An opportunity not to be missed

0

There is no getting around it: bidenomics is crushing our economy. Historically high inflation, driving up the cost of daily necessities like food and school supplies, is ravaging the nation.

In Arkansas alone, goods and services are up more than 13% across the board since Joe Biden took office. To top it all off, record gas prices are now averaging over $4.50 a gallon in our great state, with no end in sight.

Arkansans are feeling the weight and strain of these symptoms of failing leadership. But perhaps no one feels it more than our small businesses, especially our world-class farmers and loggers whose ability to survive depends on the stable price of fertilizer and fuel.

As state legislators, we cannot stop Washington’s spending spree or end Russia’s war in Ukraine, both of which underlie our current economic conditions. However, we are taking proactive steps to relieve the Arkansans. Sitting idly by is simply not an option.

Did you know that when small businesses in Arkansas invest in new equipment and property, they cannot take the same amount of capital cost allowances from their taxes that businesses in surrounding states are allowed?

Indeed, at one point the state government arbitrarily decided that it would be best to require businesses to spread their capital cost allowances over several years at a lower amount than any of our states. neighbors. It’s a classic case of “the government knows best”.

But here’s the problem: With this arbitrary rule in place, Arkansas businesses have fewer resources to invest in equipment and goods that will help them grow their businesses and create more jobs for Arkansans, placing these companies in an uncompetitive position.

Take Bob, a soybean farmer in northeast Arkansas. Today, if Bob decides to buy a new tractor for $250,000 and then hire a new worker to operate the tractor, Bob could take a maximum of $25,000 in depreciation expenses to reduce his tax burden. .

A soybean farmer in Mississippi, Oklahoma, Louisiana or Missouri could take the entire $250,000 depreciation expense to reduce his tax burden. So in an unstable Biden economy, maybe Bob decides to hold on to what he has and not expand. After all, a bird in the hand is better.

But that means an Arkansan isn’t going to work behind the wheel of Bob’s tractor, lost revenue for the local tractor dealership in Bob’s hometown, and a more stagnant state economy at a time when we have more than never need investment and growth.

Our case is pretty simple: We should take immediate action to allow Arkansas small business owners like Bob to compete on a level playing field with competitors in neighboring states and nationally by allowing them to deduct the maximum depreciation charge. This will undoubtedly encourage more small business owners to take the plunge and invest in our economy.

President Trump and congressional Republicans saw the value of this simple change when they passed the Tax Cuts and Jobs Act in 2017. They simplified and modernized the tax code to allow that full deductions be taken immediately at the federal level.

But Arkansas has yet to follow suit and align our tax code with this common-sense standard. We should, and now is the time!

If we make this simple change, we can reward and encourage small businesses in our great state to invest and grow when we need it most, right now.

For those who might be concerned about the “cost” to the state of a tax change like this, rest assured that the tax impact would be minimal: it is simply a change in timing and a increased deductions that will benefit all Arkansans.

In fact, this change to our tax code could actually have a positive impact on revenue as businesses spend more and hire more, which means more jobs for Arkansans and possibly even fewer Arkansans depending on welfare and unemployment, which means more tax revenue and more resources available to the truly needy who depend on the safety net.

We cannot completely absolve the pain the Biden administration is inflicting on Arkansas’ economy. But this common-sense proposal is a huge step in the right direction.

If the Legislative Assembly meets later this year for a special session, this proposal should be at the top of the list. This is truly an opportunity small businesses in Arkansas cannot afford to miss.

Senator Ben Gilmore currently represents State Senate District 26; Rep. Howard Beaty represents State House District 9. Both Republicans are in their first legislative terms and are co-chairs of the new Arkansas Legislative Caucus on Forestry. Their districts represent portions of southeastern Arkansas.

Share.

Comments are closed.