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Arkansas’s leaders are again pushing to cut or permanently eliminate the state income tax. Disability Rights Arkansas believes that this is not only a mistake that could have a disastrous effect on the programs that individuals with disabilities rely on to live independently in their communities but also that this course of action is fiscally irresponsible.

Funds collected through the income tax make up roughly half of the state budget. These funds pay for education, healthcare, public transportation, road maintenance, etc. If you are a person with a disability, these may be the funds that pay for programs that allow you to live independently in your community, the kind of life you might have thought of as an impossibility at one point. Tax dollars fund Medicaid, day programs, vocational supports, and affordable housing. The list goes on and on. When the Governor and legislature members talk about tax cuts or eliminating the income tax, people with disabilities and their families face the genuine fear of the life-changing consequences that could come with that.

These supports are already underfunded in Arkansas. We have a record-breaking surplus of funds that state officials cite as evidence that we are all overtaxed. This surplus could expand vital programs and support others in desperate need of funding. Community providers of developmental disability services in this state are already asked to do too much with too few resources. After the last round of tax cuts, then-Governor Asa Hutchinson announced that he would be taking steps to clear the waiting list of people with developmental disabilities who had been waiting, in most cases for years, to access community supports. Clearing the waiting list was a laudable goal. However, many people on that list are still waiting for services because they lack the resources and staff to accommodate them. Hiring staff to fill the caretaker and support jobs necessary to make clearing that list possible has been incredibly difficult in the current job market with the uncompetitive salaries that community providers can offer under current Medicaid reimbursement rates. There is a shortage of affordable housing for individuals to transfer into the community. This has left many of those told they would finally be allowed to receive the needed services still waiting in limbo. Meanwhile, those who have applied for community services since the list was “cleared” are now stuck on a brand new list.

Using the surplus to justify continued tax cuts is also a problem. A large part of why the state has had an excess of available funds for the last several years is due to funding from the federal government, including for pandemic relief. These are one-time payments and will not be repeated going forward. Planning for the future without considering that these numbers have been artificially inflated is irresponsible. It is also irresponsible to consider reducing or eliminating the amount of tax revenue before we see the long-term budgetary impact of initiatives like the LEARNS Act and the Protect Arkansas Act. Regardless of whether you think these laws are good ideas or not, the fact is that they are two costly pieces of legislation. We do not have accurate projections of their cost beyond the first three years. Removing funds from state coffers before we know what the final bill will be for the Governor’s signature policies from the last year is irresponsible.
The final issue with continuing to cut taxes is the pattern of inequality that has emerged over the last several rounds of cuts. Those who are benefiting the most from these cuts are those who need them the least. In the previous round of tax cuts, 83% of the financial benefits of the tax went to the top 20% of earners in the state. In Arkansas, those with more money pay a smaller percentage of their income in taxes. This regressive tax structure creates a system where we provide those top earners with a windfall while eliminating funds that could support programs that would help those in our state who need it the most. One method to make up budget shortfalls caused by a reduction of the income tax, which has been employed in other states, is to increase the sales tax. This is a problematic solution. Increased sales taxes have been shown repeatedly to affect low-income households disproportionately. In short, when everything costs more, people struggling to afford necessities will suffer the most.

Disability Rights Arkansas believes that instead of continuing to reduce or eliminate the state income tax, largely to the benefit of those who need it the least, Arkansas should instead invest in its communities by strengthening and expanding the programs that allow those with disabilities and other underserved groups to flourish, achieve success on their terms, and live the lives they choose.