LITTLE ROCK — The Arkansas House on Tuesday rejected a low-income tax credit proposal that was offered by a Democratic legislator as an alternative to the Republican governor’s tax plan.
House Bill 1161 by Rep. Warwick Sabin, D-Little Rock, received 28 yes votes and 66 no votes. The measure would create an earned income tax credit for the working poor that would equal 5 percent of the federal earned income tax credit and would cost the state an estimated $40 million a year.
Four Republicans joined with all 24 House Democrats to vote for Sabin’s proposal.
The vote came a day after the House and Senate voted overwhelmingly to approve matching bills containing Gov. Asa Hutchinson’s proposed $50 million income tax reduction for Arkansans whose net taxable income is under $21,000 a year. Hutchinson’s proposal would take effect in the 2019 tax year and Sabin’s would take effect in the 2018 tax year.
Speaking in support of his bill on the House floor, Sabin acknowledged that it was unlikely to pass.
“Today, I feel a little bit like the lamb that’s being led to slaughter,” he joked.
Sabin, who unsuccessfully pushed for an earned income tax credit two years ago, told House members his bill would be more targeted than Hutchinson’s proposal, noting that many Arkansans with a gross income over $21,000 would qualify for the governor’s tax cut.
Sabin also said his proposal has a proven record of success at the federal level and in 26 states. He said nonpartisan policy institutes have said the policy has been effective “in No. 1, incentivizing people to work, No. 2, in stimulating the economy, No. 3, in reducing dependence on social services and No. 4, moving people out of poverty.”
Rep. Charlie Collins, R-Fayetteville, spoke against Sabin’s bill, urging lawmakers to stick with the governor’s plan. But Collins also noted that Hutchinson’s proposal would create a legislative task force to recommend future tax reforms and said an earned income tax credit should be one of the ideas considered.
“We’re going to have the opportunity to discuss a lot of different ideas,” he said.
Rep. Vivian Flowers, D-Pine Bluff, spoke in support of the bill, saying lawmakers had a choice between “one that costs $50 million, one that costs $40 million.”
Sabin told reporters after the vote he was glad the bill received debate and hopeful the task force on tax reform would recommend passage of an earned income tax credit in the 2019 session.