LITTLE ROCK — Arkansas’ income tax could be lowered gradually to avoid cuts in state services, as Gov. Mike Beebe has done with the state sales tax on groceries, Republican gubernatorial candidate Asa Hutchinson said Tuesday.
Speaking to the Political Animals Club in Little Rock, the former 3rd District congressman said Arkansas has higher income taxes than any surrounding state. He said an Arkansan earning $35,000 a year pays the state’s top income tax rate of 7 percent, whereas a millionaire in New York only pays that state’s top income tax rate of 4.9 percent.
"This has to be addressed if we’re going to be competitive in our region," Hutchinson said. "Gov. Beebe has set the mark as to how you can do that without adversely impacting services and the essential responsibilities of our state toward education, prisons and providing a safety net for our citizens, and the answer is you do it gradually with economic growth and you trigger it so it does not adversely impact what we need to do as a state. He did that with the sales tax on groceries; we can tackle the income tax in the same way."
Hutchinson’s remarks were in sharp contrast with comments he made while running against Beebe for governor in 2006. Back then, Hutchinson advocated eliminating the grocery tax all at once and criticized his Democratic opponent’s proposal to lower the tax gradually, if growth in state revenue could support it, calling it "an empty promise."
Since Beebe has been in office the grocery tax has been lowered from 6 cents to 1 1/2 cents on the dollar. This year, Beebe signed into law a bill to reduce the tax to one-eighth of a cent if certain economic triggers are met.
Reporters asked Hutchinson if his remarks Tuesday meant he now believed Beebe was right to phase out the grocery tax and that Hutchinson was wrong to have proposed immediately eliminating it. Hutchinson said he would not say he was wrong, because his proposal was never tried.
"If I’d have got elected governor, we could see if my model worked just as well," he said. "That’s sort of speculative. It’s not a matter of changing my mind. It is a matter of what he did that worked, and it accomplished the objective."
The state Legislature this year approved a phased-in income tax reduction, among other tax cuts. Hutchinson told reporters it did not go far enough.
"It kicks in in 2015. It’s … 0.1 percent. That is not a significant enough reduction to make us competitive with our surrounding states," he said.
Hutchinson would not say how large a cut he would propose, saying he would release more details later in the campaign.
Hutchinson also said he was disappointed that no tort reform measure passed during the session and said that if he is elected governor, "I will make sure that tort reform is back on the table." He would not say what specific changes he would propose.
In addition to being a former congressman, Hutchinson has served as U.S. attorney for the Western District of Arkansas, administrator of the U.S. Drug Enforcement Administration and undersecretary for border and transportation security for the U.S. Department of Homeland Security.
Little Rock businessman Curtis Coleman and State Rep. Debra Hobbs. R-Rogers, have also announced as candidates for the Republican nomination for governor. Former U.S. Rep. Mike Ross and former Lt. Gov. Bill Halter are seeking the Democratic nomination for the office. Beebe is prohibited by term limits from seeking a third term.
The Political Animals Club has invited all of the Republican and Democratic candidates for governor to speak to it and has received commitments from all but Halter, the club’s president, Rex Nelson, said Tuesday.