- Associated Press - Thursday, January 29, 2015

LITTLE ROCK, Ark. (AP) - Arkansas Gov. Asa Hutchinson’s campaign promise to cut taxes for the middle class by $102 million moved a step closer to reality Thursday, with the House giving near-unanimous support to a plan that also would repeal portions of a 2013 capital gains tax break.

By a 95-2 vote, the House approved a proposal to cut income taxes by 1 percent for those making between $21,000 and $75,000 a year. Hutchinson, a Republican who was sworn in earlier this month, campaigned on the tax cut proposal and has called it his priority this session.

The legislation heads back to the Senate for a final vote next week.

“It accomplishes our goal of lowering the tax rates for Arkansans, bringing relief to Arkansans in our tax structure,” House Speaker Jeremy Gillam, R-Judsonia, told lawmakers before the vote.

Hutchinson later told reporters he was pleased by the support for the tax cut plan, “which is really an economic development vote and initiative, part of our plan to create more jobs.”

A House panel earlier this week changed the proposal to scale back its planned repeal of a capital gains tax break lawmakers approved two years ago. One lawmaker who had opposed the bill in committee over the $10 million cost of restoring part of capital gains tax break changed his mind and voted for it Thursday.

Rep. Kim Hendren, R-Gravette, said he’d been assured the state could afford keeping part of the break and “it won’t be used later to club some of us to vote for or against later something later.”

Rep. Matthew Shepherd, one of two lawmakers to vote against the measure, said he saw the bill as a “net tax increase” since it was repealing part of the capital gains break.

“I felt like (the tax break) was the right thing to do two years ago and still feel that way,” Shepherd, R-El Dorado, said.

The tax cut advanced two days after Hutchinson detailed his $5.2 billion budget proposal for the coming year. The governor is proposing boosting funding for schools, Medicaid and prisons and a 1 percent cut to most other state agencies.

Rep. Vivian Flowers, who also voted against the bill, said she was worried the cut would be too much of a strain on what’s already a tight budget.

“We’re basing all of this on 100 percent of the forecast, so it doesn’t leave a lot of room for us to deal with a natural disaster or an unforeseen (economic downturn),” Flowers, D-Pine Bluff, said after the vote.


Follow Andrew DeMillo on Twitter at www.twitter.com/ademillo

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