Arkansas lawmakers advance Hutchinson's middle-class income tax cut package

Arkansas Gov. Asa Hutchinson's campaign promise to reduce income taxes for thousands of middle-class residents advanced to a Senate vote Wednesday, after lawmakers amended the proposal to repeal a $21 million capital gains tax cut approved two years ago.

The Senate Revenue and Taxation Committee endorsed the proposal by Hutchinson to reduce income taxes by 1 percent for those making between $21,000 and $75,000 a year. The full Senate is expected to vote on the measure as soon as Thursday.

Hutchinson, a Republican who was sworn in last week, campaigned on the tax cut plan and has called it his top priority this legislative session. Senate President Jonathan Dismang said he expected the measure, which lists all but four senators in the 34-member chamber as sponsors, to pass easily.

"We've talked for a long time about trying to make sure we have some broad-based tax reform in the state. I believe this accomplishes that," Dismang, R-Beebe, told the panel before its vote. "It also helps our working middle-class families here in the state."

The committee advanced the proposal after Sen. Bill Sample, a member of the committee, added language repealing the capital gains tax cut.

"It's very seldom we have an opportunity to take a good bill and make it better," Sample, R-Hot Springs, told the panel.

State finance officials said the change lowered the cost of Hutchinson's tax cut package to $12.8 million in the coming fiscal year and $80.6 million when fully implemented the following year. The proposal already included delaying a portion of an income tax cut lawmakers approved in 2013.

Hutchinson said he supported the repeal.

"This amendment is also consistent with my desire to focus on middle-class Arkansans, as a start to our effort to have a competitive income tax rate," he said in a statement released by his office.

The capital gains cut was among $29.4 million in reductions former Gov. Mike Beebe, Hutchinson's Democratic predecessor, had urged lawmakers in November to delay implementing for two years.

House Speaker Jeremy Gillam, R-Judsonia, who co-sponsored the tax cut bill, said he still expected "broad support" for the package.

The proposal could face resistance from some House Republicans over concerns they'd be portrayed as raising taxes by repealing the capital gains measure.

"There's a few that might be concerned about it, but at this point I wouldn't be willing to say there's enough to kill it," said House Majority Leader Ken Bragg, R-Sheridan.

The bill has the backing of key Democrats, including House Revenue and Taxation Chairman Joe Jett, who planned to sign on as a co-sponsor. Jett, D-Success, said he expected the bill to go before his committee on Tuesday if approved by the Senate this week.

Other Democrats have said they're worried the Legislature is moving too quickly, with Hutchinson not presenting his budget proposal until next week.

"It's just hard to imagine to vote on a tax cut this size without having a budget," said Senate Minority Leader Keith Ingram, D-West Memphis.

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