Two scholars affiliated with the Advance Arkansas Institute presented a research paper to the state legislature's Joint Performance Review Committee yesterday.
The paper, “Are Arkansas Taxpayers Getting Value for Money? The Impact of Arkansas’s Budget Decisions,” was presented by Professors Noel Campbell and David Mitchell of the University of Central Arkansas. The study found, in summary, that Arkansas has a relatively high-taxing, high-spending government compared to our regional neighbors. Further, Arkansas state government spends a relatively high amount on current consumption, and a relatively low amount on investment goods that would lead to economic growth -- and, furthermore, the investment goods state government does fund seem to produce relatively little. These findings suggest that in order to make Arkansas a welcoming place for workers and job growth, we need a state government that taxes its citizens less and spends its revenue differently.
According to the presentation, Little Rock families who make $25,000 pay $3,149 per year in state and local taxes. A working-class family in Little Rock therefore pays $409 more than a similar family in nearby Memphis. A Little Rock family making $50,000 pays $4,053 in taxes, putting Little Rock in the top half of taxing localities for the South Central US.
These higher taxes mean three things:
* Arkansas working families have less money to spend on food, shelter, clothing, and entertainment than their neighbors.
* Working families are less likely to want to settle in Arkansas than in neighboring states.
* Arkansas’s tax and budget policies make its citizens, educated at taxpayer expense, more likely to leave the state.
Another important finding from the presentation is that every $1 of revenue taken in by the state costs $2.65. So it is imperative that state government exercises extreme caution and restraint when deciding to pull dollars out of the private sector.
You can read the paper, Are Arkansas Taxpayers Getting Value for Money? -- or, if you're in a hurry, you can read the three executive summaries of three of the paper's most important points below.