Legislative Task Force to Overhaul Arkansas Tax System

Local News

LITTLE ROCK, Ark. – Sixteen lawmakers are putting the state’s tax system under the microscope.

The Arkansas Tax Reform and Relief Task Force, part of the governor’s new law that established a $50 million income tax cut for low-income taxpayers, met for the first time Monday morning. 

Sen. Jim Hendren, R-Gravette, and Rep. Lane Jean, R-Magnolia, will serve as co-chairs.

According to the legislation, the task force should modernize and simplify the tax code, make Arkansas tax laws competitive with other states to attract business, create jobs, ensure fairness to all individuals and entities impacted by tax laws, and ultimately recommend new legislation for the 2019 session. 

“I don’t know that there’s actually been this comprehensive of a look with a final goal of changing the law ever,” said Sen. Hendren. “Right now, it’s very complicated as our CPA [Rep. Bob Johnson, D-Jacksonville] on the task force said, where you have to hire an accountant  to do your state income taxes, where other states don’t even have income taxes.” 

Sen. Hendren promised to tackle the tax code more than a Blue Ribbon panel did about a decade ago. 

“They really did nothing except study it,” he said. “If we do that, I will not be happy.”

Lawmakers expect exemptions to be one of the main targets of debate. 

“I think many of them will continue,” Sen. Hendren said. “Those that cannot justify their existence or are clearly out of the mainstream with regard to other states, I think you’re going to see some pressure put on them to potentially be removed so we can lower tax rates for everybody.”

The legislation requires the task force to submit a preliminary report Dec. 1. The final report is due Sept. 1, 2018 ahead of the 2019 legislative session. 

During that time, lawmakers will gather public input from state agencies to the everyday taxpayer at their monthly meetings. 

Organizations like Arkansas Advocates for Children and Families attended Monday’s meeting and plan to be at the rest. 

“We have a lot of important programs that are running on shoestring budgets,” said Ellie Wheeler, the advocacy group’s senior policy analyst. 

Wheeler knows firsthand the tax structure determines an organization’s budget which determines how its programs survive.  

“We’d love to see a restructuring of the tax code that keeps low-income kids and families in mind,” Wheeler said. 

Arkansans who are in the bottom 20 percent of earners currently pay about twice as much in state and local taxes than those in the top one percent, about 12 cents and six cents on the dollar, respectively. 

“That’s a definite fairness issue,” Wheeler said. “It’s an imbalance that we have in Arkansas that needs to be addressed.”

Wheeler calls on the task force to reevaluate tax code that affects everything from child welfare to education to health care.

“There are a lot of issues with regard to competitiveness, fairness and simplification,” Sen. Hendren said. “We’re going to look at every one of them. Most of us here have a lot to learn. We just need to be willing to accept that, and that’s the purpose of the task force is to have people come and explain all of these things to us and do a top-to-bottom review.” 

“For people who aren’t normally engaged in tax policy, I would really encourage them to pay attention to this task force,” Wheeler said. “Because if they do make some major changes, it’s going to have ripple effects, good or bad, across the state, for everyone in Arkansas.” 

The task force will meet next on June 7, when lawmakers plan to discuss the need for consultants after hearing a breakdown of the state’s tax system from the Bureau of Legislative Research.

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