Recently, state income tax has been a topic of discussion for many Arkansans. It is becoming increasingly apparent that we must work to eliminate state income tax in Arkansas so that our state’s economy can grow and remain competitive.
Contrary to popular belief, in Western society’s history, income tax is a relatively new concept. There are currently nine states in the U.S. that do not collect income taxes, those being Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Voters prefer taxes that are simple, transparent, and fair. In addition to decreasing an individual’s motivation, income taxes often result in double taxation. When income tax is removed, people are encouraged to work hard and earn more. By eliminating income taxes, workers don’t have to worry about being penalized with a higher tax bracket or, as we have seen so often, concealing their actual income to evade taxes.
Consequently, the removal of income tax results in an increase in savings and stimulates economic growth. Greater availability of capital gives entrepreneurs an incentive to increase investment and create new markets or expand existing ones. Lower taxes lead to higher spending power, higher demand, and more production, leading to more jobs. Income tax elimination will increase the purchasing power of individuals, resulting in additional investment and demand for production, which will lead to more jobs.
“But where are we going to get that lost tax revenue from?” is a common question. Each state has its revenue-raising methods, and those without state income taxes find other ways to fund roads, schools, and other infrastructure. It is feasible and desirable to eliminate the income tax and replace it with another form of revenue. To eliminate excessive taxes on our citizens, we must also examine what state programs are bloated, ineffective, and inefficient that can be cut from our state’s budget.
Taking the initiative to abolish state income tax is a big step toward Arkansas showcasing more economic “wins.” As a result, we will be one step closer to cultivating the ideal conditions demonstrated by the country’s economic powerhouses.