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Arkansas has a serious employer tax problem, a problem that costs our state jobs, opportunity and economic growth. The good news is this: The problem is one we can fix. Here are the facts:
The Tax Foundation’s latest rankings show Arkansas as the 31st most favorable tax climate for business in its State Business Tax Climate Index.
By comparison, Texas is ranked as the ninth most favorable, with Tennessee ranked 14th, Missouri 15th and Mississippi 17th.
The hard truth is that our state, through a tax code that punishes business, has effectively put a gigantic "Not Wanted" sign up at our borders to companies looking to grow or relocate their businesses.
For homegrown Razorback employers, our state tax bill might as well come with instructions for how to rent a moving van to go to Texas, the disparity between the business tax environments is so large.
The answer is for our state legislators to first stop their almost irresistible impulse to raise taxes and then implement wholesale, systemic change in the state business tax structure, rather than defaulting to the standard state economic development tactic of providing company-specific incentives to attract new business.
All of Arkansas’ job creators need to have their government-imposed costs of doing business lowered so they can use their money to expand, build and achieve their dreams. That helps create prosperity we can all share in, if we so choose. Our family members will not be forced to leave their home state for a nice career.
When 30 other states provide a better tax environment than we do, is it any surprise that Arkansas’ economic growth has remained mired in the middle when compared with the rest of the United States?
At some point our political leaders need to come to grips with the fact that people don’t start and build a business with the goal of financing government. They start a business to make money for themselves, and when taxes get too high, many of those businesspeople leave.
Jobs are created when people pursue their dreams, risk their time and money to achieve them, and bring others along to help make them happen.
The more money the state takes out of the pockets of job creators, the fewer people they can hire to sustain and expand their businesses.
Arkansas’ high tax rate doesn’t just make our state undesirable for employers; it increases costs to consumers. When a local business has to pay more to the state, it simply passes that along to you and me, increasing our everyday cost of living.
And this is disastrous for businesses that compete across state lines and internationally. Most consumers make purchasing decisions based, at least partially, on price. When it costs Arkansas companies more than their competitors to produce the same product due to the state tax structure, they have to make it up somewhere. This means lower wages and benefits for employees, directly hurting Arkansas’ workers.
It is time for our state legislators to take the Arkansas tax handicap seriously and take action immediately to lower corporate taxes across the board. No number of sweetheart deals to attract an individual business can be compared to the impact of lowering the tax burden on every business in the state.
Thousands of companies are considering the relocation of their businesses. California companies are exiting in droves and need a new tax-friendly home. Right now, we are not very friendly tax-wise. By becoming tax friendly, we can increase the prosperity of our families, our businesses and our state government.
In the end, the state will benefit as jobs are created, and our beautiful state can compete with our neighbors in the worldwide race to attract relocating businesses.
Failure to act will keep Arkansas out of consideration for many national and international corporations’ location decisions. And that is bad for all of us.
That’s why I, along with American for Limited Government, am building a coalition of the willing to educate the public and build strong support for efforts our elected officials can also support. This problem cannot be solved without the backing of Arkansas businesses and citizens alike.
Contact me to let me know you want to be part of the solution. With many people doing a little, mainly in the way of education, we can become competitive with Texas and enjoy the prosperity we all deserve by taking action now.
(Ron Bartels is the chairman of the Arkansas Conservative Party and an adviser to Americans for Limited Government. He can be reached by phone at (501) 205-2686.)
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