Stricken language would be deleted from and underlined language would be added to present law. Act 182 of the Regular Session *JLL139* 01/30/2019 3:04:07 PM JLL139

State of Arkansas

1 92nd General Assembly A Bill

2 Regular Session, 2019

SENATE BILL 211 3

4 By: Senators J. Dismang, J. Hendren 5 By: Representatives Jett, Shepherd 6

7 For An Act To Be Entitled 8 AN ACT TO CREATE THE TAX COMPETITIVENESS AND RELIEF 9 ACT OF 2019; TO REDUCE THE TAX BURDEN ON ARKANSAS 10 TAXPAYERS; TO AMEND THE INCOME TAX IMPOSED ON 11 INDIVIDUALS, TRUSTS, AND ESTATES; TO DECLARE AN 12 EMERGENCY; AND FOR OTHER PURPOSES. 13

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15 Subtitle 16 TO CREATE THE TAX COMPETITIVENESS AND 17 RELIEF ACT OF 2019; AND TO DECLARE AN 18 EMERGENCY. 19

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21 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 22

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SECTION 1. DO NOT CODIFY. Title. 24

This act shall be known and may be cited as the "Tax Competitiveness 25 and Relief Act of 2019". 26

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SECTION 2. DO NOT CODIFY. Legislative findings and intent. 28

(a) The General Assembly finds that: 29

(1) The Arkansas Tax Reform and Relief Legislative Task Force 30 was charged with: 31

(A) Examining and identifying areas of potential tax 32 reform within the tax laws; and 33

(B) Recommending legislation to the General Assembly to: 34

(i) Modernize and simplify the Arkansas tax code; 35

(ii) Make Arkansas's tax laws competitive with tax 36

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laws in other states; 1

(iii) Create jobs; and 2

(iv) Ensure fairness to all taxpayers; 3

(2) The state's income tax laws should be amended to modernize 4 and simplify the tax code and ensure fairness to all taxpayers; 5

(3) Any savings realized by the state through tax reforms should 6 be dedicated to reducing the tax burden for Arkansas taxpayers; 7

(4) In recent years, the General Assembly has reduced the tax 8 burden on those individuals, trusts, and estates that have income subject to 9 the low-income tax table and the middle-income tax table; 10

(5) The General Assembly is committed to fairly and equitably 11 reducing the tax burden on Arkansas taxpayers; and 12

(6) Reducing the top marginal income tax rate for individuals, 13 trusts, and estates would reduce the overall tax burden on Arkansas taxpayers 14 and provide relief for those taxpayers that have not received a significant 15 reduction in taxes in recent years. 16

(b) It is the intent of the General Assembly to: 17

(1) Reform Arkansas tax laws to modernize and simplify the tax 18 code, increase the state's competitiveness, and ensure fairness to all 19 taxpayers; 20

(2) Offset any revenue savings realized through tax reform with 21 corresponding changes to reduce the tax burden for Arkansas taxpayers; and 22

(3) Reduce the tax burden on Arkansas taxpayers in a fiscally 23 responsible manner. 24

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SECTION 3. Arkansas Code § 26-51-201(a)(7)-(10), concerning the income 26 tax imposed on individuals, trusts, and estates, are amended to read as 27 follows: 28

(7) Every resident, individual, trust, or estate having net 29 income greater than or equal to twenty-one thousand dollars ($21,000) twenty- 30 two thousand two hundred dollars ($22,200), but less than or equal to 31 seventy-five thousand dollars ($75,000) seventy-nine thousand three hundred 32 dollars ($79,300), shall determine the amount of income tax due under this 33 subsection in accordance with the table set forth below: 34 From

Less Than or Equal To Rate 35 $0

$4,299 $4,499

0.75% 36

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$4,300 $4,500

$8,399 $8,899

2.5% 1 $8,400 $8,900

$12,599 $13,399

3.5% 2 $12,600 $13,400 $20,999 $22,199

4.5% 3 $21,000 $22,200 $35,099 $37,199

5% 4 $35,100 $37,200 $75,000 $79,300

6% 5.9% 5

(8) Every resident, individual, trust, or estate having net 6 income of less than twenty-one thousand dollars ($21,000) twenty-two thousand 7 two hundred dollars ($22,200) shall determine the amount of income tax due 8 under this subsection in accordance with the table set forth below: 9 From

Less Than or Equal To Rate 10 $0

$4,299 $4,499

0% 11 $4,300 $4,500

$8,399 $8,899

2% 12 $8,400 $8,900

$12,599 $13,399

3% 13 $12,600 $13,400 $20,999 $22,199

3.4% 14

(9)(A) For tax years beginning on and after January 1, 2016, 15 every For the tax year beginning January 1, 2020, every resident, individual, 16 trust, or estate having net income of more than seventy-five thousand dollars 17 ($75,000) seventy-nine thousand three hundred dollars ($79,300) shall 18 determine the amount of income tax due under this subsection in accordance 19 with the table set forth below: 20 From

Less Than or Equal To Rate 21 $0

$4,299

0.9% 22 $4,300

$8,399

2.5% 23 $8,400

$12,599

3.5% 24 $12,600

$20,999

4.5% 25 $21,000

$35,099

6% 26 $35,100 and above

6.9% 27 $0

$4,000

2% 28 $4,001

$8,000

4% 29 $8,001

$79,300

5.9% 30 $79,301 and above

6.6% 31

(B) For tax years beginning on and after January 1, 2021, 32 every resident, individual, trust, or estate having net income of more than 33 seventy-nine thousand three hundred dollars ($79,300) shall determine the 34 amount of income tax due under this subsection in accordance with the table 35 set forth below: 36

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From

Less Than or Equal To

Rate 1 $0

$4,000

2% 2 $4,001

$8,000

4% 3 $8,001 and above

5.9% 4

(10) For tax years beginning on and after January 1, 2016, every 5 Every resident, individual, trust, or estate having net income of more than 6 seventy-five thousand dollars ($75,000) seventy-nine thousand three hundred 7 dollars ($79,300), but not more than eighty thousand dollars ($80,000) 8 eighty-four thousand six hundred dollars ($84,600), shall reduce the amount 9 of income tax due as determined under subdivision (a)(9) of this section by 10 deducting a bracket adjustment amount in accordance with the table set forth 11 below: 12 From

Less Than or Equal To Bracket Adjustment 13

Amount 14 $75,001 $79,301

$76,000 $80,300 $440 15 $76,001 $80,301

$77,000 $81,300 $340 16 $77,001 $81,301

$78,000 $82,500 $240 17 $78,001 $82,501

$79,000 $83,600 $140 18 $79,001 $83,601

$80,000 $84,600 $40 19 $80,001 $84,601 and above

$0 20

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SECTION 4. Arkansas Code § 26-51-201(e), concerning the income tax 22 imposed on individuals, trusts, and estates, is repealed. 23

(e) If the director determines that federal law authorizes the state 24 to collect sales and use tax from sellers that do not have a physical 25 presence in the state, then after the first twelve (12) months of collecting 26 sales and use tax from sellers that do not have a physical presence in the 27 state, the director shall: 28

(1) After making the deductions required under § 19-5- 29 202(b)(2)(B)(i), certify to the Governor and the Office of Economic and Tax 30 Policy the amount of available net general revenues attributable to the 31 collection of sales and use tax from sellers that do not have a physical 32 presence in the state during the first twelve (12) months of collections; 33

(2) Use any amount under subdivision (e)(1) of this section that 34 exceeds seventy million dollars ($70,000,000) to reduce the rate of four and 35 five-tenths percent (4.5%) in the table contained in subdivision (a)(7) of 36

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this section equally for all taxpayers subject to the rate of four and five- 1 tenths percent (4.5%); 2

(3) Certify the amount of the reduction of the income tax rate 3 under this subsection to the Governor and the Office of Economic and Tax 4 Policy; and 5

(4) Incorporate the reduced income tax rate into the table 6 prescribed under subsection (d) of this section, which shall be applicable 7 for each tax year thereafter. 8

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SECTION 5. EFFECTIVE DATE. Section 3 of this act is effective for tax 10 years beginning on or after January 1, 2020. 11

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SECTION 6. EMERGENCY CLAUSE. It is found and determined by the 13 General Assembly of the State of Arkansas that income tax rates for Arkansas 14 residents are too high in comparison to the income tax rates in surrounding 15 states; that these burdensome income tax rates prevent Arkansas from being 16 competitive with surrounding states in the region; and that this act is 17 immediately necessary because it is in the best interests of the state to 18 increase Arkansas's ability to compete in the region by dedicating as much 19 funding as is economically possible and prudent to relieve the income tax 20 burden suffered by lower-income taxpayers in the state. Therefore, an 21 emergency is declared to exist, and this act being immediately necessary for 22 the preservation of the public peace, health, and safety shall become 23 effective on: 24

(1) The date of its approval by the Governor; 25

(2) If the bill is neither approved nor vetoed by the Governor, 26 the expiration of the period of time during which the Governor may veto the 27 bill; or 28

(3) If the bill is vetoed by the Governor and the veto is 29 overridden, the date the last house overrides the veto. 30

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32 APPROVED: 2/19/19 33

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