Starting Monday, Nov. 16, Arkansas state legislators began pre-filing bills to be considered in the upcoming regular legislative session. On the first day of pre-filing, two bills and one concurrent resolution were submitted.
Sen. Jim Hendren (R) was the primary sponsor for two of the bills. His first bill, SB2, is aimed at creating an earned income tax credit, an increased standard deduction and an individual income tax reduction. This bill would also provide funding for income tax reduction through increased taxes on cigarettes and e-cigarettes.
His second bill, entitled SB3, is co-sponsored by 19 other state senators and representatives and would create a hate-crime sentence enhancement for crimes “committed against a person due to the person’s attributes.” It would also require an annual report on hate crimes in Arkansas.
According to Hendren’s SB2 bill, individuals or estates having net income of less than $22,200 will have a new tax rate table. Individuals with a net income between $13,400-$22,199 would be taxed at 3.4 percent, while individuals making $8,900 to $$13,399 would be taxed at 3 percent. Individuals making less than this amount would be taxed at 0 percent.
The bill would also revise the standard deduction for income taxes, making the standard deduction $3,300 per taxpayers for tax years beginning on and after Jan. 1, 2022. For married couples, each spouse will also be allowed to claim a tax deduction of $3,300 starting the same tax year.
This bill also addresses an earned income tax credit, and if passed, the bill would require the Department of Finance and Administration Secretary to determine the percentage of the income tax credit that the state can allow taxpayers to receive by Dec. 31, 2023 and each subsequent year. According to the bill, the tax credit must be at least five percent of the credit “allowed to a taxpayer under 26 U.S.C. § 32, as it existed on January 1, 2021, if there are sufficient funds in the Earned Income Tax Credit Trust Fund.
However, if there are not sufficient funds, the credit amount will be the “maximum amount for which there are sufficient funds” in the trust fund.
If an individual’s income tax credit exceeds their tax liability, the excess will be refunded to them.
While much of Hendren’s bill deals with lowering taxes, there are several sections that would see increases, particularly for the tobacco industry. Under this bill, there would be a special excise tax of 20 percent on retail receipts and proceeds of cigarette sales. In fiscal year 2022, the first $55 million generated through the excise tax would be deposited in the General Revenue Fund Account to offset the individual income tax reduction. Starting July 1, 2022, the first $83.7 million generated through the excise tax will be deposited into the General Revenue Fund Account.
Hendren also proposed a privilege tax on e-cigarettes sold in Arkansas that is equal to the total tax levied on tobacco products.
For the hate crime bill, there will be enhanced penalties for crimes “committeddue to victim’s race, color, religion, ethnicity, ancestry, national origin, homelessness, gender identity, sexual orientation, sex, disability, or service in United States Armed Forces.”
According to the bill, the state of Arkansas must “set out the factual predicate in the information or indictment filed with the court indicating that, upon a finding of guilt, the defendant is subject to a sentence enhancement.” The defendant must be found guilty beyond a reasonable doubt that he/she deliberately selected a victim based on the victim’s attributes and was not merely “hostile or contrary” to that attribute in an abstract manner.
The sentence enhancement can include an additional term of imprisonment equal to 20 percent to the individuals’ prison term; an additional fine equal to 20 percent of any assessed fine; or an additional term of probation, suspended sentence or suspended imposition of sentence equal to 20 percent of the individuals’ previous probation or suspended sentence,
The bill also adds a felony charge for bringing a “frivolous” or “groundless” charge for seeking a sentence enhancement. According to the bill, an individual who knowingly “brings or aids another bring a frivolous, groundless, or malicious prosecution that seeks a sentence enhancement” will be guilty of a Class C felony upon conviction.
As part of the bill, the legislature would require hate crime data to be compiled each year, with the Arkansas Attorney General heading the effort. The Attorney General would be responsible for establishing and overseeing a central database for collecting and analyzing hate crime information. The Division of Arkansas State Police and the Arkansas Crime Information Center would also serve as partners in the database project, with all law enforcement agencies in the state reporting their jurisdiction’s hate crime information to the Attorney General’s office.
On Dec. 1 of each year, the Attorney General would be responsible for publishing a summary and report of all the hate crime data.
A concurrent resolution filed on Monday was from Sen. Larry Teague (D) of Nashville, Ark. This bill would request that the Arkansas Social Security Administrator hold a referendum to determine if the General Assembly members “desire full Social Security coverage.”