- Associated Press - Tuesday, January 24, 2017

LITTLE ROCK, Ark. (AP) - The Arkansas House on Tuesday handily rejected a low-income tax credit proposal backed by Democrats, who said they hope to revive the idea when lawmakers look at deeper tax cuts in two years.

The proposal, which was defeated in the majority GOP chamber 66-28, had been presented as an alternative to Republican Gov. Asa Hutchinson’s $50 million tax cut plan and its prospects were dim before the majority GOP chamber. The House and Senate overwhelmingly approved Hutchinson’s tax cut proposal a day earlier.

“I feel a little bit like the lamb that’s being led to slaughter,” Democratic Rep. Warwick Sabin told the House shortly before the vote.

Sabin’s $40 million proposal would have granted tax credits equal to 5 percent of the federal Earned Income Tax Credit starting this year. Sabin had called the approach a more effective way to target low-income people than Hutchinson’s proposal, which would cut rates for those making less than $21,000 a year.

“I do have to question why we wouldn’t want to pass a tax cut that’s $10 million cheaper when we do have so much pressure on the budget, and it would be more targeted and more efficient in delivering the kind of tax relief we say we want to provide,” Sabin told reporters after the vote.



The vote was mostly along party lines, with Republicans raising concerns that the credit would be subject to fraud and could lead to some taxpayers receiving more back than they pay.

“For now, the point is let’s reduce the burden, the marginal tax rates, on our lowest income workers,” Republican Rep. Charlie Collins said.

House Democrats said they hoped the idea would be on the table for a legislative task force that would be formed under Hutchinson’s tax cut plan, which is expected to get final approval next week. The 16-member task force would be required to issue recommendations on broader tax code changes by the fall of 2018.

“I’m hopeful the task force will look at that and a lot of other things that affect working Arkansans, and I think that’s what this was targeted to,” House Minority Leader Michael John Gray told reporters.

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

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