Oppose New Taxes in Arkansas

January 15, 2004

Dear Arkansas State Leaders:

We are writing to offer our firm opposition to any plan that would raise taxes on Arkansas residents this year. Raising taxes and pouring more money into a broken public school system will not improve the state’s schools. Rather, unless serious education reforms are undertaken, Arkansas taxpayers will see their money wasted. We urge the Arkansas Legislature and Governor Huckabee to oppose – and vote against (or veto) – any and all tax increases.

Based on a creative interpretation of the Arkansas Constitution, the State’s Supreme Court threw out the locally controlled mechanism traditionally used to fund education. Now, Members of the State Legislature, are rushing to pass the most “creative” tax increase proposal during a special session now underway in Little Rock. Legislative proposals introduced to date include hiking the sales tax from 5.125 percent to 6.125 percent (a tax increase of nearly 20 percent), expanding the sales tax to include services, raising the capital gains tax, and increasing personal and corporate income taxes. If the big spenders have their way, Arkansas residents could see more than one of these taxes rise.

Arkansas voters have heard the “raise taxes to increase funding for education” line before. Twenty years ago when Bill Clinton was Governor of Arkansas, he worked in concert with the Legislature to foist the largest tax increase in state history upon Arkansas taxpayers. Governor Clinton did this in response to a State Supreme Court ruling that the formula for distributing education funding was unconstitutional. Taxes were raised on the promise that better schools would produce better students, thus improving the state economy. Of course, as most economists understand, raising taxes will never improve the economy. The case of Arkansas was no different. Before the 1983 tax hike, Arkansas ranked 49th in the nation in per capita income. As of 2002, the state continues to rank 49th, still leading only Mississippi.

These tax hikes have not even improved student performance. Over the past 15 years, national test scores for Arkansas students have remained relatively flat and nearly 60 percent of students at Arkansas public colleges and universities need one or more remedial courses because they did not effectively learn the basics prior to entering college.

Ultimately, all of the tax hike proposals are doomed to failure because they put the cart before the horse. Before forcing taxpayers to spend even more of their hard-earned money on education, they need to know that they will receive their money’s worth. Increasing accountability and taxpayer choice should be the first considerations in improving the education system, not afterthoughts.

Because tax increases will harm the Arkansas economy, businesses, farmers, seniors, and children, we urge the Legislature and Governor Huckabee to explore all options for education reform with NO TAX HIKE!

John Berthoud
President
National Taxpayers Union

Oscar Stilley
Chairman
Arkansas Taxpayers Rights Committee

Karen Kerrigan
Chairman
Small Business Survival Committee

Grover Norquist
President
Americans for Tax Reform

Tom Schatz
President
Council for Citizens Against Government Waste

Jeffrey Mazzella
Executive Director
Center for Individual Freedom

Paul Beckner
President
Citizens for a Sound Economy

Kerri Houston
Vice President of Policy
Frontiers of Freedom