LITTLE ROCK -- Arkansas lawmakers may change Gov. Asa Hutchinson's middle-class tax cut package to roll back its proposed repeal of a $21 million capital gains tax break that lawmakers approved two years ago, the chairman of the House panel considering the measure said Monday.
House Revenue and Taxation Committee Chairman Joe Jett said the change is being considered to make Hutchinson's proposal more palatable to lawmakers. The Senate approved the plan last week.
Hutchinson, a Republican, was sworn in earlier this month and has called the middle-class tax cut his priority this legislative session.
Hutchinson's proposal calls for cutting income taxes by 1 percent for those making between $21,000 and $75,000 a year. Finance officials have estimated the cost of the tax cut to be about $102 million a year once fully implemented.
Jett said the proposal faces some resistance because it would also repeal a 2013 law that increased the amount of capital gains exempt from income tax from 30 percent to 50 percent, and provided an income tax exemption on capital gains in excess of $10 million. Under a draft amendment that Jett said the panel is considering, the exemption would change to 40 percent starting Feb. 1. The move would cost $9 million to $10 million more than a full repeal, Jett said.
Jett, D-Success, said he hoped to have the tax cut measure before his panel as early as today. Jett said advancing the measure out of committee without scaling back the capital gains repeal would be difficult.
"I'd hate to try to get the (bill) out of committee without the amendment on there," Jett told reporters late Monday afternoon. "There's a lot of heartburn, without the amendment."
A spokesman for Hutchinson declined to comment directly on the potential change, saying the governor planned to detail his budget plan today.
Senate President Jonathan Dismang, who co-sponsored Hutchinson's tax cut plan, said he was open to the change depending on how it fits in with the governor's balanced budget proposal.
"I think we have to take that into consideration, but in theory it's something I would be supportive of," said Dismang, R-Beebe.
Any changes to the legislation would mean another vote in the Senate, if the measure clears the House. Dismang said he didn't believe changing the capital gains repeal would affect support in his chamber.
A co-sponsor of the bill, however, tried unsuccessfully to have the measure sent back to the Senate after she complained lawmakers weren't made aware of the full implications. The Senate rejected the motion 6-24.
"We found out after the fact that it's raising taxes, and that's what it comes down to, the increased taxes," Sen. Linda Collins-Smith, R-Pocahontas, told reporters. "Of course I'm against that. My goal is to lower taxes."
State Desk on 01/27/2015