Arkansas: Adressing a Clinton Legacy

Arkansas State Capitol

by Greg Kaza, Contributing Author: Arkansas Republicans control the state Legislature, governor’s mansion and constitutional offices for the first time since Reconstruction. The reversal provides an opportunity to address a Clinton legacy: the idea that taxing the poor and middle class to fund public schools leads to income growth.

One of the biggest issues to address is tax reform. Republican Gov. Asa Hutchinson vows to press ahead with a middle-class income tax cut, reducing top rates from 6.9 percent to 6.0 percent for those earning between $34,000 and $75,000 annually. The working poor would also benefit. Hutchinson wants to cut the rate from 6.0 percent to 5.0 percent for those earning between $20,400 and $34,000. The cuts, like reductions in the state grocery tax since 2007, are likely to boost Arkansas incomes.

But they are unlikely to create new jobs at rates greater than the U.S. average because they ignore higher income groups and the capital gains tax. Arkansas jobs growth (3.5 percent) trails the U.S. (7.0 percent) in the current expansion, according to the U.S. Bureau of Labor Statistics. The state will still have the second-highest top income tax rate in the southeast.

The Clinton’s, by contrast, raised the sales tax, including the regressive grocery tax to fund public schools, a legacy of Hillary’s Education Standards Committee. They vowed income growth but Arkansas’ per capita income rank barely budged, from 48th (1983) to 47th (1992) on their watch.

Gov.Bill Clinton and Former Gov.Orval Faubus (1/23/1991) / Img via the Arkansas Traveler

Proponents claimed it would “take time” for the Clinton’s tax-and-spend policies to work, i.e., students had to proceed through 13 years of K-12 education. Arkansas’ rank actually dropped to 48th (2006) before the grocery tax cut. (Today it is 42nd in the U.S.) Arkansans are still waiting for Hillary to acknowledge it was a mistake to tax the poor and middle class on their groceries.

Beyond commonsense tax reform, however, Arkansas also needs to fix its education system. State school board members are pursuing some of the most ambitious reforms to the education system in decades, including a pending proposal to take over the Little Rock School District, the state’s largest. Last year, the state Department of Education found 26 public schools in academic distress including six in Little Rock.

The Arkansas Policy Foundation identified numerous failing (‘F’ grade) Arkansas public schools in four studies (2005-2008), and recommended private school choice as a solution. Arkansas’ public school establishment opposes the idea, despite other southeastern states embracing choice programs such as tax credits or vouchers. Three states bordering Arkansas (Louisiana, Mississippi, Oklahoma) have also advanced the reform.

The response to Little Rock’s failing schools should not be a Clinton-style tax-and-spend policy. Instead, educational markets should be allowed to work by giving parents or guardians of students in failing public schools a tax credit or voucher to attend a private school. More than 20,000 students attend private Arkansas schools, a number much larger than groups opposed to the reform.

Taxing Arkansas’ poor and middle class to fund public schools did not generate income growth. Respond to this Clinton legacy with tax cuts and private school choice.
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Greg Kaza is executive director of the Arkansas Policy Foundation and  ARRA News Service contributing author.

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