Thursday, March 20, 2008

Mike Beebe vs. Your Family Budget

Families are hurting in Arkansas, but our state government is sitting on piles of extra money- this year alone they have collected $127 million more than they estimated they would. In addition, the natural gas industry is about to take off in the natural state, and it is bringing more jobs and more dollars and more economic activity with it. A U of A study indicates that an expanding gas industry will generate an additional $1.8 BILLION tax dollars for state government over the next five years, even without a tax rate increase.

State government is raking in money left and right, and the future looks even better for them. Increased economic activity from the coming natural gas boom will mean increased fuel tax revenues, increased sales tax revenues, increased income tax revenues, and increased property tax revenues (to the tune of $1.8 billion more over then next five years, even if they don't raise any tax rates). That is a lot of money for schools and roads and everybody else in the state with their hand out. Still, it does not appear to be enough for Governor Mike Beebe and the Arkansas legislature. They are about to call a special session to do what? RAISE TAXES!

That is right, they want to enact a severance tax of up to five percent on revenues from natural gas drilling. Once it gets rolling, this increase should send an additional $100 million a year into the already bulging coffers of the state government. Heck, with inflation in energy prices, it could wind up being a lot more than $100 million a year.

So with all of that bonanza of dollars flowing in, how much of it does Governor Mike Beebe and your Arkansas legislature want to share with you? Why actually, none. They want to spend it all themselves without giving a single penny of tax relief to any Arkansas family. They say they need the money for "roads" without giving any specific guarantees of which road is to be built. So, 100% for state government, 0% for tax relief to Arkansas families.

Their grossly imbalanced allocation of this bonanza begs for the question, "who is hurting more, the Arkansas Government or Arkansas Families?" Well Arkansas government revenues are $127 million over the expected increase. The state government planned on getting more money this year, but it is actually raking in a $127 million larger increase than they thought they would get. With the coming severance tax increase, Beebe and company are likely to grab an extra $100 million per year on top of that. Additionally, the expansion of the natural gas industry in the state has them looking at an almost two billion dollar windfall of extra tax revenues over the next five years even if they don't raise any taxes. So how is your family doing? It is my contention that our families need it more than our roads. Arkansas families need tax relief more than Arkansas government needs more revenues.

New roads don't mean much to a family who can't afford gas to travel on those roads.

It is my contention that 100% of the revenues from this tax rate increase should be returned to taxpayers in the form of tax relief for Arkansas families. Lots of politicians will tell you they are "conservative". Here is a good test for them- Any proposition to keep this windfall into the fat hands of the ever-increasing government is not "fiscally conservative". "Fiscally conservative" is reducing the amount of money that the government spends and increasing the amount that is retained by those who earned it. Any politician who tells you otherwise is lying to your face (and perhaps to themselves if they actually believe it).

Arkansans are over taxed. While it is true that our income tax burden alone is middle-of-the pack, our combined income and sales tax burden is one of the highest in the nation as a percentage of income. And our personal exemption (actually a mere $22 tax credit) is among the worst in the country. Only five states have punier exemptions/credits on income tax than Arkansas does, and each of those five has a lower income tax for a family of four making $40,000 a year.

Our state income tax exemption/credit situation is perhaps the worst in the nation, yet here is our legislature with $127 million more than they thought they would have, and about to come together to rake in an estimated $100 million more, yet they do nothing, nothing, to fix our lame state income tax exemption/credit situation.

Governor Beebe attempts to deflect from this rapaciousness by mentioning that he has cut the sales tax for groceries in half. Yes, after starting with the largest budget surplus in state history he let Arkansas families keep about 10% of the overage. He was under great pressure to do so because he was running against a fellow who proposed eliminating it all. Mike Beebe proposed eliminating half now and half later "when the budget permits it". If the budget ever permitted it, now would be the time. If not now, when? If there was ever a time that families needed tax relief, now would be the time.

Bear in mind that eliminating the grocery tax was something he committed (though to be fair did not promise) to do BEFORE this upcoming gas tax windfall. The treasury is overflowing with revenues and we have a windfall coming. Why is the Governor calling a special session to raise taxes instead of calling for one to finish the job on his commitment to eliminate the sales tax on food? Why is he calling a special session to add to the state's hoard of taxpayer monies instead of calling a special session to make our personal income tax exemption comparable with other states? They use the fact that our gas severance tax is lower than other states as an excuse to raise taxes, but they don't seem to notice that our personal income exemptions are lower than other states too! If we are keeping up with the Joneses then raise our severance tax to the national average and raise our income tax personal exemptions to the national average too! But it does not seem to be about logical consistency down there, it seems to be about separating us from our earnings.

I would urge ever legislator who cares about Arkansas families to vote against any tax rate increase unless it is at least offset by tax cuts. Families are hurting.


Anonymous Anonymous said...

Good to see that every conservative blog in Arkansas is against this tax. What do you suppose the Chambers of Commerce have as a motive to think that this raping of Arkansas is a good idea?

9:45 PM, March 20, 2008  
Blogger Mark Moore (Moderator) said...

Jim Bob Duggar once described the Chamber as a "pro-tax organization" and the dishonest local media heaped ridicule on him. He was right, and they, as usual, were fraudulent. I can't recall a tax increase that the Chamber has ever opposed.

Chambers tend to represent the businesses that try to make a living out of the taxpayer's pockets. The business owners downtown join the chamber, and suddenly the Chamber is all for a tax increase to spruce up downtown.

We need to get it out of our minds that the Chamber is conservative. Conservative is as it does. By their stances, they seem to have joined the ranks of corporate pillagers who have learned it is a whole lot more profitable to lobby government for your money than market for you to do business with them of your own free will. At the least, they seek to use government not to level the playing field, but to tip it unfairly in their direction.

Some businesses with influence in the Chamber have been promised some roads from this money- roads that will disproportionately benefit them. That is my best guess.

9:59 PM, March 20, 2008  
Anonymous Anonymous said...

Okay, that is a reasonable answer. What about the Arkansas Republican senators. Why are the Senators always more liberal than their constituents?

8:08 AM, March 22, 2008  
Anonymous Mark M said...

The same answer- conservatives need to put it out of their minds the the Republican party is a conservative party. It is a pro-government party with a huge slice of conservative base that must be lied to every election in order to continue to get their votes.

Those politicians who want to continue to advance will, no matter what they say come election time, vote to continue to loot the middle class in order to fund a growth of government in a way that favors "big" business. Not benefit business as a whole mind you, because that would be small government with a level playing field, but I mean business that has "invested" in government to effect policy their way.

Certain Republicans that get elected to lower office who don't go along with it are castigated by the corporate media and undermined by the corporate party.

Conservatives keep losing because they don't even have a team on the field, they just think they have a team on the field. It is far past time that they woke up.

9:50 AM, March 23, 2008  
Blogger Debbie Pelley said...

Our Governor and legislators need to face reality and look at our tax statistics.

• Arkansas state revenues are $127 million over the expected increase this year.
• Our combined income and sales tax burden is one of the highest in the nation as a percentage of income. ( According to CNN's Money Line, Arkansas ranked 11th in the nation in state and local tax burden as a percentage of income in 2005. According to Federal of Tax Administrators Arkansas ranked even worse. They ranked Arkansas 4th in the nation in state and local tax burden.2005.
• A two-parent family of four living at the poverty line paid $406 in Arkansas state income tax in 2005, the third-highest in the nation.
• Arkansas ranks #1 in the nation in the amount allowed for combined state and local sales tax. (up to 11.5 cents.) 5
• Arkansas ranked 9th in state tax revenue growth compared to income growth from 1992-2002.
• Arkansas was one of the three states in the country to raise taxes by 5 percent in 2004 plus study finds. f(rom Arkansas News Bureau, "Arkansas one of three states to raise taxes by 5 percent-plus, study finds" by Doug Thompson, July 21, 04.)
• Our state income tax personal exemptions (actually a mere $22 tax credit) is among the worst in the country. Only five states have punier exemptions/credits on income tax than Arkansas does, and each of those five has a lower income tax for a family of four making $40,000 a year.
• Mike Beebe proposed eliminating the grocery tax, half now and half later "when the budget permits it". If the budget ever permitted it, now would be the time. If not now, when? If there was ever a time that families needed tax relief, now would be the time.

7:14 AM, March 27, 2008  

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