Corporate income tax cuts keep pinching state finances, monthly revenue report shows [View all]

[LiberalArkie]

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Net available general revenues totaled about $2.737 billion during those five months, which is $25.3 million less than the same time a year ago — a drop of about 0.9%.

The report is clear on the cause: “The decrease in year-to-date revenues compared to [fiscal year] 2024 is largely due to the impact of individual and corporate income tax rate reductions passed in the First and Second Extraordinary Sessions of the 94th General Assembly,” it says.

The state Legislature and Gov. Sarah Sanders cut income taxes during the 2023 spring regular session and again during a special session in September 2023 — and then a third time in a second special session in June. (The formal name for a special session is an “extraordinary session” in state government parlance.) The most recent tax cut bill lowered the top corporate rate from 4.8% to 4.3% and the top individual rate from 4.4% to 3.9%, retroactive to the beginning of 2024.

The November DFA report says year-to-date individual income tax collections are down $64.9 million, a 4.5% drop below fiscal year 2024. The drop in corporate income taxes is far steeper: Year-to-date collections are down $38.2 million, a drop of more than 18%. Those declines were offset somewhat by an increase in sales tax collections, which were up $24.6 million over the previous fiscal year.

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https://arktimes.com/arkansas-blog/2024/12/03/corporate-income-tax-cuts-kept-pinching-state-finances-in-november

Only one solution is to cut the top tax rate so more money can trickle down and cut Medicaid, school funding and other programs.