Governor Asa Hutchinson’s top priority this legislative session, a $100 million income tax cut, passed its first hurdle Wednesday in an amended form. The senate committee on Revenue and Taxation advanced the one percent cut for individuals earning between $21,000 and $75,000 a year. The full senate is expected to take up the measure Thursday.
Senate President Jonathan Dismang (R-Searcy) said despite an amendment repealing a 2013 capital gains tax cut he expects widespread support among his Republican colleagues.
“We have overwhelming support in the senate, with the understanding even that there was the possibility of this amendment coming on. I feel very comfortable where we are,” said Dismang.
Senator Bill Sample (R-Hot Springs) said the cancelation of capital gains cuts from last session is needed to help accommodate the cost the governor’s tax plan,“this one provided us the amount of revenue that we needed to support the new tax cuts, about $21 million is what this will bring in,” said Sample.
Sample said the governor did not ask him to offer the repeal, but that he took the initiative himself. Other possible delays or repeals to 2013 tax cuts have also been suggested previously. Those cuts not offered for delay in the Revenue and Tax Committee include a break on energy consumption for manufacturers and the expansion of the personal exemption limit. Hutchinson’s tax proposal, carried by Senator Dismang and House Speaker Jeremy Gillam already included a roll back of a one-tenth of a percent cut for the top income bracket passed in 2013, set to go into effect this year.
The amended tax plan passed through committee without objection, though Democrats Bruce Maloch of Magnolia and Larry Teague of Nashville noted they still had some reservations about how the remainder of Hutchinson’s tax cut cost will be absorbed in the budget. Earlier this week Governor Hutchinson said the rest of his tax plan will be funded by what he predicts to be future revenue growth based on the plan, and by cuts to state services. The budget is to be presented on Tuesday.
While Republicans are united behind the income tax cuts, the repeal to cuts from last session may not sit well with some of the more conservative members of the GOP. Representative Nate Bell (R-Mena) said he doesn’t want to reveal his opinion at this time but noted, “I’ll just say that I voted for the capital gains tax cuts originally.”
House Speaker Gillam, like the Senate President, said he generally expects a supportive body. The House could take up Hutchinson’s tax plan as early as next week, according to Gillam.