In State of the State, Hutchinson Seeks Committee to Study Tax Reform

by Arkansas Business Staff  on Tuesday, Jan. 10, 2017 11:24 am  

Gov. Asa Hutchinson is asking legislators to form a blue ribbon commission to recommend further changes to the state's tax code.

Arkansas Gov. Asa Hutchinson is asking lawmakers to form a task force to recommend further changes to the state's tax code, calling for deeper reforms as he faces divisions with fellow Republicans over dueling tax cut plans.

Hutchinson called on lawmakers Tuesday to enact his $50 million tax cut for more than 600,000 people making less than $21,000 a year. The Republican governor has faced resistance from some lawmakers who say they want to see deeper cuts that will take effect sooner.

Hutchinson said the task force would focus on further reducing income tax rates in Arkansas to make the state more competitive. He said the plan fits his goal of reducing the "overall high income tax rate" for all Arkansans.

"The priority goals are fairness, competition, simplification and economic growth," Hutchinson said. "The focus of the plan is to reduce the high income tax rates in Arkansas. We need to have a plan to reduce the tax rate over time to a more competitive level."

Hutchinson's remarks came in his "State of the State" address to a joint session of the Legislature, which convened Monday. In his speech, the governor noted the 50th anniversary of Republican Winthrop Rockefeller's inauguration and sought to strike a tone of optimism about what lawmakers can do together.

"Today we have our own moment in history, and we can only be worthy of this moment if we work together," Hutchinson said.

More: Read the full transcript of the governor's speech here.

At least two GOP lawmakers who had been pushing for deeper tax cuts said they're dropping those efforts during this year's session after Hutchinson's proposal to pursue more tax code changes.

"There are still some unanswered questions, but I'm optimistic that we're going to be looking at a major overhaul of our tax system in two years," said Republican Sen. Bart Hester, who had been calling for a $105 million income tax cut. "If that's the direction we're headed, I'm happy to get on board right now."

Republican Rep. Charlie Collins, who had suggested halting a planned grocery tax cut to pay for further income tax reductions, also said he backed the governor's plan.

"We're going to set the task force up so it's actually recommending things before the 2018 election cycle so this is stuff people are going to have to own," Collins said.

The top Democrat in the House said he was encouraged by Hutchinson calling for the panel to look at tax changes rather than call for cuts that could hurt vital services. Republicans hold a majority in both chambers of the Legislature, but Democrats hold half the seats on the House committee that's expected to take up any tax cut bills.



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