Back to business now that most of the snow has melted.
The Arkansas General Assembly now has a handful of bills to help the Arkansans – and Arkansan-owned businesses – who were kept afloat by government aid during the pandemic. These bills should be commended. And passed immediately.
The bills would discourage people from paying income taxes on money they received from aid packages. Not a terribly exciting topic – unless you are among the thousands and thousands of Arcansan people who have received such help. And paying back quite a bit of that to the government could mean the difference between closing your business and keeping your business up and running.
First, there is House Bill 1361, which would change the state's income tax law (passed in 1929). Thanks to Michael Wickline for the statement in Monday's newspaper: "The bill would exclude financial assistance received by a taxpayer through certain federal coronavirus aid programs from the definition of income, including providing credit under the Paycheck Protection Administration grants … and payments received under the Coronavirus Food Assistance Program … "
And the important part or one of the important parts: "If HB1361 came into effect, it would be retroactive for tax years beginning on or after January 1, 2019."
There are a few other key bills, notably Senate Bill 236, that would prevent Arcansans from paying state income taxes on unemployment benefits in 2020 and this year. Another bill, HB1049, would allow those receiving this money to have the state withhold taxes for later, as the state no longer has that ability. Talk about adding injuries, imagine receiving unemployment benefits several months a year and then receiving a tax bill on April 15th.
Some entrepreneurs and chamber types have testified in favor of the proposed legislation. The bills make sense, especially given the state's surpluses. Thank you, Governor Asa Hutchinson and General Assembly.
The story of the news site was remarkable in its details. For example how many millions were projected for the state budget and how many millions more than that actually came in during a pandemic year (!) And how many of the federal government's "loans" were given, what they turned into grants, etc. The best argument for however, the legislation came from Les Eaves, a state representative from Searcy:
"It's important to remember that these loans, obtained through the (Paycheck Protection Program), enabled companies to keep all of their employees on payroll, even when their machines were idle in factories," said he.
Then he added, "During tax return season, numerous business owners are discovering the painful reality that these Arkansas state PPP loans could still have a high tax burden. This approach contradicts the federal government's own treatment of the loans, which are considered the vital lifeline for small businesses in the midst of the pandemic. "
The fact is, these companies need the money more than the state of Arkansas. And if the federal government doesn't tax this aid, why should the state?
But perhaps some opponents put forward a better argument for the bills. An analyst was quoted in the newspapers as saying HB1361 would cut government revenues by $ 200 million or more over two years. And that "scarce public revenue" should better target those with greater needs.
First, who has a greater need than the business owner with employees on the payroll?
Second, the argument would work better if public revenues were really tight. The state of Arkansas, which has an unprecedented surplus in fiscal 2021, can afford these bills. We support.