Hutchinson signs tax-cut bill into law

Gov. Asa Hutchinson on Friday, Feb. 6, 2015, signs into law a 1 percent income-tax cut for Arkansans earning between $21,000 and $75,000.

Gov. Asa Hutchinson on Friday signed into law a 1 percent income-tax cut for Arkansans earning between $21,000 and $75,000.

Hutchinson signed the legislation in his office conference room at the state Capitol.

The law, which also repeals parts of a 2013 law cutting capital-gains taxes, fulfills a commitment Hutchinson made during his campaign — and that he reiterated was a top priority when he took office — to reduce the tax rates for middle-income earners. He signed the bill 24 days after being sworn into office.

Hutchinson said he was "thrilled" to make his first public bill signing one that was his "major campaign theme."

"It is one of the reasons that I presented to the public that I be elected," he said while members of the Arkansas House and Senate, Lt. Gov. Tim Griffin and others stood behind him.

He noted that the bill passed both chambers with bipartisan support and said it should help the state as it works to attract industry and job-producers to Arkansas.

"I think it's important that we focus our first tax-cut effort for the middle class," he said. "But it also is more than just some relief for middle-class taxpayers. It's a start for being competitive for job creation in our state. Arkansas has been an island of high income-tax rates, higher than anyone in our region, and this starts the middle class flattening and lowering that income-tax rate from 7 percent down to 6 percent and 6 percent down to 5 percent."

Hutchinson called it a "responsible first step" and said other income categories will see reductions as the state's economy grows.

He declined to say what income bracket he's considering for the next reduction effort.

"Let's just wait for the future," Hutchinson said. "Let's celebrate this for the middle class. My goal is to flatten the rate so we can be competitive with our other states, and that means we've got to eventually lower it for the other income categories as well. But let's celebrate this today but wait down the road for the rest."

Beginning in tax year 2016, Arkansans making $21,000 to $35,099 will have their tax rate reduced from 6 percent to 5 percent. Those making $35,100 to $75,000 will have their tax rate reduced from 7 percent to 6 percent. It also repeals the 2013-passed exemption on capital gains over $10 million.

Also standing by Hutchinson when he signed the bill into law were Adam and Melissa Koehler, educators from Cabot who Hutchinson said would receive more than $500 a year in savings because of the new law.

"We are excited to represent middle-class Arkansas families, and we are excited about our tax cut and the money coming back to our pockets, as well as to the economy in Arkansas," Melissa Koehler said.

With his tax cut plan now law, Hutchinson said he will turn his attention to supporting legislators on their bills. And he named prison overcrowding, criminal justice and career education and job-skill training as key issues.

"There's a lot of good bills that are out there addressing many of these things," he said. "I hope to be supporting those."

See Saturday's Arkansas Democrat-Gazette for full coverage.