Politics & Policy

The Biggest Tax Cut in Arkansas History

Cutting taxes on groceries? It's a concept that Clinton and Huckabee never quite grasped.

The people of Arkansas are enjoying the first months of the biggest tax cut in state history, a 50 percent reduction in the sales tax on groceries. A non-dynamic state estimate found that more than $100 million, which annually had gone into the state’s coffers, will now stay in consumer pockets — whether they shop at Piggly Wiggly in the Delta or at Kroger or Harvest Foods in Little Rock.

The tax cut is the biggest news in Arkansas this year. Of course, if you live elsewhere you may not have heard of the detail-oriented governor who rejected the long-held belief in this state that the poor and middle class should be taxed on what they buy at the food store. And I’m not describing either of the two former governors from Hope — Bill Clinton and Mike Huckabee. The Arkansas sales tax on groceries was increased during their terms, a fact overlooked by national media.

Arkansas, sadly, is one of few states that still levy a regressive tax on food, one of life’s essentials. And how did the tax survive two decades that included Clinton’s “Bridge to the 21st Century” and Huckabee-style “compassionate conservatism”?

The short answer was public education. The sales tax, including the tax on groceries, was raised under both Clinton (1983) and Huckabee (2004) to fund a K-12 system with serious problems — such as below-average student scores on standardized national tests and one of the lowest college-graduation rates in the United States.

The long answer, however, was a failure to cross the fiscal T’s, as in taxes, and dot the visionary I’s, as in imagination. This is where freshman Democratic governor Mike Beebe comes in.

Beebe, raised by his working mother, a waitress, had the imagination to make a phase-out of the grocery tax his main issue in the 2006 election. And this year he turned that idea into reality. The governor skillfully navigated the grocery-tax cut around legislative critics who preferred an earned-income tax credit that excluded the middle class. He would also base the tax cut on a budget surplus of nearly $1 billion that Mike Huckabee did not use to reduce taxes.

The grocery-tax cut took effect July 1. According to the Arkansas Policy Foundation it will save the average four-person family in the state $234 a year. That may not sound like much, but it is significant in a state where per capita income has generally ranked 48th or 49th in the nation. In 1983, when Clinton began what would be a ten-year stint as governor, per capita income in Arkansas was only 75.2 percent of the U.S. average. It increased only a hair to 77.6 percent of the national average in 2006, when Huckabee left office. But now there will be $234 more in each Arkansas household each year, an important amount in a poor state

The tax cut was a long time in coming. Former state senator Bud Canada (D., Hot Springs) never surrendered to cynics in his quest during the 1990s to end the grocery tax. Later, in 2002, a coalition of fiscal conservatives and economic libertarians advanced the issue with the support of the state’s largest newspaper, the Arkansas Democrat-Gazette, and its editorial-page chief Paul Greenberg, a conservative Pulitzer Prize winner. And now Beebe can take a bow.

Mike Beebe, in his first year as governor, has delivered the biggest tax cut in Arkansas history, one that has lifted a burden from the backs of the state’s poor and middle class. Neither Clinton nor Huckabee can ever say that.


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