News came Saturday that the state of Tennessee is now going to offer free college tuition at their universities for students whose families make less than $50,000 a year. Tennessee had already made community colleges tuition free.
It’s hard to count all the things that Tennessee is doing right. They have no state income tax, which helps attract lots of jobs. Look at all the auto assembly jobs they have attracted over the years, and what the most recent one, Volkswagen, has done for the city of Chattanooga.
Tennessee has been far more proactive than most states with K-12 education initiatives. They competed aggressively in the Race to the Top national funding. They’ve taken all their failing schools and put them into a special school district to get intensive support. Nashville is a boom town. Construction cranes can be seen all over Memphis. And Chattanooga and Knoxville are growing and prospering. It’s just hard to keep people out of your state when you don’t have an income tax and you have very good governance.
Meanwhile, in Arkansas, we’re discussing whether to raise $100 million of tax revenues on cigarettes and e-cigarettes and give lower income people an earned income tax credit, i.e cash, even if they don’t pay income taxes. It’s hard to be against helping lower income people with tax payments, although Governor Hutchinson already has helped by lowering income taxes for low income Arkansans four years ago. But would it be better to give them more cash to help with their house or car payments, or maybe even to buy a large flatscreen TV or help pay for a Netflix subscription. Or instead make community colleges and colleges tuition free to those with lower incomes, like Tennessee is doing.
Arkansas is doing good things, like moving income taxes lower, from 7% down to 5.9% over several years. But how does 5.9% compete with 0%? Why doesn’t Arkansas offer no state income taxes for any new resident of the state for five years?. Then when someone compares Arkansas to Tennessee, the income tax rate is the same, at least for the first five years of residency. Considering how people move around and change jobs and careers, they may not be concerned about paying an income tax six years from now. In the meantime these new residence would be paying property taxes and sales taxes in Arkansas, the second highest of all the 50 states. Actually, Tennessee is the highest. But that isn’t keeping people out of Tennessee.
Arkansas has competition, and we need to respond to it. In this case, it’s not just Texas, it is Tennessee. We are concerned that by 2050, when people look back and write the history of a tale of two states, we are afraid people will conclude that Tennessee got it right but Arkansas didn’t. Yet there’s still time to make sure this doesn’t happen, and turn our state into a growing and prospering place for all Arkansans, regardless of income.