There were a lot of numbers in Michael Wickline's front-page story last Wednesday. Thankfully the news side has somebody like Michael Wickline to plug into it. Such a story would be dangerous in our hands. There are three types of people in this world: Those who are good at math and those who aren't.
Gov. Asa Hutchinson and his people have come up with another budget plan. They seem to do this every year, as if it were required. And in the plan, there are Big Issues, such as an increase of millions in revenue from this year to next, a tax cut (again), and a surplus even though the state, like all states, is choking through a pandemic. Asa Hutchinson is going to complete his two terms in office with a couple of legacies that other governors can only envy. One of them will be his budgetary talents and fiscal competency.
Down in the story, after the Big Issues were addressed (our reporters don't bury the lede), the story notes that the governor hopes to lower taxes for those coming to Arkansas:
"The governor said reducing the top individual income tax rate to 4.9 percent for new residents in Arkansas for five years would help recruit talent for the state's growing tech industry and manufacturing from large urban areas while also attracting retirees to the state."
Why, hot dog! One editorial column that we might mention has been talking about lowering the tax rate for newcomers for years now. Perhaps somebody in state government has a subscription?
Give the governor credit. He has lowered the tax rate from 7 percent to 6.9 to 6.6 and in 2022 to 5.9. He is definitely making Arkansas more competitive with other states that have income taxes. And while 4.9 percent for new residents, if approved, is better than 5.9 percent, it still isn't competitive with Texas and Tennessee, border states that have no state income tax.
If the state of Arkansas promised no income taxes for newcomers to the state, for a period of five years, that would make the kind of national headlines that 6.9 to 5.9 to 4.9 won't.
Last month, we asked the budgeteers at state how this newcomer exemption might affect the budget. We were told that Arkansas expects 9,000 new people every year, and not requiring them to pay income tax would cost the state $16.5 million in the first year, and it would go up to about $82 million in the fifth year. But they also told us that they were just adding up the income tax numbers, and we'd suggest that more people moving here would pay more sales taxes and property taxes. Not to mention open more bank accounts, buy houses, start businesses and donate to charities.
And everyone in the state would stand to gain. A larger population would mean a rise in revenues from property taxes as home prices rise, more money for roads, and eventually the newcomers would become not-so-newcomers and begin paying income taxes too.
Point being: The governor and his people are pointed in the right direction. Or as Abraham Lincoln once put it about some of his allies: Their faces are set Zionward. But this plan doesn't go far enough. People are leaving New York state, California, New Jersey and Illinois in droves. And they are going to places with no income tax, such as Texas, Tennessee and Florida.
These are the states that Arkansas is likely to compete with, especially when people decide which state has the lowest or no income tax. There is a reason why Austin and Nashville are booming. How can Little Rock and Northwest Arkansas compete with zero percent? And people are not just moving to metropolitan areas. Many are looking to live in the country. What more beautiful place than Arkansas in the Ozark and Ouachita mountains, the Grand Prairie of east Arkansas, or the piney woods of south Arkansas?
Let's go big, Arkansas. Or at least bigger. And make some noise on a national level. Let's exempt newcomers from the income tax. For five years.
Let's give Texas and Tennessee a run for their money.