On Wednesday, Arkansas Governor Sarah Huckabee Sanders signed laws that reduce the state’s property and income taxes. This followed a special session where lawmakers also passed bills to maintain Arkansas’ hunting and fishing programs.
Sanders signed the law cutting the highest corporate and individual income tax rates, and another law that increases the homestead property tax credit. This happened shortly after the predominantly Republican Legislature ended their session that started on Monday.
These tax cuts are part of Arkansas’ ongoing efforts to lower income taxes in recent years. Since assuming office last year, Sanders, a Republican, has signed three tax cuts into law and aims to gradually phase out the tax over time.
“We are making progress responsibly,” Sanders said during a press conference before signing the bills.
Under these measures, the top individual tax rate will drop from 4.4% to 3.9%, and the top corporate rate from 4.8% to 4.3%, effective retroactively from January 1st. According to financial experts, these cuts will result in a cost of about $483 million in the first year and $322 million annually thereafter.
Sarah Huckabee signs the bill (Via Jack Solomon/Shutterstock)
Supporters argued that Arkansas’ strong financial position justifies these tax reductions, pointing to a projected surplus of $708 million by the end of the fiscal year.
However, opponents of the measures criticized them for primarily benefiting higher-income earners. They suggested that the state should prioritize funding to address issues like the high maternal mortality rate and expand services for people with disabilities.
“Now is not the time to reduce funding for programs that tackle these challenges,” said Democratic Representative Denise Garner before the House voted on the tax cuts on Tuesday.
Additionally, the new tax legislation mandates that Arkansas allocate $290 million from its surplus into a reserve fund to prepare for potential economic downturns.
