Tax Debate (Jeff Hankins Publisher's Note)

by Jeff Hankins  on Monday, Feb. 28, 2011 12:00 am  

The sprint to cut taxes in Arkansas by the Arkansas General Assembly is an impressive display of determination, particularly by emboldened Republicans who wasted no time capitalizing on their success - even mandate - in the November election.

State Rep. David Sanders, R-Little Rock, my former colleague on AETN's "Arkansas Week," called to declare Arkansas Business simply wants the status quo because an editorial last week didn't rally behind all the tax cut proposals. I told him I was delighted he was engaging in and calling about something other than state mottoes and sports agents.

To the contrary, our editorial said: "The day will come when this state can and should consider broad changes to its tax structure. But that day is not today ... ."

The primary disagreement is over timing. I agree with the editorial in that I don't think the state should be looking for new ways to spend money, nor should we be making major tax reductions - or increases - when this state's finances remain so unpredictable.

What I'm seeing is a variety of tax cut proposals without a tax strategy for the state. The single biggest deterrent to job recruitment in this state isn't the sales tax on manufacturing or the capital gains tax, but the state income tax, which few of our neighbors have. We're among the top 10 states in the U.S. for tax revenue as a percentage of personal income, and that's because of the combined impact of income, sales and property taxes.

All the rage is cutting taxes to help a small percentage of businesses in the state, yet every business is going to take a hit from increased taxes to replenish the broke unemployment fund. How does that make sense for a pro-business and pro-growth environment?

I'm confident supporters of the tax cuts will say the current efforts are just a start and they will ultimately push for more. A strategic, coordinated effort when we know the economy, particularly the job market, has fully stabilized could be far more effective.

Likewise, we should expect to see the Republicans stand up against increased highway and severance taxes, as well as pesky fee increases. The "needs" identified by the highway supporters ultimately may be no greater than other "needs" of government.

* * *

I have participated in 17 of our 23 Arkansas Business of the Year awards events, and none was more memorable than this year's event.

The winners' remarks put the crowd on an emotional roller coaster.

Joel Rush, an entrepreneur who founded The Learning Institute in Hot Springs, was overwhelmed by the recognition received for putting his heart and soul into a business that's making a difference for educators across Arkansas.

Laura Rhea, a 26-year veteran of the Arkansas Rice Depot and its CEO, described in her Nonprofit Organization of the Year acceptance remarks how her daughter, Allison, had died a year ago to the day. This is a woman who has experienced poverty herself, been confined to a wheelchair for the past nine years and lost a daughter who was also a key leader in the organization. But her organization delivered 8 million pounds of food to hungry Arkansans last year, and that's what drives her every day.

And then there was Arkansas Business Executive of the Year Jim Gaston, who has invested his life in building not only a world-class trout fishing destination known as Gaston's White River Resort, but also the state tourism industry in general. His rural Arkansas humor reminded us that it takes unique individuals and not just unique business models to make companies successful.

* * *

I erroneously said in my last column that Sheffield Nelson never would have advocated an increase in the state's severance tax while he was CEO of Arkansas Louisiana Gas Co. In fact, he did during the 1980s.

Nelson disputes the Stephens revenge theory, while others tell me I was dead-on correct. His efforts to persuade the Legislature to increase the tax were (a.) during his tenure with Arkla, (b.) after his falling-out with Witt Stephens and (c.) during a time when Nelson was relatively cozy with Gov. Bill Clinton, who ultimately protected both Nelson and Stephens from an increase.

You make the call on motivations or lack thereof.

 Jeff Hankins can be reached via e-mail at, followed on Twitter @JeffHankins and connected with at and




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