Mike Ross Vows to Cut Income Taxes If Elected Governor

LITTLE ROCK — Democratic gubernatorial hopeful Mike Ross unveiled a nearly $575 million proposal Wednesday to gradually cut Arkansas' income taxes, setting up a monthslong debate with his chief Republican rival for the state's top office over their competing tax cut plans.

Ross, a former congressman and the only Democratic candidate for governor, stopped short of offering a specific timeline for his tax cut proposal and said he would push for the reductions as the state could afford the loss in revenue. Ross said his proposal would adjust the state's income tax brackets by making retroactive a 1997 law that tied the brackets to inflation.

Under Ross' proposal, the state's top income bracket — currently a 7 percent rate that starts at $34,000 — would instead apply at incomes of $75,100 and above. The top rate is already being lowered to 6.9 percent starting in 2015 under a tax cut package approved last year. Ross' proposal would also lower the tax rate for nearly all income under $75,100.

"Our current tax code unfairly punishes middle class Arkansas families and must be changed," Ross said at a news conference to announce the plans.

The proposal comes nearly three months after Republican gubernatorial hopeful Asa Hutchinson detailed his proposal to also gradually cut income taxes, starting with a $100 million cut for middle class workers in his first year if elected. Hutchinson is one of three Republicans seeking the GOP gubernatorial nomination.

Ross, who had previously criticized Hutchinson's tax cut plan as lacking specifics, declined to offer a timeline for his tax cut proposal, or how much he would initially cut. Ross said those decisions must be based on state revenue growth and on Wednesday derided Hutchinson's plan as too costly for the state.

"Unlike my opponents, I will not bankrupt this state to win an election or make a campaign promise I cannot keep," Ross said.

Hutchinson, who is running against Little Rock businessman Curtis Coleman and state Rep. Debra Hobbs for the GOP nomination in the May 20 primary, called Ross' plan vague.

"Unfortunately his plan is just not serious. It has no specifics or time-frame for action," Hutchinson said in a statement released by his campaign.

Ross and Hutchinson are both mimicking the tax cut strategy of Democratic Gov. Mike Beebe, who defeated Hutchinson in the 2006 election by vowing to gradually cut the state's sales taxes on groceries. Beebe, who is unable to seek re-election because of term limits, successfully pushed for cutting the tax from 6 percent when he took office in 2007 to 1.5 percent now. Beebe has endorsed Ross and appeared in commercials for him.

"There was no time limit or timeframe put on removing the sales tax on groceries, but we've done almost all of it in eight years," Ross said. "My goal, over the eight years I would be governor, would be to hopefully fully implement or come close to implementing this plan, but it will depend on revenue growth."

In addition to the income tax plan, Ross last year proposed gradually reducing the tax that Arkansas manufacturers pay for repairing or partly replacing machinery. That cut is estimated to cost the state $40 million a year when fully implemented.

The competing plans come a year after the Republican-controlled Legislature approved a tax cut package that will eventually cost the state more than $140 million a year. The grab-bag of reductions includes cuts on the taxes applied to capital gains, income and manufacturers' utility bills. Beebe signed the cuts into law, but warned the eventual cost of the reductions could be a problem later.

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