LITTLE ROCK, Arkansas — The Arkansas Senate approved middle-class tax cuts Thursday funded in part by a repeal of a $21 million capital gains tax cut approved two years ago.
The Senate voted 30-3 Thursday to approve the cuts, a key campaign proposal of new Gov. Asa Hutchinson. People making $21,000 to $75,000 a year would see a 1 percent reduction in their income taxes under the bill.
The bill faced limited opposition from senators who said they didn't want to pass a tax cut before hearing Hutchinson's full budget proposal, which the governor is scheduled to give next week.
"I'm in a quandary here," said Sen. Joyce Elliott, D-Little Rock, who voted no. "Who is not for a tax break? That person will not raise his or her hand."
Senate President Jonathan Dismang, R-Beebe, acknowledged those concerns, but said the Senate would have another chance to vote on the bill if the House approves it with amendments, as expected.
House leaders have predicted the tax cuts will pass easily.
The proposed cuts would reduce the income tax rate from 7 percent to 6 percent for those making between $35,100 and $75,000 a year. Those making more than $21,000 and less than $35,100 would see their rate go from 6 percent to 5 percent.
State finance officials estimate the bill will reduce state income by $12.8 million for the fiscal year starting July 1, and $80.6 million for the following fiscal year.
Hutchinson has indicated some state agencies will see small cuts in his budget, but has not yet released specifics.
The capital gains cut was part of $29.4 million in previously approved reductions that former Gov. Mike Beebe had urged lawmakers to delay implementing for two years.
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