An Opportunity to Engage for Transparency and Lower Taxes

Tomorrow will be a big day at the Capitol. This is a wonderful opportunity for you and your friends and family to engage, impacting the future of our state and the economic future of our children.


The Capitol Gains Tax Cut, HB1002  will be heard at 10 am by the Senate Revenue and Tax Committee. Rumors flying that key members will not be present- Please call Committee members and respectfully request they attend and vote.


 Uncommitted Votes:  Sen. Paul Bookout (Jonesboro), Sen. Linda Chesterfield (Little Rock), Sen. Jerry Taylor (Pine Bluff), Sen. Larry Teague (Nashville).  Senate Phone 501-682-2902.


There is also a bill that has been flying under the radar which is a huge step for government transparency, HB1046, TO PROVIDE THAT CASH FUNDS RECEIVED BY CONSTITUTIONAL OFFICERS OR STATE AGENCIES AS A RESULT OF AN AWARD BY THE COURT OR SETTLEMENT AGREEMENT ARE SUBJECT TO APPROPRIATION BY THE GENERAL ASSEMBLY.


It is scheduled for the Senate State Agencies at 10 am as well. 


It is my understanding, that the Attorney General has the majority of discretion currently of where this money is spent, although he told me that the Judges are involved to an extent.


There are millions of dollars that flow in and out of this fund and in the spirit of transparency the tax payers of Arkansas need to know the details of that flow and have more oversight.  


The Arkansas Senate sent a resounding message on transparency yesterday with a unanimous vote for the "online checkbook" This would be an additional step to help bring fiscal responsibility and government transparency to our state. Please call the committee members and ask them to once again stand with Arkansans and support transparency. 

WINNER WINNER~ BUDGET THINNER... AND ONLINE

Today was an EPIC day in the Arkansas Legislature!


By a vote of 5-76-7 the House voted down 113 GIF (General Improvement Fund) request, totaling nearly a BILLION dollars. WAY TO GO!








They also reportedly voted down another 8 bills according to Tolbert Report. In his post today Jason explains what GIF's are and list the other 8 bills (read more...)


And that's not all...


A tweet from Rep. David Meeks this afternoon said "I've been assured that HB1992,the severance tax bill, will be pulled.It has been killed for now. Will let u know if that changes."
You will recall that HB1992 was the "shale tax" bill that I spoke of in my post "I Picked the Wrong Week..." and the committee meeting that was so horrible.


But wait there's more...


Just when you thought it couldn't get any better, HB2060, the bill that was a mandate for union dues to be taken from paychecks and paid directly to the union is being pulled and will be removed from the calendar~ 


AND.... Drum Roll Please

The Arkansas State Senate UNANIMOUSLY voted to approve SB221 the online checkbook bill!


IT IS A GREAT DAY IN THE STATE OF ARKANSAS~ 
PLEASE CALL YOUR REPRESENTATIVES AND SENATORS AND TELL THEM YOU APPRECIATE THEM STANDING WITH ARKANSANS!


AND>>> While you have them on the phone encourage them to vote the rest of this session to GROW JOBS~ NOT GOVERNMENT~ Yes on Capital Gains Tax Cut (HB1002), NO on Diesel Tax (HB1092) and Internet Tax(SB738)

A Note From AFP Arkansas on TAX Issues~

Stand with AFP Arkansas

Grow Jobs NOT Government

Capital Gains Investment Tax Reduction: SUPPORT

When it comes to creating new jobs, Arkansas is at a competitive disadvantage. Texas, Tennessee, Oklahoma, Missouri, Mississippi and Louisiana have eliminated or have reduced the job killing capital gains tax.  Arkansas has the opportunity to do the same by passing HB 1002.  According to the Wall Street Journal, “Businesses in high tax states invest less…and this leads to lower productivity and eventually lower average pay for workers.”  Let’s invest in Arkansas future by growing jobs, NOT government!

Uncommitted Votes:  Sen. Paul Bookout (Jonesboro), Sen. Linda Chesterfield (Little Rock), Sen. Jerry Taylor (Pine Bluff), Sen. Larry Teague (Nashville).  Senate Phone 501-682-2902.

Billion Dollar Diesel Tax INCREASE: OPPOSE

HB1902:  A bill that increases Arkansas’ diesel tax to 7.7 cents HIGHER than all of our surrounding states (Missouri, Oklahoma, Texas, Tennessee, Louisiana, and Mississippi).  Diesel taxes are almost entirely passed on to consumers in higher cost of retail goods including food, clothing, office supplies, etc. (according to a Stanford University study conducted in March of 2010.¹)  For every one cent diesel tax increase per gallon, Arkansas consumers face an increase retail price of 1.09 cents.  Because Arkansas has the third highest per capita recipients of social security payments in the United States, just over 20% of our population², the burden will be felt most significantly by those living on fixed incomes.

Uncommitted Votes:  Sen. Paul Bookout (Jonesboro), Sen. Linda Chesterfield (Little Rock), Sen. Jerry Taylor (Pine Bluff), Sen. Larry Teague (Nashville).  Senator Jake Files (Fort Smith), Senator Bill Sample (Hot Springs) Call Senate Phone 501-682-2902

1.http://www.gsb.stanford.edu/facseminars/events/applied_microecon/
documents/ame_10_10_marion.pdf
2.Social Security Administration Master Beneficiary Record

Remember, states with more economic freedom grow faster, have better wages and better quality of life.  Let’s get government out of the way and work together to grow jobs, not government!

For Freedom & Liberty,

Teresa Crossland-Oelke
Arkansas State Director
Americans for Prosperity

“Man is not free unless government is limited.” - Ronald Reagan

Letting Capital Prompt Gains~ Capital Gains Tax Cut~

Let’s kick this off with explaining what a capital gain even is in the world of taxation. It was brought to my attention the other day that many people don't have a clue what the term means. It does have one of those foggy, generalized sounds that conjures not a single image.
   

A capital gain is simply what the tax law calls the profit you receive when you sell a capital asset, which is property such as stocks, bonds, mutual fund shares and a business that constitutes real estate. This doesn’t include your primary residence by the way.

There already is a federal capital gains tax, which means that even without an additional state version, you will pay at least 10% (and as much as 36%) on a short-term capital gain (less than a year) regardless of your home state. 

But if you’re a business owner or someone who owns real estate, or has invested his money and lives in the state of Arkansas , you’ll also be forking over another average of 4.9 percent on the sale. 
    

I should point out again at this point that Arkansas is one of the nation's least business friendly states, coming it at 39th. We are the 14th highest in state and local tax burden at 9.8%   and Arkansans make $13,000 less than the national average median income. 

Our neighbor states (see map above) are kicking our Razorback hindquarters , and Texas, our arch sports rival is growing in business because they have figured out how to attract, rather than repel new businesses that spell additional new jobs. Those Longhorn folks, along with other neighboring Southern states, realize that eliminating their capital gains taxes is just good for business growth.

According to the Tax Foundation's Background Paper: 2011 State Business Tax Climate Index 

A far more effective approach is to systematically improve the business tax climate for the long term so as to improve the state's competitiveness. When assessing which changes to make, lawmakers need to remember these two rules:

• Taxes matter to business. Business taxes affect business decisions, job creation and retention, plant location, competitiveness, the transparency of the tax system, and the long-term health of a state's economy. Most importantly, taxes diminish profits. If taxes take a larger portion of profits, that cost is passed along to either consumers (through higher prices), workers (through lower wages or fewer jobs), or shareholders (through lower dividends or share value). Thus a state with lower tax costs will be more attractive to business investment, and more likely to experience economic growth. 

• States do not enact tax changes (increases or cuts) in a vacuum. Every tax law will in some way change a state's competitive position relative to its immediate neighbors, its geographic region, and even globally. Ultimately it will affect the state's national standing as a place to live and to do business. Entrepreneurial states can take advantage of the tax increases of their neighbors to lure businesses out of high-tax states.

Columnist Mike Masterson, (full disclosure) my husband, described in his column yesterday this very scenario: 

[A] reader told me that in 1991 an Arkansas banker he knew prepared to sell his bank holding company to another in-state, start-up bank holding business. Before the transaction occurred, the seller moved to a neighboring state that had no a capital gains tax on a business sale. This meant that he legally avoided paying capital gains and income taxes.
Six years later, the same holding company was bought out by another in-state bank that was, in turn, was bought by another, all in fairly short order.
“Those were stock exchange and tax-free gains until a shareholder sold his shares in the open market,” the reader wrote. “As a director and shareholder of the original purchasing bank, I bought as much stock in the bank as I could.”
When the time came for him to sell and pay capital gains, he’d already left Arkansas and saved a hefty chunk by avoiding capital gains taxes on the sale. He still holds a fair amount of stock in another bank after selling half of it while living in his new home state. Once again, he paid nocapital gains taxes because he didn’t have to.
Another of his friends in Arkansas owned a professional firm that he wound up selling. He also bought a home and moved to another state without any capital gains tax before the sale was complete. Cha-ching!
“Arkansas has lost quite a bit in sales and ordinary income taxes from just from us,” the reader. “Arkansas definitely needs to have this bill passed.”
Any questions so far? I hope the need for HB 1002 is becoming much clearer for our oddly resistant governor and any legislators who, inexplicably, oppose the measure, which could help attract businesses and jobs to our state.
Successful politicians find it best to vote for improving Arkansas and its people rather than engaging in or knuckling under to self-serving oleboy politics.
“I’m confident that the other Arkansas businessman and I made our moves to preserve those moneys forour heirs and our select charities,” said this reader, who’s approaching his 70th birthday. “No one did it for personal lavishness. We didn’t want or need to do that. There are a great many like us whose other taxes and contributions Arkansas has missed out on because of its current tax structure.
“I want to be sure to leave my family enough to live on and enough to cover almost any adverse health events,” he continued. “My state now has no income, capital gains tax, estate or death taxes. Were Arkansas close to that, I’d live in the River Valley until I die. As is, I live here.” Ole-boy politics.

 This is an important bill for Arkansas families and attracting Arkansas businesses. Get the facts and contact the Senate Revenue and Tax committee members,  ask them to grow jobs NOT government~  

Senators Lamoureux, Files, Sample and Williams have already committed to a YES vote.

Please contact Senators Teague, Taylor, Chesterfield and Bookout 

 

More on Capital Gains~

This is an important bill for Arkansas families and Arkansas business, get the facts and contact the Senate Revenue and Tax committee members  ask them to grow jobs NOT government~  

Senators Lamoureux, Files, Sample and Williams have already committed to a YES vote.

Please contact Senators Teague, Taylor, Chesterfield and Bookout 

(subscription required to read entire articles from Ark Dem. Gazette)


Mike Masterson's (fully disclosure, also my husband) column today on the Capital Gains tax cut~  

Tax reform for Jobs

By Mike MastersonTuesday, March 1, 2011
LITTLE ROCK — Why should the average Arkansan give a hoot about something so seemingly mundane as eliminating a capital gains tax?
GOP Rep. Ed Garner of Maumelle is the sponsor of such a bill, House Bill 1002, which has 40 co-sponsors. It passed in the House 53-40 and is now in the Senate.
Since Garner is the expert, I asked him why this potential law matters to everyday Arkansans. He said that the average Arkansan in our state, which has one of the country’s lowest per-capita incomes, might mistakenly think that eliminating the capital gains tax won’t mean a whit to them.
“They’d be inclined to wrongly think that eliminating this tax on new businesses will help the rich get richer while the middle class and working poor struggle to make ends meet,” he said.
“Supporters say the bill will create jobs, while its opponents call it a windfall for the rich that will cause budget shortfalls, which the governor has targeted at higher education.”
But Garner said that those scare tactics aren’t true by any stretch.
“This is not the typical capital gains tax cut because HB 1002 would eliminate the capital gains tax on all ‘new’ business investments in Arkansas. There would be no reduction of the tax on existing holdings, no socalled imaginary windfall for the rich or ‘trickle-down’ debate.
“Instead, for taking the risk of establishing a new business investment in Arkansas, our state won’t tax any profits the founders earn on their investment if the business is sold a year or more later.”
Why do we need this reform?
“Because Arkansas has a 4.9 percent capital gains tax and all but one of our surrounding states either don’t have this tax or already have eliminated all or some form of their capital gains tax for in-state investments.”
Does this bill matter that much?
“Ask any corporate accountant deciding on where in the South to locate his company’s new facility, or headquarters. Better yet, ask some high-profile Arkansans who move their business they built here before selling it to avoid the tax. These folks stay gone and their investment and charitable dollars go right along with them. You bet it matters when we don’t stay competitive.”

Read entire story here 

Another story from the Ark Dem Gazette~ This article was published February 27, 2011

EDITORIALS Over the Ledge Tomorrow, pigs might fly

The House has passed a bill that would cut the state’s capital-gains tax on some property. In a state that could use every bit of capital it can get, this is good news. Now let’s let those who create jobs create even more of them. And not in surrounding states, but here at home. The governor calls this voodoo economics. So did George Herbert Walker Bush when he was running against Ronald Reagan for the Republican nomination in 1980. If faulty memory serves, Ronald Reagan’s tax policies weren’t exactly bad for the country’s economy. (Read more...)

The Wall Street Journal Pipes In~

The State Business Tax Revolt

Governors get a jump on corporate tax reform.

President Obama says he wants corporate tax reform but hasn't proposed how to do it. Maybe he should take a look at the states, where as many as 10 new Governors are moving ahead to reform and reduce business taxes. The motive is to attract more businesses and create more jobs, while avoiding the fate of California and New York.

Take Iowa, which has the highest state corporate rate at 12%. Add that to the federal rate of 35%, and the Tax Foundation says the Hawkeye State may have the highest levy in the developed world. Governor Terry Branstadback ... (read more...)

And then there is my post from Feb 23rd,  A Union that Get's It   that points to the 

National Taxpayers Union is a union I can believe in. Yesterday they sent an open letter to Senator Larry Teague ,(D-Nashville), Chairman of the Senate Committee on Revenue & Tax, and the members of that committee.

CAPITAL GAINS and the $44.5 Myth~ Where's the Press~

Why haven't we read this in the press about the Capital Gains Tax Cut? 

 Most of the stories that I have seen in the media over the HB1002 filed by Rep. Ed Garner are talking about this huge loss of revenue of 44.5 million dollars. But have you read this?~

Sent to me by Rep. Garner~

The 44.5 Million Dollar Myth

DFA has projected a 44.5 million dollar impact on revenue of the 2013 fiscal year when HB1002 passes.  There is no, can be no, impact on the 2012 budget. Zero.  Let's examine the fantasy of this assumption.  It is important to understand this equation because many State funded agencies, most notably, Higher Education has been told that their budgets will be cut to make up for the imaginary loss of revenue.  It is unfortunate that political rhetoric has obscured the facts of this important legislation for job creation in Arkansas.

This is what would have to happen…..

In order to affect the 2013 Budget, capital investments would have to be made in Arkansas after July 1, 2011 through Dec. 30, 2011.  A six month window.  Those investments would have to be held for over one year and sold in the six month window of July 3, 2012 through Dec. 31, 2012.

The equation for this impact is as follows…

Capital Gains from NEW Arkansas investments made July 2, 2011 through Dec 30, 2011, held for over 1 year     minus     30% of the gain and sold at a profit July 3, 2011 through Dec 31, 2011                               (current exclusion)

equals   Capital Gains taxed at AR income tax rates for the taxpayer

                  (this is running at an effective rate of 6%)

So…… to have an impact of 44.5 million dollars this must be the equation….

1.064 Billion Gains - 319 million (30% exclusion) = 744.67 million x 6% (effective) = 44.5 million

Assuming an average 10% return, 10.64 Billion would have to be invested and sold in Arkansas investments with 6 month windows for the buy and sell.

If even as much as HALF of all Arkansas investment made could be sold at an average 10% profit after one year…. Total investments in Arkansas in the second half of 2011 would equal 21.28 Billion in new investments in Arkansas.

This is simply not possible. This is a myth.  Will the media report this?  What is the response of Higher Ed who has been told their budgets will be cut?