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Income Tax Chronology

(September 2023) Following is a brief Arkansas income tax chronology.

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Economic Expansions Tend to Produce State Revenue Surpluses

(July 2023) Arkansas Gov. Sarah Huckabee Sanders; her predecessor, former Gov. Asa Hutchinson; and state legislators have reduced the income tax rate to 4.7% since 2015. The top state income tax rate was 7.0% a decade ago. Some critics make class-warfare arguments to oppose the tax cuts. Others claim the state cannot afford them. Another argument making the policy rounds is that state surpluses used to reduce rates are one-time events.

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Marijuana Taxation

(July 2023) Arkansans defeated a marijuana legalization measure last November after approving an initiated medical marijuana amendment in 2016. The 2022 proposal would have established a lower tax rate than the 2016 amendment. A Tax Foundation report states, "Recreational marijuana taxation is one of the hottest policy issues in the U.S." APF has fielded many questions on the issue.

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The LEARNS Act and Literacy

(2Q-2023) The recently enacted LEARNS Act (PA237 of 2023) makes major revisions to Arkansas' K-12 education system. LEARNS stands for literacy, empowerment, accountability, readiness, networking and safety. In the literacy component, the 145-page LEARNS Act emphasizes phonics, and concepts such as "literacy goals," "literacy coaches," "literacy screeners," and "literacy grants."

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Little Improvement in Reading Scores in 21st Century

(2Q-2023) The average score of Arkansas fourth- and eighth grade students "was not significantly different" from their average score in 1998, according to the National Center for Education Statistics.

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Economic Indicators and No-Income Tax States

(May 2023) Historically, Arkansas critics of income tax cuts have relied on class-warfare arguments to oppose the policy. More recently, some critics have tried to argue that no-income tax states do not generate higher income growth.

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No-Income Tax States Lead Private Jobs Growth

(May 2023) Policy Foundation research concludes states without an income tax create new private-sector jobs at rates greater than the national average.

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No-Income Tax States Top Population Growth

(May 2023) States without an income tax recorded higher levels of population growth than the national average and states in local regions, according to decennial U.S. Bureau of the Census data.

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Pulaski County School Choice Market Largest in State

(April 2023) More K-12 students are enrolled in the Pulaski County school choice market in the current school year (2022-23) than enrollment in each of four local public-school districts, Arkansas Department of Education (ADE) records and other data show. In essence, the school choice market is the largest district in the county.

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Policymakers Ban Local Income Taxes

(February 2023) Arkansas legislators have approved a bill to ban local governments from enacting an income tax.

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Arkansas Improves Competitive Position

(February 2023) Past Policy Foundation research noted a reduction in Arkansas' top income tax rate to 4.9% would improve the state's competitive position in the 12-state Southeast region. New Federation of Tax Administrators (FTA) data shows improvement in rank.

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Regulatory Sandboxes in Border States

(February 2023) The regulatory sandbox idea has advanced across the U.S. since Utah policymakers enacted an industry-specific proposal in 2019. Lawmakers in 13 states have enacted regulatory sandboxes. Proposals have been introduced in an additional 20 states.

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School Choice Market Near 110,000

(December 2022) Nearly 110,000 Arkansas students attend charter, home or private schools, or are enrolled in a public school choice program in the current school year, state Department of Education and other records show. The niche school choice market has grown from 66,627 students (2013) to 109,683 in the 2022-23 school year. Factors contributing to growth include dissatisfaction with public schools deemed 'failing' in letter-grade surveys, technology that makes distance learning feasible, and religious affiliations.

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The Role of Dictionaries in Advancing Literacy

(November 2022) The Policy Foundation sponsored a public forum on the issue of dictionaries and literacy on Nov. 4 at Lyon College in Batesville. The forum featured a keynote talk by Lyon Assistant Professor of Elementary Education Dr. Karin Brown (1); a Batesville School District literacy specialist and 3rd Grade school teachers; parents; and business community members.

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Personal Income Higher in Tennessee & Texas Border Counties

(September 2022) Per capita personal income is higher in Tennessee and Texas counties than in adjacent Arkansas border areas, according to U.S. Bureau of Economic Analysis (BEA) data.

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Policymakers Accelerate Income Tax Cut

(August 2022) Arkansas policymakers approved an income tax rate reduction in a special session this month by making it retroactive to Jan. 1, 2022. The move reduces Arkansas individual and corporate income tax rates.

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Jobs Growth Means Economic Expansion

(August 5, 2022) Past Arkansas Policy Foundation research memos have identified cyclical turns in the U.S. economy prior to official announcements from the NBER's Business Cycle Dating Committee, the leading arbiter within the economics profession.

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The Fiscal Impact of Repealing the State Capital Gains Tax

(June 2022) The Arkansas capital gains tax has generated between $54.7 million and $115.9 million in annual revenues in the past decade, according to a recent communication from the state Department of Finance and Administration (DFA) and historical data.

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Arkansas Trails U.S. in Jobs Growth, Leads 11 States

(2Q-2022) Three years into a national economic expansion, Arkansas trails the national average in jobs creation, according to a review of U.S. Bureau of Labor Statistics records. Arkansas led 11 other states during the period.

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States Without Income Tax Lead in Jobs Creation

(2Q-2022) States without an income tax led the Southeast and Arkansas' border region in jobs creation in the first two years of the national economic expansion that began in April 2020, Bureau of Labor Statistics records show.

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Utah Led U.S. in Jobs Creation in Last Expansion (2009-2020)

(May 2022) Nonfarm payroll employment is the broadest economic indicator at the state level. Utah had a higher jobs creation rate than any state in the last economic expansion, according to a Policy Foundation analysis of employment data compiled by the U.S. Bureau of Labor Statistics (BLS).

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Arkansas Exports to Russia, Post-Soviet, Ex-Warsaw Pact Nations

(April 2022) Total Arkansas exports to Russia in 2020 were minuscule, state Department of Commerce records show. Russia ranked 50th in the world that year among Arkansas export markets. Total exports to former Warsaw Pact nations were five times greater, with Romania the largest export market among the group.

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Nearly 290,000 Pay Top Income Tax Rate

(March 2022) Nearly 290,000 Arkansas filers paid the top state income tax rate last year, according to a state Department of Finance and Administration document.

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More States Cut Income Tax Rates

(March 2022) Thirteen states including Arkansas reduced individual income tax rates in 2021. Policymakers in two other states in the Southeast region--Georgia and Mississippi--took action in 1Q-2022 to join the group.

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Business Cycles & Arkansas Income Revenues

(March 2022) Arkansas income tax revenues have increased in each national economic expansion since 1991. Revenues fell only five times in the 30-year period, with declines occurring around all three recessions. The relationship between income tax revenues and the business cycle is a factor when enacting multi-year rate reductions that rely on revenue triggers.

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SURVIVORS OF SOCIALISM, PT. 1
Challenging Students to Think Critically

(1Q-2022) "What stays in my mind about Arkansas are the wide-open spaces. It was my first long-distance drive west of the Mississippi in a car. Some people think this type of drive is boring but to me it was very meaningful. There was something very special about the big road and the open spaces of Arkansas." Dr. Andrei Znamenski describing his first visit to Little Rock.

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INCOME TAX CUT WOULD IMPROVE
ARKANSAS' COMPETITIVE POSITION

(December 2021) A pending proposal to reduce Arkansas' top income tax rate from 5.9% to 4.9% would improve the state economy's competitive position in the 12-state Southeast region, Federation of Tax Administrators records show.

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STATEWIDE SCHOOL CHOICE MARKET TOPS 110,000

(UPDATED: November 12, 2021) More than 110,000 Arkansas students will attend charter, home or private schools, or are eligible to participate in a public school choice program in the current (2021-22) school year, state Department of Education and non-profit records show.

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PULASKI SCHOOL CHOICE MARKET TOPS 20,000

(November 2021) More than 20,000 K-12 students participate in the Pulaski County school choice market in the current school year, public records show. The market includes students enrolled in Pulaski County charter and private schools, along with public school students eligible for a choice program. Home school students are also part of the market but the state Department of Education (ADE) has not released a count for 2020-21 or the current year.

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Charter Enrollment Stable Near 40,000

(October 30, 2021) Newly-released public records show 39,232 students enrolled in Arkansas conversion and open-enrollment charter schools in the 2021-22 school year. There were 40,512 students enrolled in charters in the 2020-21 school year.

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Regional Jobs Magnets

(September 2021) Arkansas policymakers have taken action to boost Arkansas' economic competitiveness by cutting the top income tax rate from 7.0% to 5.9%. Tax cut opponents maintain there is no economic advantage to reducing rates. Yet U.S. Bureau of Labor Statistics jobs data show states without an income tax enjoy an economic advantage over those with the highest tax rates. States without income taxes have emerged as regional jobs magnets.

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More Than 750,000 Pay Top Arkansas Tax Rate

(August 2021) Tax cut critics claim an income tax cut would benefit only a small number of Arkansans but DFA records show 772,459 filers paid the top 5.9% rate.

The DFA communication states: "Regarding the state’s top rate (5.9%), a total of 772,459 taxpayers paid the top income tax rate in the most recent data available."

Border States Reduce Income Taxes (UPDATED)

(July 2021) Four of six states that border Arkansas have acted this year to reduce state income tax rates. They are Tennessee, Oklahoma, Missouri and Louisiana. A fifth border state-Texas-does not have a state income tax.

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No Income Tax Leads Jobs Creation

(July 2021) Opponents of tax cuts argue they do not impact economic growth. Yet federal data show border states without income taxes lead jobs growth.

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THREE BORDER STATES REDUCE INCOME TAXES

(June 2021) Three states that border Arkansas have taken action this year to reduce their top state income tax rates. The states are Tennessee, Oklahoma and Louisiana.

A fourth border state-Texas-does not have a state income tax.

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Income Tax Cut Would Place Arkansas Among Third Of States With Lowest Rates

(2Q-2021) Cutting Arkansas' top income tax rate to 4.79% would place it among the third of states with the lowest rates, a reversal of its relative position in 2015 when it ranked among states with the highest rates.

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Proposal Would Cut Income Tax Rate To 5.8%

(March 2021) A proposal pending in the state House of Representatives would reduce Arkansas' top income tax rate from 5.9% to 5.8%, public records show.

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Arkansas Jobs Growth Declined After Minimum Wage Increases

(March 2021) Arkansas' job creation rate in the Leisure and Hospitality employment supersector declined after two minimum wage increases last decade, U.S. Bureau of Labor Statistics (BLS) records show.

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Scope Of Practice Expands For Nurse Practitioners

(March 31, 2021) Two measures expanding scope of practice for certified nurse practitioners have been approved by the state General Assembly and signed into law by Gov. Asa Hutchinson.

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Proposed Arkansas State Spending Limits

(February 2021) What is the proper growth rate for state spending? For more than a decade this idea has been debated. One idea advanced by U.S. Rep. Bruce Westerman while in the state legislature would limit spending to Arkansas personal income growth. More recently, spending at some agencies has increased less than CPI during the administration of Gov. Asa Hutchinson.

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Arkansas Efficiency Project, 5-year Review (2015-2020)

(January 2021) Five years ago, the Efficiency Project identified DFA as a key agency to advance efficiency in Arkansas state government. PwC and the Policy Foundation made recommendations in two reports. A strong, preexisting DFA culture has applied Project recommendations to significantly improve several processes. Total savings from DFA actions to improve these processes is estimated at $61.8 million through September 30, 2020.

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Transformation Report: $57.6 Million In Savings

(December 2020) A report by the Hutchinson administration to a legislative panel estimates $57.6 million in savings from last year's reorganization of state government. The report, which surveys efficiency efforts since July 2019 also cites a Policy Foundation finding that the state has recovered more than $40 million from "collection recovery efforts."

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Department of Transformation and Shared Services Report

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Top Income Tax Rate Drops Jan. 1, 2021

(December 2020) Arkansas' top marginal income tax rate drops from 6.6% to 5.9% effective January 1, 2021, the latest action to make the state more competitive with states in the Southeast region. Arkansas Gov. Asa Hutchinson has presided over income tax cuts since assuming office in January 2015. The top marginal rate was 7.0% at the time.

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Top 25 County School Choice Markets

(December 2020) Nearly 100,000 students attend charter, home or private schools, or are eligible to participate in a public school choice program, state Department of Education and non-profit records show. Twenty-five (25) counties have the largest number of charter, home and private school students.

Most Arkansas public companies are based in one of the 10 largest county markets.

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Efficiency In Arkansas Higher Ed

(November 2020) Public records show declines in "total operating expenditures" (FY2015-to-2019, at 15 Arkansas colleges and universities. Eight other colleges and universities increased total operating expenditures less than the Consumer Price Index.

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CPI-Spending Link Encourages Efficiency

(November 2020) The practical effect of a CPI-Expenditures link is that it incentivizes officials to search for efficiencies in a low-inflation environment.

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School Choice Market Nears 100,000 Students

(October 2020) Nearly 100,000 Arkansas students attend charter, home or private schools, or are eligible to participate in a public school choice program, according to state Department of Education and non-profit records. The niche school choice market has grown from 66,627 students (2013) to 97,337 (2019-21). Factors contributing to this market's growth include dissatisfaction with public schools deemed 'failing' in letter-grade surveys, technology that makes distance learning feasible, and religious affiliations.

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Four Counties Top Income Ranks

(October 2020) Four counties led Arkansas income ranks in the last decade, recording levels greater than the state average, according to federal data. The counties are Benton, Pulaski, Union and Arkansas. They were the only counties to report per capita personal income levels greater than the Arkansas average in 2009 and 2018, U.S. Bureau of Economic Analysis records show.

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Arkansas Jobs Growth Topped 21 States

(September 2020) Arkansas' job creation rate topped 21 states in the national expansion that started in June 2009 and ended earlier this year in February, Bureau of Labor Statistics (BLS) records show. The finding is noteworthy because some observers still relegate Arkansas to 48th or 49th in national economic rankings.

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Market Response To COVID-19

(August 2020) The market response to COVID-19 is to increase the supply of medical services in response to increased demand as a result of the outbreak. There are numerous actions Arkansas state government can take to accomplish this goal. These include temporary suspension of rules and regulations, and repeal of laws that interfere with expanding access to care.

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Investing In Arkansas

(July 2020) The Policy Foundation's Efficiency Project (2015-16), funded with support from private foundations, represented an investment in Arkansas' economic future.

Public Records

State of Arkansas, Examples of Transformation Savings (July 2019-March 2020) Read More

Savings: $26,751,030

Collection Recovery, Second Shift Payment Plans

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NBER: U.S. Entered Recession In February

(June 8, 2020) The National Bureau of Economic Research (NBER), the official arbiter of the U.S. business cycle announced today that the economy entered a recession in February, according to a release from the Cambridge, MA., nonprofit.

The Policy Foundation announced last month that a recession began in February based on peaks in four coincident indicators including payroll employment.

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U.S. Economy Entered Recession In February

(May 11, 2020) The longest economic expansion in U.S. history ended in February, a Policy Foundation analysis of four coincident indicators shows.

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Newsmaker Interview: Lt. Gov. Tim Griffin On Efficiency, Transformation & Tax Cuts

(April 2020) A 5th generation Arkansan, Tim Griffin was raised in Magnolia and has served as Arkansas lieutenant governor since 2015. Lt. Gov. Griffin spoke at the Policy Foundation's 20th anniversary event in 2015 and served on the Transformation Advisory Board, a 15-member citizens panel (2017-18) that emerged from the Policy Foundation's Efficiency Project (2015-16). The Board's work led to the reorganization of Arkansas state government in 2019.

The Policy Foundation recently interviewed Lt. Gov. Griffin about his work to transform Arkansas state government and make Arkansas' economy more competitive with other states.

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The School Choice Market In East Arkansas

(March 2020) Previous Policy Foundation research memos and news media have noted the prevalence of a significant school choice market in Pulaski County, Arkansas' largest by population. Another school choice market exists in a nine-county area of East Arkansas where more than 8,000 K-12 students are enrolled in charter, private and home schools, according to public records.

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Arkansas Income Tax Rate Declines
Top Rate Still High For Region

(February 2020) Arkansas' top income tax rate declined from 6.9% to 6.6% but is still second-highest in the southeast region, trailing only South Carolina (7.0%), according to records from the Federation of State Tax Administrators.

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State Spending Freeze Would Have Saved $302 Million

(January 2020) A state spending freeze (FY 2015-17) would have saved Arkansas taxpayers $302 million.

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Newsmaker Interview: Justin Pearson
Case Created Taxicab Market

(January 2020) Three years ago, a government-imposed monopoly existed in Little Rock, interfering with an entrepreneur and limiting consumer choice to one taxicab company. Today, more competition exists thanks to a successful legal challenge handled by Justin Pearson, an attorney with the Institute for Justice. The Policy Foundation recently interviewed Pearson about the case.

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Education Savings Accounts

Mission Statement

The Arkansas Policy Foundation is a nonpartisan, non-profit organization that analyzes the impact of public policy on Arkansas and makes recommendations.

The Foundation emphasizes the importance of tax policy and education reform.

Principles of tax policy: Arkansas would benefit from comprehensive, pro-growth reform; Arkansans are not under-taxed; taxes and rates do matter to entrepreneurs; dynamic scoring of tax changes and effects provides benefits.

Education reform: The Foundation seeks intellectual honesty and complete openness in reporting the lack of academic progress in Arkansas' school system.

The Foundation encourages citizenship.

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Visit http://arkansaseconomics.org/