“Scarce resources can be allocated toward fiscal goals … when government does more with less.”  Policy Foundation, Arkansas Democrat Gazette, 20161


(February 12, 2018) Arkansas Gov. Asa Hutchinson proposed using efficiencies and savings from the transformation of state government to reduce the top state individual income tax rate from 6.9 to 6.0 percent in 2019.


Gov. Hutchinson proposed the tax cut in today’s State of the State address to the 91st state General Assembly. Legislators approved the freshman governor’s plan to cut income tax rates for Arkansans earning between $21,000 and $75,000 annually in 2015, and for those earning less than $21,000 in 2017.2  Arkansas’ 6.9 percent top income rate starts at $75,000.


‘More Competitive Tax Structure’


Gov. Hutchinson said Arkansas needs “a more competitive tax structure” that “is more fair … more simple.”  He stressed that goal could be achieved “without diminishing services,” and told legislators about a recent trip to New York City to promote Arkansas to business and media leaders.  At the Wall Street Journal’s3 editorial board he “was asked a question … ‘What is the top marginal tax rate in Arkansas?’  Board members observed Arkansas’ top rate was high.  Hutchinson noted, “That story illustrates the competitive nature of taxes in a mobile society. Businesses can relocate. Individuals can relocate.”


‘Transformation Efforts’


Gov. Hutchinson said his administration’s “transformation efforts to reduce unnecessary spending” are “in full gear.”  He described “transformation panels” created in early 2017 after the Policy Foundation’s Efficiency Project completed its work in late 2016.  The governor is projecting a $64 million budget surplus, with the bulk of funds set aside to pay for the tax cuts outlined in today’s address to the legislature.

1  “More with less: Government efficiency possible.”  Arkansas Democrat Gazette. December 9, 2016

2  Describing the income tax cuts, Gov. Hutchinson told legislators, “They said it couldn’t be done, we did it.”

3  “A New Arkansas Supermajority to Take On Government Bloat.” Wall Street Journal. January 14, 2017.  The column describes the Arkansas Efficiency Project’s goal: apply savings from efficiencies to achieve fiscal goals.