department of Finance and Administration spent uncounted hours over several weeks to produce this plan.
When a state cuts taxes, of course, that means that our economic growth must continue to absorb these tax cuts. I was determined that our tax cuts would not require us to spend less money on major programs such as prisons, public schools or the state’s health care system.
The idea behind this is simple. We don’t spend more money than we take in. We must carefully examine every department and agency to ensure we are spending our money wisely. My transformation plan to reduce the size of government is part of the big picture as well. As we manage government, we control government spending, which allows us to reduce taxes because our economy continues to grow.
My plan requires only two years to hit 5.9 percent. In 2020, the rate will drop to 6.6 percent, and in 2021, we will make the goal of dropping it to 5.9 percent. The cost to the state is $97 million, which is $100 million less than the cost of previous plans. And the plan will significantly flatten and simplify the state’s top income tax bracket.
I want to emphasize that under this plan, no one will pay more in income taxes. This plan, combined with the next reduction in the grocery tax, will allow more Arkansans to keep even more of their paycheck.
Since I took office in 2015, 90 percent of all Arkansas taxpayers have received a tax cut. Once we implement this tax cut, 100 percent of all Arkansas taxpayers will have benefited from a tax cut.
I am grateful for the work of the members of the legislative task force who helped produce this plan. I eagerly await the bill’s arrival on my desk so that I can sign it into law.