From the Arkansas Statehouse...

No tax break for you!

In Taxes on 6 April 2009 at 6:06 pm

Arkansans don’t like to be taxed, and they really like to get tax breaks. But the line has to be drawn somewhere. The Senate Taxation Committee drew it by rejecting every single tax exemption that came before it today. There was a flood of them after the House went on a tax-break binge last week, much to the consternation of Gov. Beebe.

Here’s a breakdown of the bad breaks:

-An exemption for single-parents who have two or more dependents and make less than $17,200 a year. The best of the tax bills, the sponsors said it corrected an oversight from previous sessions. Sort of baffling this one didn’t get through considering how much support it had. Revenue loss was said to be $3.6 million.

A credit for someone who sells a motor home to the person who is renting the motor home. Supporters of this one said it would encourage home ownership. We know what sort of trouble that attitude has gotten the country into recently. Besides which, living in a trailer isn’t exactly what I’d call the American Dream.

A back-to-school sales-tax holiday. $1.6 million revenue loss was too much for DFA. This one inspired a lecture from Sen. Denny Altes on the Laffer Curve.

A tax credit for the development of central business improvement districts. Rep. Tracy Pennartz, the sponsor, said the credit would pay off five-t0-one, though she did not say where her numbers came from. This bill was long in development and had a certain amount of support. But, though Rep. Pennartz offered a last-minute amendment that would eliminate the credit if funding couldn’t be found outside general revenues, DFA objected. It said the credit would create an expectation from business districts that the state might not be able to meet. Still, the bill got a sympathetic hearing and will go to interim study.

A capital-gains tax exemption. Sponsor Rep. Ed Garner and DFA sparred over how much the impact would be, but it looks to be huge. Garner said the break was necessary to enlarge the economy; DFA said it would help mainly individuals, not businesses, and take $42.8 million from the state in 2011. Seems to me that exempting people from stock and real estate profits isn’t the best economic catalyst.

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