Friday, Apr 5, 2013
Tax Cut Bills Progress in General Assembly
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LITTLE ROCK - Tax cut legislation advanced in both chambers of the General Assembly.
The House Committee on Revenue and Taxation advanced HB 1585 to reduce state income taxes. It would cut the state's 7 percent income tax rate to 6.875 percent on taxable income of $44,000 and above. The 7 percent rate now applies to taxable income of $34,000 and up.
The current 6 percent rate applies to taxable income from $20,400 to $33,999 and HB 1585 would apply it to taxable incomes of $20,400 to $43,999. It would become effective for tax year 2014 and subsequent tax years.
The bill would reduce state general revenue by $28.6 million in fiscal year 2014 and $57.2 million in fiscal 2015, according to the state Department of Financial Administration.
Also, the committee advanced HB 1966 to lower capital gains taxes. It would create a 70 percent exemption for any net capital gains from the sale of Arkansas real property and Arkansas based businesses if they were made after Jan. 1, 2014.
It also creates an additional exemption for net capital gains on assets acquired before Jan. 1, 2014. Net capital gains up to $5 million would continue to receive the current 30 percent exclusion, but 70 percent of gains above $5 million be exempted.
HB 1966 would reduce state general revenue by $3.1 million in fiscal 2014, $10 million in fiscal 2015, $18.3 million in fiscal 2016 and $27.9 million in fiscal 2017.
The Senate passed SB 108, which would benefit businesses by extending the period in which they can report net operating losses on their income tax, from five to 10 years. It would apply to losses incurred after January 1 of this year.
By Fiscal Year 2020, the extended operating loss carry-forward period would save Arkansas businesses more than $13 million a year. Within four more years the savings to Arkansas businesses would increase to $63.4 million a year.
Members of the Senate leadership have said that they are working on tax cuts of $100 million.
Also last week the Senate overrode the governor's veto of SB2, which requires voters to present a government-issued photo ID. The bill was sent to the House, which would have to vote to override in order for it to become law.
The Senate passed three measures to hold down costs and improve the financial integrity of the Teacher Retirement System. One measure, SB 162, would authorize the Board of Trustees of the system to raise the contribution rate of local school districts from 14 percent to 15 percent if necessary to address a critical funding issue.
A second bill, SB 123, would authorize the board to raise the contribution rate of working members from 6 to as much as 7 percent if necessary to address a critical funding issue. SB 130 would to allow the board to reduce the $75 a month benefit stipend.
The three Senate bills were reviewed by the Joint Retirement Committee before the entire Senate voted on them. Because the Joint Retirement Committee has already reviewed them, they were placed on the House calendar. That means they will not be referred to committee again, and will be voted on by the entire House.