Earn Less and Taxed More
It’s hard to get ahead in life when a neighbor keeps robbing you. You work hard to provide food and shelter for your family and maybe you even started a business. However, these efforts don’t go far when someone takes a portion of the food, the roof over the house, and wants a piece of the business’ profits without contributing any effort into earning them.
Arkansas is one of the lowest income per capita states in the country; our median income is $33,150 – well below the national average of $40,584. In other words, the people of Arkansas make less money than 46 other states! We also have a total tax rate of 8.1% (the 9th highest in the country) and the 13th highest state income tax rate. Surely, though, since Arkansas is taxed so much, we are using this revenue productively, right? It could be argued that a fast-growing economy is a somewhat decent trade-off for a nearly-$7500 difference in income… However, last year, Arkansas’ GDP only grew at a rate of 1.3% – ranked 38th in growth.
To put all of this into perspective: Families across Arkansas earn less than the average American, are taxed more than the average American, and the Arkansas economy grows slower than the average state. These statistics show just how limited economic freedom is in Arkansas and the effects that follow.
By lowering taxes on the citizens, more money stays in their pockets; they can use this money to buy products they want, donate to charities or non-profits (like Americans for Prosperity), or even create wealth through entrepreneurship or investment. One dollar of tax revenue not only is going to be divided between many programs, but there are a lot of bureaucratic and administrative costs that aren’t transparent and vacuum most of it up. It’s hopeful that 30 cents of that dollar actually goes to paying for programs, like education or Medicaid; compare this to private charities, where over 70 cents of every dollar goes directly to its intended cause (the rest is basic overhead). If one really cares about helping a child learn or taking care of those who can’t afford to help themselves, why not give them one dollar directly?
Promoting economic freedom not only ensures that programs receive the full amount of the donation rather than just the leftover scraps, but Arkansans will be free to pursue their other economic interests, like creating jobs, generating wealth, starting a business, sending their kids to college, and growing the economy. Embracing economic freedom will guarantee that Arkansas will witness a new day where it can serve as a good model for the rest of the country, rather than just a bad example.