Ah, the good old days. Take, for example, the long-ago year of 1999. Gather around, kids, and we'll tell you about the days when the Internet was just a baby. Back then, "social media" was the paper's personal ads section. Nobody'd heard of Facebook yet. Most of us were just hoping that our PCs wouldn't melt down a minute after midnight, Jan. 1, 2000. We called it Y2K.
As the infant Internet began gobbling up not only our time but our dollars, politicians at all levels of government wondered how to make a buck off it. How tax the thing and pave the streets with the profits? At the time, some of us argued that this new-fangled Internet thing shouldn't be taxed much, if at all. Why kill it in the crib?
It was a cute debate. And largely the various governments of the several states stayed hands off as dot-coms and apps and startups grew.
But now this Internet is big--and still growing. It's shaving, dating and eating us out of house and home. And these days, it is plenty old enough to pay its way.
On Thursday, the U.S. Supreme Court ruled that Internet retailers can be required to collect sales taxes, even in states where they have no physical presence. This could be a turning point for many businesses, and we don't mean just Amazon.
Your local retailers--brick-and-mortar stores, the ones that have always paid taxes--have long complained that their products are more expensive, and at a disadvantage, because many online companies don't collect sales taxes. And state governments have argued this has meant tens of billions of dollars in lost tax revenues every year. The National Retail Federation called Thursday's ruling a "major victory." It was for anybody who values fairness--and the retailer down the street that might not just serve your interests but employ your neighbors.
When it comes to retail shopping, fair is fair. And now there's a United States Supreme Court ruling saying just that.
It might take a while for all this to filter down. The state of Arkansas shouldn't expect a windfall of tax revenue this year. Some experts say the feds should figure out some sort of legislation to guide these matters, so the several states aren't interpreting the ruling 50 different ways.
But here's a long-term suggestion for Arkansas and Arkansas' lawmakers: What the tax code should do in this state is promote economic growth, and make the Natural State more attractive to new residents and business than, say, Texas or Tennessee or Missouri. (We're already more attractive than Louisiana, thank you.)
This state has tough competition with those border states that don't have income taxes. Reducing the Arkansas income tax for everyone by a marginal amount is going to have only marginal results. Arkansas needs something bolder, something unique, something that really spurs economic growth.
One idea is to get competitive with our neighbors like Texas and Tennessee. But Arkansas can't afford to eliminate the state income tax unless the idea is phased in over many years. It simply is too great a source of the state's tax revenues.
Another, perhaps better, idea is to grant a moratorium on any income taxes for five years to any new state resident. Those moving to Arkansas would not pay any state income taxes until after their fifth year in the state. This would put Arkansas on a very competitive basis with border states for new residents. The mild climate and four seasons--and lack of hurricanes--should be highly attractive to retirees, too. Most people who come to Arkansas and live here for five years will love it, and it's highly doubtful they'll move again just because they'll eventually have to pay income taxes.
Since these people are not living or paying taxes here now, granting this exemption shouldn't cost Arkansas anything. And not to stereotype too much, but most retirees would move here with their savings accounts, and open new deposits in local banks. That, in turn, would stimulate even more economic growth.
A key to more economic growth in Arkansas is more population growth. If there are other states offering such a deal to new residents, we haven't heard of them. Arkansas would have a unique program to try to boost economic development for the entire state, benefiting low income, middle income and, in fact, all Arkansans.
What we need more of is bold action on our own--not just Supreme Court rulings--to help move Arkansas forward. To make Arkansas stand out. To make national headlines, but in a good way.
A good start would be an income tax moratorium for new residents for five years. Why not give it a try? Are lawmakers listening?
Editorial on 06/22/2018