NORTH LITTLE ROCK — Republican candidate for governor Curtis Coleman on Wednesday outlined an economic plan that would cut state taxes by an estimated $2.4 billion, limit growth in state government and remove what he called roadblocks to economic growth.
“Let’s make reducing the tax burden on Arkansas taxpayers our No. 1 objective. Let’s do that first, and let’s put everything in order behind that objective,” Coleman, the CEO of Safe Foods Corp. of North Little Rock, said during a news conference at his campaign headquarters in the Safe Foods building.
Asked if he would place cutting taxes above funding public education as a budget priority, Coleman said he would.
“You start with tax cuts for taxpayers, but that doesn’t mean you have to cut funding for education,” he said.
The biggest proposed tax cut in Coleman’s plan is a phased-in reduction in state individual income taxes that he said would cost $2.3 billion over eight years. The plan also would reduce the number of state income tax brackets from six to four, with people in the upper three brackets seeing a decrease in their tax rate, though some in the bottom bracket would see a tax increase.
In the first year, people earning $50,000 or more would pay 6.82 percent, people earning between $20,000 and $49,999 would pay 5.85 percent, people earning between $10,000 and $19,999 would pay 4.38 percent and people earning $9,999 or less would pay 2.43 percent.
Currently, people in the state’s top bracket — earning over $33,999 — pay 7 percent and people in the lowest bracket — earning $4,099 or less — pay 1 percent.
Rates would decrease under Coleman’s plan each year. For the 2023 tax year, the rates for the four brackets, in descending order, would be 5.53 percent, 4.66 percent, 3.19 percent and 1.18 percent.
Coleman said he would pay for the tax cuts with a combination of expected increases in state revenue and reductions in the annual operating budgets of state agencies. He said he did not yet have any specific agency cuts to propose.
When asked in an interview how he justified changes that would raise taxes on the poorest Arkansans, Coleman said, “If they do, I’ve missed that.”
After being shown that his plan would raise taxes on some people by nearly 150 percent in the first year, Coleman said. “I would expect we would repair and change (that) before we did the actual proposal. It was certainly an unintended consequence and an oversight on my part, definitely not an intention to increase anybody’s taxes.”
Coleman also said he would propose eliminating the capital gains tax, which he said would cost $45 million a year; exempting military retirement pay and survivor benefits from the state income tax, which he said would cost $14 million a year; and cutting corporate taxes by $24 million a year.
His plan for corporate taxes is to do away with the current six brackets, with rates ranging from 6.5 percent to 1 percent, and replace it with just two brackets: Any business with an annual income of $1 million or more would pay 6 percent and any business with an income below $1 million would pay nothing.
Coleman also said he would create “tax-free enterprise zones” in every county where the median household income is below the statewide median household income. Any business that starts up in or moves from out of state into one of those counties would pay no state income tax for its first 10 years, provided it was not competing with a similar business in the region.
Coleman maintained that the tax break would cost the state nothing because it would go to companies that do not exist in Arkansas now.
He also said he would propose limiting annual growth in state government to the percentage of annual growth in the gross domestic product and would put more emphasis on technical training in schools.
Coleman’s plan also calls for the creation of several committees. One, composed of small-business owners, would review state laws of the last 10 years and flag those that inhibit economic growth; another, composed of small-business owners and taxpayers, would review current state regulations and flag those that inhibiting economic growth; and a third, composed of taxpayers, would review future obligations of the state, such as public employee pension plans, to determine if the state will have adequate resources to meet them and if adjustments are needed.
“We’ve got to remove the (statutory and regulatory) roadblocks to create growth in new jobs growth and in new income in Arkansas, which will obviously create new revenue for state government, which enables the tax cuts I am proposing,” Coleman said.
Coleman’s Republican primary opponent, former Congressman Asa Hutchinson, who has proposed his own plan for cutting individual income taxes, said in an emailed statement Wednesday that he welcomes other candidates to offer plans to cut taxes.
“Of course we must first meet our obligation for a quality education. I have offered a concrete and detailed income tax reduction plan that will lower taxes on middle-income families first without affecting our commitment to a quality education for our kids,” Hutchinson said.
Seeking the Democratic nomination for governor are former Congressman Mike Ross, who also has a plan to cut individual income taxes, and substitute teacher Lynette Bryant.