Dear Legislator,
On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, I write to strongly urge your support for SB 211, the “Tax Competitiveness and Relief Act of 2019.” This important legislation would cut taxes for many hardworking Arkansas families and businesses by nearly $100 million over the coming years. Allowing taxpayers to keep more of what they earn is the best thing policymakers can do to spur economic growth across Arkansas. On the heels of a strong bipartisan Senate vote in favor of SB 211, we respectfully urge you to follow their lead and swiftly pass this commonsense legislation.
The state Legislature should be commended for making great strides over recent years to produce a state tax code that is fairer and more conducive to economic growth. Since 2015, this body, along with the Governor, have enacted two of the largest tax cuts in state history, a $150 million middle class tax cut in 2015 and a $50 million tax cut for lower-income taxpayers in 2017. Now, once again you have the opportunity to build on this progress by passing another sizeable income tax cut that will be a boon for your constituents.
As you are aware, Arkansas’s tax code is unique with three different rate schedules depending on a filer’s income. SB 211 would simplify the third rate schedule by consolidating the number of tax brackets from six down to three, while also reducing the top marginal rate from 6.9 percent to 5.9 percent by 2021. Middle class taxpayers in the middle schedule will also see a reduction in their taxes as that top rate slightly declines to 5.9 percent, down from 6 percent. Importantly, small businesses that file under the individual tax rate as an S-corporation will see great benefits under this system. Freeing up more capital for small businesses will enable them to invest in new equipment, raise wages, hire new workers, or further expand their business.
Slashing the top effective tax rate to 5.9 percent will put Arkansas more in line with other states in the region. Instead of holding the mantle as the highest rate among its neighbors, adopting this change will now be below Louisiana (6 percent) and match Missouri’s top rate. While these tax cuts are essential to improving Arkansas’s economy, we still encourage additional reforms to the tax structure. Specifically, we recommend replacing Arkansas’s complex three schedule system with a simple, flat tax rate levied on all filers, regardless of income, and increasing the standard deduction.
By implementing another round of impressive tax cuts, Arkansans would be given another dose of much-deserved financial relief. A fairer tax code for Arkansas taxpayers is well within reach of becoming law, and the time is now to pass one of the largest tax cut proposals in state history. We strongly urge you to vote “YES” on SB 211 when it comes before this chamber.
Sincerely,
Thomas Aiello
Policy and Government Affairs Associate