The Tolbert Report

The House passed a measure this morning that would eliminate the state tax on capital gains by a vote of 56 to 19 with many members choosing not to vote.  The bill – HB1947 – is sponsored by Rep. Ed Garner who believes the tax cut would help attract businesses to Arkansas. 

“Ultimately, this is all about jobs,” Garner told me following the House vote. “Any revenue lost would be more than made up for by additional investments in our state’s economy.”  By the eliminating the state tax on long term capital gains, Garner and other lawmakers believe businesses would be more likely to locate in Arkansas instead of other states with a more tax advantageous laws on capital investments. 

The bill will now likely be sent to the Senate Revenue and Taxation Committee where Garner will have to make his case once again.  Garner believes if he can convince the committee that his bill will spur economic development and therefore end up increasing revenue in the long run, then his bill will have a good chance.

However, a fellow state representative, speaking off the record, told me he was a bit more skeptical. He told me his understanding was that the Senate Revenue and Taxation Committee will kill most, if not all, the tax cut bills coming out of the House.  The committee is scheduled to meet on Monday morning where it will be potentially the last opprotunity to consider any revenue related bills.

UPDATE - Gov. Mike Beebe’s spokesman Matt DeCample passes on word to me that the governor has spoken to Rep. Garner on his bill but that he will not be lending his support.  “While it’s an admirable cause, the revenue impact to the state is too large for the governor to be able to support the bill,” said DeCample.

Gov. Beebe has proven to be perhaps the most powerful person under the dome at the state capital.  Will his lack of support doom the bill?

UPDATE II - It looks like the Senate Revenue and Taxation Committee came through for Gov. Beebe and killed a good idea.  According to Capsearch, the HB1947 died for lack of a second.   Remember this one next time a company decides to locate somewhere beside Arkansas.  What might have been!