House Revenue & Taxation Committee
Video
Transcript
Bills discussed (5)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
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HB1684
· 3 mentions in transcript
Matched: “a motion. Mr. Chairman, I move to take House Bill 1684 by Representative Stubblefield from the table. Okay,”
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Pre-2017 bill | ||
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HB1495
· 2 mentions in chapter, transcript
Matched: “HB1495”
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Pre-2017 bill | ||
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HB1757
· 1 mention in chapter
Matched: “HB1757”
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Pre-2017 bill | ||
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HB1802
· 1 mention in chapter
Matched: “HB1802”
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Pre-2017 bill | ||
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HB1899
· 1 mention in chapter
Matched: “HB1899”
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Pre-2017 bill |
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Chair
Unverified
0:00
In order, Representative Linderman, I'm going to recognize you real quick for
Representative Homer Lenderman
Unverified
0:07
a motion. Mr. Chairman, I move to take House Bill 1684 by Representative Stubblefield from the table. Okay,
the motion is to take HB 1684 off the table. If it's taken off the table, it cannot be voted on the same day by House rule. So if this motion passes, this bill will go back on the active agenda for some time later in the week. Having said that, all in favor, say aye. Aye. Any opposed? Okay.
Thank you, sir. HB 1684. We'll move down to the regular agenda. We have a special order today. I know we have some people that have traveled a long ways to testify. Call HB 1495. Representative Nichols, you're recognized to explain
Representative Jim Nickels
Unverified
0:49
your bill. Thank you, Mr. Chairman, and thank you, committee, for allowing this to be presented as a special order. because this is a major public policy issue.
It is of interest not only to Arkansas but across this country. And the bottom-line question that I think this legislation tries to address is, should a locally owned, say, tire store like Sherwood Tire in my district be taxed more than a branch of a national retailer that sells tires? And I think you would say, of course not. The answer is no. Yet, without combined reporting, national retailers and other corporations often have a distinct tax advantage over an Arkansas business.
Many national and multinational companies engage in complicated tax avoidance strategies that artificially shift profits out of jurisdictions where they are earned and put them in states where the business rate is lower or where no corporate income tax exists. This occurs because most large, multi-state corporations are composed of a parent corporation and a number of subsidiary corporations owned by a parent.
Some major retailers, such as Walmart and Toys R Us, have shifted profits earned by subsidiaries to reduce their taxes. Combined reporting addresses this practice by treating the parent company and the fully-owned subsidiaries as one corporation for state income tax purposes. In other words, the profits made by the parent and subsidiaries are combined and added up together. In a state with combined reporting, the corporate tax is determined by a formula on the percentage of business operations that take place in the state.
The primary goal of combined reporting is to create a level playing field for all businesses. It seeks to ensure that large, multi-state corporations cannot end up paying income tax at a lower effective tax rate than small businesses in Arkansas by subdividing themselves into separate corporations and then manipulating transactions within the overall corporate group. Opponents of combined reporting ignore potential benefits of this policy.
Small, often family-owned corporations doing most of their business in the state in which they are located generally do not have the resources to set up Delaware holding companies, captive real estate investment trusts, and other tax shelters that exploit the absence of a combined reporting in the state. But their large multi-state corporate competitors do. By nullifying the corporate tax savings from aggressive tax avoidance, combined reporting could benefit Arkansas's economy by preventing large out-of-state corporations
from underpricing the state's small businesses. Perhaps this phenomenon explains in part why a recent study financed by the Federal Small Business Administration found that states with more aggressive corporate income taxes, specifically including combined reporting, tend to have higher entrepreneurship rates. Combined reporting is a key tax policy choice needed to ensure that multi-state corporations pay their fair share of Arkansas income taxes, just as small Arkansas businesses must do.
The legality of combined reporting has twice been upheld by the United States Supreme Court, which found that it is a reasonable and fair strategy for taxing multistate corporations. I have at the end of the table with me Professor Richard D. Pomp. He is a professor of law at the University of Connecticut. He is a summa cum laude graduate at the University of Michigan and a magna cum laude graduate of Harvard Law School. He has taught at Harvard, NYU, Texas, and Boston College.
In addition, he has been a distinguished professor in residence in a university in Bangkok, Thailand, and a visiting scholar at the University of Tokyo Law School and at Harvard Law School. But his credential for being here and speaking on this issue is that he works for many Fortune 500 corporations. So he can speak to this issue from the highest level of our business entities that are out there.
I have given you an introduction. I'll now, if it's okay with the chair, let Professor Pomp introduce himself, and he has a few introductory comments. You bet. Professor
Pomp, you are recognized, and thank you for being here, and welcome
Speaker 11
5:57
to Arkansas. And, Representative Nichols, thank you. I love being here in Arkansas.
Chair
Unverified
6:01
I love being in any state where the corporate income tax is essentially elective. So there's not many states left I can visit where I can ask my clients,
how much would you like to pay
Speaker 13
6:15
and then make it happen? And Arkansas is still one of them. So you might as well have a sign at the airport when you come into town. Welcome to Arkansas, pick our pockets,
Chair
Unverified
6:29
because that's exactly the result of your corporate income tax. And it's not surprising nearly 60% of your corporations file a tax return showing no corporate income tax do, or that your corporate income tax has really disappeared on you from about 30% of state taxes to 7% in 2008,
Speaker 13
6:49
much more than can be explained by people electing to be limited liability companies and S-corporations and the like. So you have a disappearing
Chair
Unverified
7:00
corporate income tax. You have an elective corporate income tax, and it's a pleasure being here. My clients would disown me if they knew I was here because I'm going to talk about this bill. It's a technique for shutting down the games that the Fortune 500 and others play.
The bill, I am sure, has induced apoplexy in the business community, as it always does wherever
Speaker 13
7:29
it is introduced. And I can hear the mantra now, bad for economic development will lose jobs, shift corporations to other states. It's the same thing that has been said for decades in places like California, which has had combined reporting since the 1930s and doesn't seem to have done badly.
Chair
Unverified
7:53
Over half the states use it, and there's been a rush lately. Seven states have adopted it since 2004, Massachusetts,
Speaker 13
8:02
Michigan, New York, Texas, Vermont, West Virginia, and Wisconsin. They have joined longtime users like California, Arizona, Colorado, Idaho, Illinois, Kansas, Maine, Minnesota, Montana, North Dakota, Nebraska, New Hampshire, Oregon, Utah.
Chair
Unverified
8:18
So you have about half the states with corporate income taxes now using what this bill proposes, combined returning, and it's under consideration by other states.
Now, you could ask yourself why this rush all of a sudden, and I think it's quite simple. The Wall Street Journal, to its credit, has in a series of articles exposed the amount of tax avoidance that takes place without combined reporting. And so they have had just a series of exposés, and I remember testifying in Vermont, which was a state that started the second generation of states. And the part-time legislature, basically farmers, they knew they were being screwed somehow by New York lawyers and investment bankers.
They didn't know exactly how it was happening, but they knew it was, and they knew combined reporting was going to stop it. And by golly, that's exactly what they did. So even less sophisticated people understand there's a problem here, and they understand combined reporting is the solution. California is interesting. They had this problem that you are facing starting in the 1930s, during the Depression. Hollywood was making money.
It was one of the few sectors of the economy that was making money as people, you know, went to movies for escapism. And Hollywood was still the center of the country in terms of movie making. The movie would be made in California. And then when it was finished, the master print, which is the way things were done in those days, was transferred to a subsidiary in Nevada, Nevada not having a corporate income tax. Prints would be run off the master print. The movie would be distributed out of Nevada. The royalties would be collected in Nevada, and California wouldn't see a penny from this movie
that was made using the infrastructure of Hollywood. And the tax administrators, on their own, without statutory authority, developed this notion of combined reporting, which simply puts the pieces of a corporation back together again. It's really as simple as that, although obviously there's technical issues that surround any tax measure. But that, in general terms, is the philosophy, that your tax should not be a function of
how many pieces you're able to break yourself up into, that the tax department ought to have the right to put substance over form. And we have seen a slew of states since California grapple with that issue. It comes in so many spins and so many variations. Wisconsin adopted combined reporting recently because banks were basically stashing their portfolios in Nevada. And all that money was being collected in Nevada,
not paying a penny of tax in Wisconsin. They ended that. Transfer pricing, a very common way of doing, getting around a state that doesn't have combined reporting. I produce something, and then I transfer it out of state at a very low price so that no profits would appear here in Arkansas. I may transfer it to a corporation in Nevada or Delaware or some other very favorable tax regime, and then let them sell the good.
And all that profit is then collected out of state, and you see nothing from it. REITs, which is not a household word, but basically here's the way the game is played. You put your real estate in an entity. You have other members of the corporate family pay rent to this entity. So it's moving money from left pocket to right pocket. Those entities take a deduction. They reduce their tax, and the money comes back tax-free.
The details aren't as important as just it being another example of a game that gets played in a state that does not have combined reporting. And then I think most people here are familiar with the Toys R Us problem where you set up a holding company in Delaware, you transfer your name to that company, and then you pay a royalty to get the use of that name back. Why go to all that trouble? Because the royalty is deductible. There are so many spins and variations, and every time one is shut down, a new one springs up.
It is virtually impossible to stay on top of it without combined reporting. As good as a tax department is, and you folks are lucky here, you have a first-rate tax department, but they are overstretched, they are understaffed, overworked, and you're not going to keep up with investment bankers and tax lawyers sitting there out of state. They get paid very well to exploit every loophole there is, and I don't care how good the tax department is.
You folks have taken one measure. You have an add-back statute, which is sort of a poor man's combined reporting. It really doesn't do much to stop most of the strategies that I identified for you. And believe me, we tax lawyers have ways now of
Speaker 13
13:43
getting around the add-back statute, which is what you would expect. This
Chair
Unverified
13:50
is not really a revenue-raising measure. It will raise revenue, in my opinion, maybe $38 million to $95 million.
But you ought to separate that out. That money could be used for spending. It could be used to lower the rate of the corporate income tax. So this is not a measure that should be looked at as a revenue-raising measure. It's a measure that should be looked at as ending tax avoidance, ending your pockets being picked, and giving you control over your tax base rather than a bunch of lawyers sitting there out of state. The common argument that if I can anticipate, because these are the arguments that have come up in every state that's adopted combined reporting,
it's going to hurt the business climate. Well, you know, if fairness and if stopping game playing hurts the business climate, it will hurt the business climate. Will that have any effect? All we can do is look and see what's happened around the country. Between 1990 and 2007, that's two business cycles. There's only eight states with corporate income taxes that had net positive growth in manufacturing. You know, this is a sad commentary on what's going on in our country, but be that as it may, only eight states had net growth in manufacturing. Seven of these
eight were combined reporting states. So Arizona, Idaho, Kansas, Montana, Nebraska, North Dakota, and Utah. The two next best performing states, which by best we mean had flat manufacturing employment, were also combined reporting, and those were Oregon and Minnesota. Of the states that lost manufacturing, a majority did not require combined reporting. So, I mean, this is not to say you adopt combined reporting, you're going to have an increase in manufacturing. What it is to say
is that combined reporting really has nothing to do with whether you're going to see an increase or a decline in manufacturing jobs or in jobs in general. You know, unfortunately, we are all bit players in a larger economy. I'm willing to bet you that your major corporations here in Arkansas already do business in combined reporting states, because they are key players in combined reporting states, and your major corporations being multi-state corporations, no doubt, are in combined
reporting states already. California, which has had the longest history, as I said, certainly There's no roadblock to Silicon Valley or the other growth in California. You know, I could go on with anecdotes. I'm sure you're going to hear counter anecdotes. It's hard to make tax policy on anecdotes, especially when they are self-serving. But if you just want another one, Intel is one that often held up, headquartered in California, combined reporting state, plants, major plants in Oregon, Arizona, Colorado, all combined reporting states.
I can tell you as a tax lawyer, rarely, if ever, do I see one of my clients make a locational decision based on the corporate income tax. Why is that? Well, state and local taxes are a very small percentage of the cost of doing business in every state. It's about 2% of the general cost of doing business is all state and local taxes, and that's property tax. That's a large part of it.
The corporate income tax is about 10 percent of that 2.5 percent. And tax regimes come and go. None of us have the right when we come to a state to freeze the law. And so you just don't make $100 million decisions based on what the particular tax statute looks like today when it could easily change tomorrow. What is important on where corporations locate? Labor, energy, transportation, quality of life, where the CO went to school, grew up, all of that.
And it so overshadows the corporate income tax. A couple of pennies on the wage rate can wipe out anything you could do with the corporate income tax. It is so tempting to think the corporate income tax is the holy grail because everyone who's elected wants to do what's best for the state, and you have limited tools. You know, that's a sad truth, as I'm sure you discover every day. There's limited tools with which you can intervene in the economy because we are all sort of victims of these larger forces at play.
Can combined reporting lose money for a state? Boy, if that were true, then there would be a lot of tax lawyers who have wasted their time and clients' money at exploiting the loopholes of not having combined reporting. You are ready, believe it or not. You are already behind the eight ball because of a court case you had in Arkansas that allows corporations to elect combined reporting. Well, who's going to elect combined reporting? Only corporations for whom it reduces their taxes.
So the corporations that have already benefited from combined reporting have elected it. You have paid the price for that. And what this bill would do would be to say, okay, it ought to be symmetrical. It ought to be a two-way street. And we ought to be able to impose on corporations if it's going to stop game playing. So you really have elective combined reporting, which is the worst of all possible worlds because that has to be a revenue loser.
Elections always lose money for a state because the people who make the election know when it's in their interest or not in their interest. So this would be a game changer, but I'll tell you what is really needed, and that is a public disclosure bill. Publicly traded corporations right now report an awful lot of information on their 10-Ks and annual reports, including in the aggregate state and local taxes. We do not have that broken out by corporate income tax.
It would be very useful to pass a bill that would require publicly traded corporations, no invasion of privacy or anything else. They're already reporting this information to disclose how much they do pay in the Arkansas corporate income tax. And that, I think, would be a real eye-opener for you and probably would, I think, help demonstrate the need for a bill like this.
Representative, I will stop here and be very happy to take questions, comments, counterpoint. We have a few questions.
Representative Bell, you're recognized for a question. Thank you,
Representative Nate Bell
Unverified
20:46
Mr. Chair. Professor, you've mentioned several corporations who elect to be incorporated in Delaware. Why do you believe these companies have chosen to headquarter
Chair
Unverified
20:56
there? I don't think we have many corporations that are headquartered in Delaware.
We have corporations that are incorporated in Delaware because they have a very favorable corporate law. And you could be incorporated in Delaware and located anywhere else you want. The intellectual property holding company is a subsidiary. It often consists of a couple of file cabinets and a rented CPA. It's not a major presence. Delaware has a very favorable law, all part of their economic development, that says if you manage intellectual property out of Delaware,
we will not tax you on the royalties you receive. That is the reason why so many intellectual property holding companies are in Delaware. But they are not headquartered there. Their parent corporations can be headquartered anywhere in the United States. So Sherwin-Williams, which is a public case, one in Massachusetts, one out of New York, and a client of mine headquartered in Ohio, but they did have a subsidiary set up in Delaware,
as do many of the corporations that exploit this intellectual property game. So
Representative Nate Bell
Unverified
22:14
what's the benefit to these corporations to incorporate in Delaware?
Chair
Unverified
22:20
The benefit of incorporating in Delaware is you get a very favorable pro-corporation corporate law with a long history. so that if you're management and you're looking for a corporate law that is going to be pro-management,
Delaware is a very attractive place to incorporate. But once you have filed your incorporation papers with the Secretary of State in Delaware, you are then free to locate your business anywhere you want. Thank you.
Representative Bibiano, you're recognized for a question. Thank you,
Representative Mark Biviano
Unverified
22:54
Mr. Chairman. Thank you for a very informative presentation, Professor. tell me what's going on
at the federal level in regards to this issue you see this is an
Chair
Unverified
23:04
issue that does not come up at the federal level
because the feds have what's known as consolidated reporting which is really a kind of combined reporting if you are a major corporation you have an election to file a consolidated return which brings together all of your subsidiaries And so the feds have really no need to police the transfer pricing game. They have no need to police the intellectual property holding company game because those entities are all going to be brought back together exactly the way combined reporting does.
So in a sense, by having consolidated returns at the federal level, this combined reporting has already been dealt with maybe since I think we have consolidated returns since the early days of the 20th century. So the feds have no need to worry about this problem, which is why states like Arkansas can't rely on IRS audits to help police your corporate income tax. This is a problem unique to you.
Representative Mark Biviano
Unverified
24:15
How many states currently are in the same position
Chair
Unverified
24:19
as Arkansas? Well, there's about 45 or 46 states with corporate income taxes. Twenty-three of them have combined reporting, so about 23 states would be in positions like
Representative Mark Biviano
Unverified
24:29
you. Okay, so over about half the states have chosen not to do this at this point.
Chair
Unverified
24:38
That is correct. Why do you think that is? I think that they get beaten down by business lobbyists who come in with the self-serving anecdotes that I referred to
that raise the banner of economic development and repeat the mantra of business climate. And oftentimes the other side is not fully presented. So there's a lot of studies out there and a lot of literature, and it doesn't take long on Google to download the other side of the story, that there's a lot of studies that have shown that there is no correlation between combined reporting and a loss of jobs or a movement of corporations or a decline in economic growth.
Representative Mark Biviano
Unverified
25:33
Okay. So let me make sure I understand. So what I'm hearing is even though half the states in our country do not do this, you believe there is no economic incentive
Chair
Unverified
25:48
for those states to remain the way they are? MR. Yeah. Since 2006, we, of course, have had about seven states adopting combined reporting. So the trend is certainly in favor of adopting combined reporting.
But yes, you now, on the larger issue of the impact of the corporate income tax in general on locational decisions, you have probably 40 or 50 years of literature, all of which is very skeptical about there being any correlation whatsoever. You know, it would be nice if the holy grail, let's eliminate our corporate income tax and jumpstart the economy. I agree with that, by the fact. Well, that's fine.
It's very tempting. It would just be nice if there were any empirical support for that,
Representative Mark Biviano
Unverified
26:41
you know. Who are the seven states that recently have adopted? Massachusetts, Michigan,
Chair
Unverified
26:45
New York, Texas, Vermont, West Virginia, and Wisconsin. And how would you
Representative Mark Biviano
Unverified
26:50
characterize their overall financial situation in each one of those states right now? They have balanced budgets. They
run in deficits. They run in.
Speaker 13
26:58
Well, there's not many states running balanced budgets, regardless of where you look, whether they're combined reporting or not. Unfortunately, you are. But there's not a whole lot of states.
This is, you know, if you have natural resources, you have oil, that's a pretty good indicia you're going to be doing okay. So if you're blessed with natural resources, that's fine. If you took a big hit when Wall Street went south, which is sort of our story in Connecticut, We live off of basically Wall Street. We have a lot of wealthy people work on Wall Street, commute to Wall Street from the southern part of Connecticut. When Wall Street went south, we went south. So hard to blame that on our corporate income.
Representative Mark Biviano
Unverified
27:38
So you would agree that what we've been doing in Arkansas, we're doing pretty well in the way the
Chair
Unverified
27:48
laws are written today? No, I don't know what your economic situation here is. What I am comfortable testifying is that there's 40 or 50 years
Speaker 13
27:57
of literature that says the corporate income tax does not correlate with economic growth, so. Thank
you. Representative Love, you're recognized for question.
Thank you, Chairman. I just want to get back to the bill. In plain English, tell me what this bill does. Is it because from what I'm understanding and what I read, if Walmart does a percentage of business here in Arkansas, you're saying that income will be taxed and it will be kept here instead of them allowing them to shift it or send it somewhere else. Is that what you're saying?
Chair
Unverified
28:38
Well, I guess, you know, to put it in simplest terms, this is like putting Humpty Dumpty back together again.
I mean, if you think of corporations as eggs and a corporation starts to drop eggs throughout the country, this puts them all back together again. It says, basically, we don't care whether you form another entity in Delaware that you're transferring things to or not. We're going to treat that as moving money from your left hand to your right hand. And just the way you and I don't get a tax deduction when we take our wallet out and shift it from the right side of our pants or left side of our pants,
a corporation is not going to be able to affect its income tax either by moving its wallet, its money, its assets from one pocket to the other. You know, in simplest terms, that's what the bill does.
Okay. Follow-up. No, motion at proper time. Representative Harris, you're recognized
for a question. Thank you, Mr. Chair.
Representative Justin T. Harris
Unverified
29:40
I would like to say I wish you were my professor because you're quite entertaining. And the more you spoke, the more things started to become clear to me.
So my question could be for Representative Nichols or you. So what I'm kind of getting the gisting to go back to Representative Love, we're looking at taxing the bigger corporations in Arkansas that provide many jobs across the state and provides income into the state. So we're looking at maybe, you know, if we want to have fairness, but we're going to raise those taxes. Is that correct?
Chair
Unverified
30:17
Well, this bill will raise revenue. Whether you use that money to reduce the corporate income tax or not, the rate of it is a separate issue.
In other words, you don't have to use the money for spending. You can use that money to finance a reduction in the rate of the corporate income tax. In terms of jobs, your corporations are already in combined reporting states. So it's not like your being a non-combined reporting state is the reason there may be jobs here. I mean, we all wish it were that easy. Can I ask another question, Mr. Chair? Yes, you're right.
Representative Justin T. Harris
Unverified
30:56
So how then you made a statement. How are you going to
Speaker 60
31:00
raise the revenue? Well, by shutting down loopholes, you will raise revenue.
Chair
Unverified
31:08
And by raising taxes? Well, raising taxes is a different issue because I can give back that revenue by lowering the corporate income tax. So I won't be raising taxes. I will be having a fairer system. There will be winners and there will be losers, but that is always true of tax reform. When you shut down loopholes, you are going to be raising revenue.
But you can give that revenue back through lower tax rates, and you will end up with a fairer system than what you now have, one that isn't prone to tax manipulation, a tax system that you control rather than some tax lawyer controlling. Thank you. Representative Garner, you're
right, can ask for a question. Thank
Speaker 66
31:53
you, Mr. Chairman. So what you're saying is let's level the playing field, and if you don't want to raise taxes, let's just level the playing field and reduce the rate of tax.
Speaker 67
32:06
Is that – That is one of your options. I'm not here to advocate anything, but that's one of
Speaker 66
32:13
your options. Then for Representative Nichols, does – I didn't read anywhere in here that your bill is proposing to lower the state's income. Is there a tax reduction anywhere in your bill, Representative Nichols? Not in my bill. The attempt
Representative Jim Nickels
Unverified
32:28
in my bill is to close this loophole. I feel that if
you'll note the title of my bill is the Arkansas Small Business Tax Fairness Act
because I feel that the Arkansas small businesses and working families end up paying proportionally more toward the operation of government and that the multi-state corporations that are able to shift their income out of state are able to avoid
Representative Ed Garner
Unverified
32:56
that. And I agree with the overall concept of eliminating loopholes in credits and lowering the – keeping the tax rate as low as possible.
That's something – you know, I'm a member of ALEC, and that is a core principle, and so I agree with that. But my problem is it looks to me that if that is what your witness is testifying to, that your bill, in essence, would affect a raise in taxes. Is that the bottom line of what your bill does at this point? The
Representative Jim Nickels
Unverified
33:34
bottom line of this bill, I think, is that it would have those corporations
and multi-state businesses that shift their income out of state. They've earned the income in-state, and so I think they owe it to the state of Arkansas to pay their fair share of taxes instead of letting it all fall on the backs of the Arkansas small business entrepreneur and
the working families of Arkansas. This is why this is entitled the Arkansas Small Business
Representative Ed Garner
Unverified
34:04
Tax Fairness Act. I don't disagree with the intent, but the bottom line of what your bill does, my understanding of it is that in creating this fairness,
that the effect of your bill will be to raise taxes on corporations that work in Arkansas, or at least the larger corporations that are currently using tax legal. I guess we're talking about legal tax. I mean, you're not saying that corporations are doing something illegal, are you? Not at all. I'm saying there
is a – But you're trying to close the loopholes, but in doing that without lowering the tax, you are, in effect, raising taxes
Representative Jim Nickels
Unverified
34:44
on large corporations in Arkansas. Is that correct? But those large corporations that may be impacted in Arkansas are already impacted in several other states that have combined reporting.
They understand combined reporting. If I was a large multi-state corporation, I would take advantage of this. But I think it is bad public policy for us to put the burden on the Arkansas small business and the working families of Arkansas when these large multi-state corporations should also be stepping up the table and paying their
Representative Ed Garner
Unverified
35:13
fair share to Arkansas. Does your bill raise taxes on large corporations
Representative Jim Nickels
Unverified
35:17
doing business in Arkansas? I'll say my bill collects more revenue than is currently collected. This is not a bill that is increasing any tax rate.
is not adding to the tax code in that way. This is just closing a loophole on how the income is reported. Will large corporations pay
Representative Ed Garner
Unverified
35:36
more tax revenue to the state of Arkansas? Professor Pomp had a figure
Representative Jim Nickels
Unverified
35:41
he said a while ago, and I don't remember exactly what it was, if you can add that.
Chair
Unverified
35:51
By shutting down loopholes, the experience in other states shows estimates for Arkansas would be about $38 to $95 million.
Thank you, Mr. Chairman. Thank you. In terms of whether this is legal or not, I will ask you, if my client does something, it's challenged by a state tax department, and my client loses in court and ends up not being allowed to do what they hope to do. I don't know if you want to call that, oh, they did something illegal. They did something that was gray. It certainly was not tax evasion. It wasn't that they failed to report income.
It wasn't that they made up something. No, they did something, and a court might have determined there was no business purpose. There was no motivation for it other than tax, and so they end up losing. So, again, I don't know what label you want to
put on it, but. Representative Collins, you're recognized for a
Representative Charlie Collins
Unverified
36:53
question. Thank you, Professor. And I'd just love to tap into your vast knowledge for a moment. Our corporate income tax right now, I think, maxes at 6.5 percent on 100K or more.
How does that compare with other
Chair
Unverified
37:06
states? When you do comparisons, it is very important not to just compare rates, rates. That a tax is the product of two numbers, and that is the rate and the base. And you can have whatever rate you want as long as I determine the rules on the base. That's an old saying we tax lawyers have. And indeed, there are many a lobbyist who doesn't really care about the rate, actually enjoys a high rate.
I have been in lots of situations where a lobbyist doesn't want the rate lowered because it is very useful cosmetically to have a high rate as long as their clients don't pay it. So you could have as high a rate you want as long as I can manipulate the base so that a high rate times a very small number is going to be a very small number. And so, again, the only way to meaningfully compare states is to really posit a hypothetical corporation,
give them a certain payroll, a certain capital base, put them in various states, and then see what they would pay. And there are studies that do that. So
Representative Charlie Collins
Unverified
38:19
I don't know what that one's conducted. If I could just follow up, Professor, because I think that was extraordinarily insightful and incisive analysis. Would you, if you had to make an estimate, consider Arkansas to be a
Speaker 89
38:34
high-rate, narrow-based state or a low-rate, wide-based state?
Chair
Unverified
38:38
I would think a low-rate, low-based state. It's elective here. A client comes to me and says, you know, I'd like to pay this amount to Arkansas. Can you arrange that? Yeah, we could probably arrange that. So I don't know how I classify that as a very pro-loophole elective corporate income tax, and I don't care about the rate. But the rate, if you look at it as just an absolute number, it's in the middle. Thank you.
Okay. I don't see any more. Well, I do have some more questions. I'm sorry. Representative Colin
Smith, you're recognized for a question. Thank you,
Representative Linda Collins-Smith
Unverified
39:19
Mr. Chair. Representative Nichols, I'm not picking on Walmart, but Walmart's a huge employer in the state of Arkansas and across the nation. Can you tell me that if we were to not lower corporate taxes at the time that we accepted your bill,
what would keep one of our
own state companies from moving out of the state? Well,
Representative Jim Nickels
Unverified
39:50
I think Walmart has a significant capital investment in this state, and I don't think this would cause
them to move from the state. If a Walmart representative is wanting to testify against this bill, they would tell you that in a number of states, they do combine reporting. Those states where they have operations, they do collect on the income that is earned in that state.
I think any corporation would use whatever idea they would have to avoid paying taxes. And, you know, if you've got a Walmart neighborhood market in your community, and I can't speak for Walmart, but I think just some of the information that I've gleaned from looking at this issue, So that Walmart store, the physical location is probably owned by a separate corporation in Delaware.
And then that store will be paying rent to that Delaware corporation. So it's shifting that income out of Arkansas. And I think that if the money is earned in Arkansas, that the people of Arkansas need to be able to benefit from that. And instead of the tax burden just falling on the locally owned businesses that we have in this state, you have heard many a time that the job creation that we so desperately need comes from small business.
And small businesses, to a great extent, are local businesses. And the tax scheme right now just puts more of the burden on the local, usually family-owned small businesses and the working families that pay their taxes that cannot start a trust in Delaware to shift their income. But most of the multistate corporations, they are used to combined reporting.
And I think if they were honest, they would tell you that combined reporting is a fair system. Now, saying that, can we avoid paying taxes if we can? Yes, they're going to do that. I think their shareholders would expect that. But I think as a people in the state of Arkansas, if you are getting the benefit of earning your money here, earning your income here, then you should be taxed on that income
just like we are taxed on the income that we earn from our jobs and our small businesses. A follow-up, Mr. Chair? One of the
Representative Linda Collins-Smith
Unverified
42:45
things I think that concerns me about that, it seems like maybe Walmart has some loyalty to the state that it started its business in, and I appreciate that, but I was sure would hate to test all those jobs. So I guess I just have a little bit of concern, and I wanted to ask your thoughts on that. I just had a little concern about the fact that all those jobs created.
I sure would hate to lose them. It's a consideration I have to keep
Chair
Unverified
43:13
in the back of my mind. Thank you. Yeah, I mean, no one wants to lose jobs. I guess the question I would want to know is what percentage of the total cost of doing business in Arkansas is their corporate income tax? I don't know. This is all confidential, which is why I think a disclosure bill would be very useful so you have some of the information you need to really make that kind of informed judgment. I know what the studies show elsewhere, and it's a very tiny percentage of the cost of doing business.
So, you know, what do I do professionally when I don't represent business? I train tax lawyers, and I train them to be aggressive and to exploit every weakness possible. That's what they do for a living, and they do it well. You have to stay on top of them. You have to be one step ahead of them because they're going to kill you every time, and that's what they're doing now. And they're doing a great job at it. But you have techniques and tools. You know, this is the 21st century. You have 21st century tools, and combined reporting is one of them.
And without it, you are really at the mercy not only of me but of my students. You know, we crank out a couple thousand tax lawyers every year,
Representative Stephen Meeks
Unverified
44:30
so. Representative Meeks, you're recognized for a question. Thank you, Mr. Chairman. I have two questions, if that's all
right. First question I have is if I've got a subsidiary located in the state of Oklahoma, and that subsidiary earns a certain amount of income, is that income that under this provision here, since we're doing this combined reporting,
Is that income going to be taxed in both states, just Oklahoma, just Arkansas,
Speaker 60
44:59
or how would that work? Well, I'll start and talk generally. One of
Chair
Unverified
45:04
the things about combined reporting is it rejects notions like income is earned in X. That's one of the problems, that when I manufacture in state A and I finish it in state Y and I store it in state Z, and I sell it to customers elsewhere, it is impossible to really know where income was earned
because you have all this synergy, all this interdependency, all these flows of value. That is what combined reporting acknowledges, that we don't know where income is really earned. It's certainly not where you book it. And so what we do is we put all the pieces back together, and then we apply the same formula that you now apply. And so if they create a subsidiary in Oklahoma and it's part of the unitary business, the results of the Oklahoma subsidiary will be added to the results of all the other parts of the family,
and then you will take an apportioned share of it. Now, I don't, you know, I'm sure that's what the bill does. I've not looked at details of the bill, but that's the
Representative Stephen Meeks
Unverified
46:13
way combined reporting works. I just want to make sure that this corporation is not going to be paying state income taxes on the same income
Chair
Unverified
46:21
to two or three different states. Well, if they are consistent in their use of formulas and whatnot, it shouldn't happen. But let me assure you that what we tax lawyers do for a living is make sure that there is no double taxation.
There is under taxation. That's how we earn our money. It's to make sure the result that you described doesn't happen, and where we really earn our keep is to make sure that there's
Speaker 13
46:48
under-taxation and there's less than 100 percent taxation.
Representative Stephen Meeks
Unverified
46:52
So the $50 million revenue increase that we could expect of the state of Arkansas, is that $50 million increase coming from money that's not going to other states, or is this an increased expense to the bottom line of the corporation?
Speaker 60
47:08
Well, it will be an increase. I don't know if bottom line or not. It will be an increase from
Chair
Unverified
47:15
not being able to exploit a loophole that has been exploited. So it's money that should have been paid here for years and now will be paid going
Representative Stephen Meeks
Unverified
47:23
forward. So we're not taking money from Texas, Oklahoma, or our surrounding states. No,
Chair
Unverified
47:28
Delaware, one of the reasons we set up these intellectual property companies in Delaware is Delaware doesn't tax them. So you're
Speaker 11
47:35
not taking any money from Delaware. Okay. And
Representative Stephen Meeks
Unverified
47:37
the second question I have is you call this a small business fairness.
And if these corporations are, we'll
just use $50 million to have a number out there. If the corporations here in Arkansas are going to have to come up with an additional $50 million to cover this revenue expense, the general notion is with businesses is that you want to reduce your cost of business, so that way the fee that you're charging to your customer is going to be competitive. For example, if we use Walmart, for example, they're bigger, larger entities,
so they can usually charge a little bit less on their products than, say, the local corner shop does. The assumption is under this is that perhaps by, quote, unquote, making this more fair, the cost of business has become more equal. So, therefore, the corporation, I guess the bottom line question is here, is Walmart going to end up charging more for their product to cover this cost, to, quote,
unquote, make it more fair between the business corner and Walmart?
I just don't see that happening. If you would comment
Chair
Unverified
48:49
on that. Well, let's put it differently. If you were to eliminate your corporate income tax,
Representative Stephen Meeks
Unverified
48:56
do you think the prices would drop at Walmart stores? I would think so to the extent as possible, yes Competition would eventually drive those prices down But back to my original question Making this fair between the large
corporations If this gets passed Is this really going to
Chair
Unverified
49:14
make things Fair? If I have a loophole and you don't
I think you take away my loophole The system is fair Thank you Can we have a few
more questions? We do have several people that are signed up to speak on the bill, so
I just want to throw that out there. Having said that, Representative Viviano, you're recognized for the
Representative Mark Biviano
Unverified
49:39
question. Thank you, Mr. Chairman. Are Arkansas corporations doing anything illegal by taking advantage of those
Representative Jim Nickels
Unverified
49:45
loopholes? We're not alleging that at all, Mr. Viviano.
Representative Mark Biviano
Unverified
49:49
Okay. All right. Yes or no question? If we pass this
law, will it increase or decrease the profitability of Arkansas corporations? It
Representative Jim Nickels
Unverified
50:09
means that more revenue will flow to the state from the multistate business entities. Now, I'm not a CPA. Does that impact possible profit for the multi-state? If they're having to pay out more in income taxes than they're paying now, I would assume that that would be correct.
But if you level the playing field, then Sherwood Tire becomes more competitive with the Sam's Club and Walmart Tire Departments. So I think you're leveling the playing field for your homegrown Arkansas small
businesses. Well, I don't think I have to be a CPA to
Representative Mark Biviano
Unverified
50:58
know that if the corporations are paying more tax, That's coming directly off their
bottom line, which allows them to have less money for capital investment and for job creation.
Chair
Unverified
51:12
And the question is, what percentage of their cost of doing business will this tax reflect? And it will be probably white
Speaker 60
51:19
noise. But, again, that's something that's knowable, and you can determine that. Yeah, and so
Representative Mark Biviano
Unverified
51:24
has over half of the states in the country have decided not to do that,
Speaker 60
51:30
too. Well, it's not a conscious decision. You have to ask how many of those states have actually
Speaker 13
51:36
put it on the agenda and debated it rather than just, you know, not take it up at all.
Representative Garner, you have a question.
Representative Ed Garner
Unverified
51:50
liked your analogy of the – or I warmed to the analogy of Humpty Dumpty and the shells, the pieces of shells spread all over the nation and some of those pieces of that company being located in a place that could then essentially transfer income to other parts where they're not taxed. My question is, though, if you pass this bill under the mantra of fairness
and fairness to local businesses, which I'm receptive to, Do you not encourage, without a reduction in the tax, the overall tax rate, do you not encourage that piece of shell that is located in Arkansas to be moved by that company to one of the remaining places in the nation where we're not taxing in a unitary basis? Under
Chair
Unverified
52:49
combined reporting here in Arkansas,
there would be no effect on their Arkansas tax by shutting down Delaware and reopening it in Nevada because you would be melding them back into the family, regardless of where they
Representative Ed Garner
Unverified
53:03
were. No, I mean, would it not encourage the company, the whole country, to say, well, we have a piece of our shell in Arkansas. Let's get it out of there and put it into one of these other, what, 20-something states that is not doing it. I mean, wouldn't the pressure be there to do that?
Chair
Unverified
53:25
That would fly in the face of all of the empirical data showing that the economic growth has occurred in combined reporting states. So, again, you have to look at what percentage of the cost of doing business, the state corporate income tax is, and look at what drives locational
Speaker 67
53:43
decisions. Not having looked at that data, but are you testifying that tax
Chair
Unverified
53:49
rates don't matter? I'm saying when it comes to locational decisions, big decisions, where are we going to locate that the overwhelming weight of the study shows that the corporate income tax, because it is such a small percentage of the cost of doing business, gets completely overwhelmed by energy, by labor, by transportation, and then by intangibles like quality of life, where the CO went to school, where his or her family is located, et cetera.
Speaker 67
54:19
So following that logic, would it be your advice to provide
Representative Ed Garner
Unverified
54:23
a better life in Arkansas that we raise the corporate income tax to accomplish that since it doesn't matter? There's probably a range in which you could do that
Speaker 67
54:34
without suffering. Yes. Okay. Thank you, Mr. Chairman. I mean,
Chair
Unverified
54:39
you see this every day in the history of this country. Okay. I don't have any more questions.
At the moment, there are several people signed up to speak for the bill and against the bill.
So, Professor, thank you. Thank you. And you certainly
have the opportunity to come back to the table. He has
Representative Jim Nickels
Unverified
55:07
to leave for the airport, so if any of you think you're going to
Chair
Unverified
55:12
ask him a question. Thank you for being here. Lisa Sharp is
signed up to speak for the bill
Ms. Sharp, you're recognized to speak for the bill Thank you for
Speaker 127
55:25
being here I'm a little nervous, so I'm just going to read My name is Lisa Sharp and I'm the owner of Nightbird Books in Fayetteville, Arkansas Nightbird Books is a small, independent bookstore with six employees I'm here to ask you to make running a business in Arkansas equitable for us all, no matter our size, by supporting combined reporting. I'm not going to repeat the facts about the diminished income to the state when multi-state businesses can manipulate their income reporting.
Instead, I want to speak about how important small businesses are to Arkansas and the need to treat them fairly in order to sustain them. Like many other small businesses in Arkansas, my competition for sales comes from a large national chain. It's hard enough to maintain my bookstore without my state government giving my competition a tax break, but not requiring combined reporting. Some may feel that in a capitalistic economy, the businesses that can work the system best and provide the lowest prices should rightly win the sales. But even so, by allowing tax breaks for the multi-state businesses,
Arkansas is interfering in the survival of the fittest, making it harder for the Arkansas businesses to compete. While I'm not asking for any special treatment or tax breaks for small businesses, I believe it is necessary you know the facts about how important we are for the Arkansas economy so that you can support us by keeping the system fair and equitable. In 2004, the Andersonville study of retail economics found that on average for every $100 in consumer spending with a local business, $68 remains in the local economy.
And for every $100 in consumer spending with a chain business, $43 remains in the local economy. That's 25% more of every dollar spent that will stay in Arkansas communities when the money is spent at a locally owned business. In 2002, Austin, Texas conducted a similar study that focused on book and music stores only and concluded that for every $100 spent in a locally owned store, $45 stayed in the local economy, and only $13 stayed when the same amount was spent in a chain store.
In that case, more than three times the money stayed in the local economy. These differences occur because locally owned businesses recirculate their income by spending their money on local accountants, graphic designers, lawyers, etc. Also the profits go to local businesses who live in the community and spend their income in that community. These studies demonstrate that equal dollars spent at local and national businesses don't result in equal income for Arkansas. I ask that you adopt combined reporting as a way to end the unfair tax advantage the
multi-state businesses have over the locally owned businesses and allow us to make our contributions to the Arkansas economy. Thank
you, Ms. Sharpe. Ms. Sharpe, would you be willing to take a question or two? Sure, if I can answer them. Representative Meeks, you recognize. Thank you.
Representative Stephen Meeks
Unverified
58:21
Thank you, Ms. Sharpe. I appreciate you coming down today. And I work for a small business, so I definitely can understand that we need to take care of our small businesses. And I guess the question I have, and please don't take this as an attack, is a curiosity.
If we were to do this, what advantage would that create, or would it create any advantage at all for your business? Or is this just a, we need to make sure the big guys are being
fair? Would there be any practical advantage or help to your business if we
Speaker 127
58:53
did this? For my personal bookstore, probably not, because the, you know, Barnes & Noble is not located in Arkansas, headquartered in Arkansas, but I, as a small business owner, I think it's fair for the whole, all of us, you know, I'm speaking for more than just myself, and
my money that I do pay as a corporate business will go further and do more if everybody's paying their share. Okay, thank
Chair
Unverified
59:21
you. Representative Harris, you're recognized. Hello. Well,
Representative Justin T. Harris
Unverified
59:27
thank you for coming all the way from Fayetteville. I enjoy Nightbird Books, and I'm glad you're there on the south part of town. You said something, though, I'd like to go back to. You were talking about chains, you know, $68 coming from local.
But just, you know, we haven't even mentioned Tyson's in any of this, but I'll go back to Walmart, though. I just wanted to make that clear. Walmart has, if I'm not mistaken, four chains in Fayetteville. Right. So do you think that would multiply your scenario of $68 compared to $48? I'm not
Speaker 127
1:00:02
positive because this was done on an average of many businesses in a Chicago, Illinois suburb and in Austin, Texas. Each city would be a little bit different. This was just done as an average.
And part of that is that when it's locally owned income coming in, it's spent locally. It recirculates. There's a multiplier effect. So Walmart profits, even though it's headquartered in Arkansas, the business owners do not live in Arkansas. You just have to go to one, you know, shareholders meeting to realize that very few of those shareholders are actually right here in the local economy. Well, thank
Representative Justin T. Harris
Unverified
1:00:41
you for creating jobs, at least one of the six in District 87. So thank you.
Thank you, Ms. Sharpe, for being here. I appreciate your testimony. Thank
you. Ms. Sharpe has spoken for the bill. Mr. Kenny Hall from the State Chamber is signed up to speak against the bill.
Chair
Unverified
1:00:59
I saw you're recognized, and Mike Parker as well, speak against the bill. Thank
Speaker 142
1:01:09
you, Mr. Chairman and members of the committee. I'm Kenny Hall, Executive Vice President of the Arkansas State Chamber of Commerce and the Associated Industries of Arkansas.
We represent over 1,300 businesses of all types and all sizes in every county in Arkansas. We have longstanding policy against unitary combined reporting, and I have two pieces of information I wanted to bring to you today. First of all, being passed out to you is a letter from the Council of State Taxation. It's a national organization of which we're a member of. They offered to send someone here today to testify. We suggested that they send you the letter instead.
In addition, and more importantly, I have with me Mike Parker, who's an Arkansan, practices law here in Little Rock with the law firm of Dover, Dixon & Horn, and he serves as a volunteer legal counsel to the State Chamber's Tax Committee. And with your permission, I'd like for him to address this bill and take your questions. Mr. Parker, you're recognized. Thanks for being here.
Speaker 144
1:02:11
Thank you, Mr. Chairman. I don't know about the more importantly part that Kenny mentioned, but it is good to be here. You know, my name is Michael Parker. I do work at Dover Dixon Horn, and I'm tax counsel for the Arkansas State Chamber of Commerce and Associated Industries of Arkansas.
I have not taught at Harvard, Bangkok, nor Tokyo, but I have represented Arkansas taxpayers, large and small, for the last approximately 38 years. I talked with three of those taxpayers in particular about this proposal, this bill. and all have multimillion-dollar investments in Arkansas, all have several hundred employees in Arkansas, and none of those companies engage in aggressive tax strategies
of the sort described by the sponsor to my knowledge. The effect of this bill is very different for those three companies. For one, it would result in a substantial tax reduction for that company just because of its multi-state characteristics. For the second company, it would create a substantial tax increase for the company, once again, because of its multi-state characteristics. And the third told me that the bill as written would increase their taxes significantly, but that if Arkansas went to a fairer apportionment factor than a single sales apportionment factor is what that's referred to, then that it would be revenue neutral for that company.
There's no – Professor Pomp mentioned or referred to other accounting characteristics of our tax system. There are many other characteristics of the tax system, and this issue of allocation among the states is one of them. All three of these companies oppose unitary combined reporting, not because of the individual impact in Arkansas on their corporate taxes, but because of other aspects of the unitary combined reporting system that they oppose.
One is that it's an extremely complex system, and the other is that it's arbitrary. There is administrative complexity, and the reason is, you can use this example of Humpty Dumpty and putting the egg back together, which I thought was interesting. The issue is not that you're going to put the egg back together. But the issue and the complexity in command reporting is which pieces of the egg are you going to pick up and put back into the egg?
Because unlike consolidated reporting on the federal level, where if you're reporting consolidated, all the parts are there, there's a decision-making process when it comes to unitary combined reporting. And that decision-making process requires that taxpayers and auditors examine the pieces of that egg and decide which ones of those are unitary with the egg itself and which of those are not. Now, that's a very subjective determination.
It has to do with all sorts of factors and considerations. I'm not going to go into all that now. I'm just telling you that the disputes that come up between taxpayers and taxing authorities when it comes to unitary are many times revolve around this issue of which corporations, which affiliates, which subsidiaries operate in a unitary manner with the corporation that's doing business in Arkansas, and which of them do not. And auditors, some taxpayers believe, are inclined to think that if there's a lost corporation,
they'll leave that piece laying on the ground. They don't want to pick up a lost corporation and have losses brought into the state. But if there's a lot of income associated with one of those pieces, they want to pick that piece up, and they look at that much more closely. And the taxpayers' decisions and auditors' decisions differ. So it's a very complex system from that standpoint. The other is that it's arbitrary. It really has no basis, no relationship to the amount of true economic activity that goes on in the state of Arkansas.
It is based on other factors. So there are some other concerns with the bill that are mentioned. And Joe Crosby, who is the author of the testimony that has been passed out to you, there are other concerns mentioned there that national corporations have concerning unitary combined reporting. One that I think would be of interest to us in Arkansas is that none of our surrounding states that have corporate income tax per se have adopted unitary combined reporting. None of the states in the south or on the lower Atlantic side of the country have generally adopted combined reporting.
it would make Arkansas an outrider insofar as our tax administration here in the state. And the other, as I mentioned, is this issue about the subjectivity that's associated with the system. So I'd be happy to answer
Speaker 149
1:07:15
any questions. Thank you, Mr. Parker. Representative Jean,
you recognize for a question. Thank you,
Representative Mark Biviano
Unverified
1:07:23
Mr. Chairman. Mr. Parker, Mr. Hall, whoever will answer this. Yes, several surveys and groups have put Arkansas' business climate somewhere between 38 and 42 on a national scale of 50 states.
Speaker 152
1:07:41
Do you see if this House bill passed, would this help
Speaker 144
1:07:49
our business climate? According to the taxpayers that I have talked to, my perception would be that
Representative Mark Biviano
Unverified
1:07:58
they would not think it had helped our climate. And also, small businesses, one here said this bill will not help them. Small banks, some sub-S's, some restaurants I know are in sub-S's that are, you know, small.
Speaker 144
1:08:11
Will this do anything to help them that you all can
see? I really can't speak to that. I haven't talked with those
Representative Mark Biviano
Unverified
1:08:25
groups. Sorry. Okay. Thank you. Representative Bibiano, you recognize for question. Thank you, Mr. Chairman. Being consistent with
our example of Wal-Mart, do you believe in
the states that Wal-Mart, the states that they do business in that has combined reporting, if they were given the choice, would
they elect for combined reporting or not?
Michael Parker
Unverified
1:08:46
Sir, I'm sorry. I can't answer
Representative Mark Biviano
Unverified
1:08:50
that question. As a tax advisor, what would
Speaker 144
1:08:57
you advise them? You know, if all the states had the same system, it would probably not be a big issue in making location decisions or election decisions or things of that nature. But they don't. So each company would have to look at its individual characteristics.
And I think if a corporation is given an election, it's going to make a decision based on whether it's going to increase or
Representative Mark Biviano
Unverified
1:09:27
reduce its taxes. But in this case, we have testimony that
Speaker 144
1:09:32
it will increase their taxes. I don't think you've had testimony that it would increase Walmart's taxes or any individual company's taxes. It would, I think the testimony, if I understood it, was it would tend to increase revenues for the state. I don't agree with that. I don't know that you can predict what the impact on Arkansas is going to be.
Okay. Thank you. Thank you. Thank you for being here. Appreciate your testimony. Mr. Phil Jackson is signed up to speak for the
bill. Members, Mr. Jackson is a former past chair of the Revenue and Tax Committee here, and so a special welcome to you. And even further, I understand that maybe even Mr. Bill Stovall has served on your committee
or you had the fortunate duty to have to put up with him as well. So glad you're here and appreciate your testimony. You're recognized. Thank you, Mr. Chairman and members of the
Speaker 156
1:10:44
be back. It's been a long time. I must think I was on chairman and non-revenue and tax for four years or six years, but it was also during the period of time that we went through education reform.
So during that time, there was a lot of debate, a lot of issues. Some of us had to do some things that we really were uncomfortable doing, but we knew that we had a constitutional obligation to fund an equitable, fair education system. When we got done, we had to take some bits and pieces and do some things to get that funding done. And like I said, there were some things that we really didn't like doing, but we had to do it. But when we were through, one thing that we did recognize, and many of us stated it,
that soon we were going to have to do in the state of Arkansas, we were going to have to address tax reform, real tax reform, tax reform that can result in lower tax rates for corporations, that can result more in job creation. more job opportunities those types of things and at the same time pay for the vital programs that we have to pay for the citizens of this state very important programs I know that each one of you want to be
you know what people to be your family members the people in your district to be treated fairly and one thing about this bill I think it does is it starts to address fairness now I recognize that there's some pretty powerful individuals, very nice folks that are going to be opposed to this bill. But I also recognize that those folks represent some of the largest corporations in this state. I would ask, and the previous speaker mentioned that he had talked to four people, I would
ask you that when you go back to your district, you ask them or ask one of those folks to go with you, I'd be glad to go, and ask them, say, we have a tax policy. in the state of Arkansas that allows some of the largest corporations to avoid paying their fair share their fair of corporate income tax now we can't afford to give you that same opportunity you're gonna have to pay him but they're not gonna have to name my even compete against you would you support that legislation I think you're gonna say no
we wouldn't support that sometimes you get the answer the question based upon the way you ask the question then these people are the small business people in your community and what is I started looking at small business back then but one of the things that I think is very important and these numbers are astonishing to me and I look them up and I'll give you the websites and the government reports that I've looked at but small businesses and I'm going to go with companies that have less than 500 employees
they amount for more than half of the GDP more than half of the employment they've done most of the hiring companies with from 1 to 10 employees are higher than most people and what's surprising is from 10 to 20 is the second largest growing now another interesting is of the millions of companies in the United States
78% have less than 10 employees and 99% have less than 500 now when I first read it I thought that can't be right that really can't be right because I come from up by Eureka Springs area northwest Arkansas and I'm thinking of these big corporations so I got to thinking about it and I pulled out the yellow pages And I invite you to do that when you go home.
Pull out the yellow pages and look at those companies. They're your local company, the person you go to, the little restaurant that you go eat at, where you have your lawnmower fixed. Some of them sell gasoline, clothes that compete against large corporations. They're the people that can't afford to hire these tax – or to get the large tax deduction schemes.
They can't afford to buy and purchase those. They can't afford to pay people to represent them the way that some of the powerful lobbying teams do. They have to rely on us or you all coming here to think, how can I be fair to them? Now, one thing about the tax reform issue that I think is very foreign is if you're going to give it to one group, give it to another group. That's where the job growth is, 99%.
And you can look through and count in your yellow pages who it is. I have been told that this bill is anti-business. How can a bill that is going to have a leveling effect for 99% of the business owners that you know and represent be anti-business? I just can't see that. This is not an anti-business bill. Just like Mr. Palm said, it just takes the ability away from some change to shift income.
That's what it does. I come up with a new slogan the other day or mine. What it does is it's not a tax increase, but it eliminates non-tax investment incentives. You know, I thought that was pretty good. It eliminates something. When I was chairman of this committee, after we had one of these debates, but one of the chief financial officers of a company that's been mentioned in here a lot,
visited with me in that office, and he said, combined reporting, I will admit, is the fairest tax. And I thought that was interesting. When he left, their PR person called me and says, Representative Jackson, we would prefer or request that you not use those remarks when you present your bill. And I agreed to you. Now, I have no reason to drive this many miles and lie to you because this really doesn't affect me.
But what I'm saying is these large corporations know it. But if you start on tax reform, you want to give those companies that are doing most of the hiring, that are homegrown, they're here. Give them the same level playing field. And when you go home, ask your constituents about that. But word the question that you asked them right. And count your yellow pages. appreciate the opportunity to be back and visit with you I had a lot of good memories in this room had a couple that weren't that nice too so so I appreciate
it thank you yeah we take a question have too many
sure as long as it's not tough one represent Burris you recognized
Representative John Burris
Unverified
1:18:04
for a non-tough question thank you thank you mr. chairman it actually it's going to be more of a statement I'm going to think of a question at the end so it's gonna be pretty easy. But thank you for your service. Glad to see you back. It's something that's kind of been alluded to a couple times by a couple different testimonies. I wanted to clarify it. In some ways, I glanced at the bill, read the bill, looking at the impact
and listening to the testimony. But I want to make one thing pretty clear. I actually hate to say that I haven't been approached by anybody about this bill, not a single corporation lobbyist and not the sponsor either so I just I'm not trying to call anybody out but I just want to say that because it's kind of been alluded to a couple times I until today I've literally spoken to zero people about this bill it seems like a rather large deal and so I'm kind of disappointed in that from every perspective but but I guess I wanted to say that I'm terrible at thinking of
questions on the spot but are you happy to be back yeah i sure am and and you brought
Speaker 156
1:19:08
up a good point um i'm surprised that you didn't get to meet a lot of people we got a lot of when we were first running we got a lot of meals and a
Representative John Burris
Unverified
1:19:18
lot of uh visits well i'm not comfortable kind of i i don't think that's necessarily you know that's not the intent of what i was saying and i and i don't think and i don't and i don't think most of us at the table take that perspective i i just like i said But it's been alluded to, and I wanted to clarify.
Speaker 158
1:19:35
Okay. I'd like to answer one part of your question, though. And this is where I really feel that you have the opportunity to
Speaker 156
1:19:42
go, and that's to start the discussion on tax reform someplace. Because it has to take place. It needs to take place. Because the fairness issue is a very important issue, and it's important. And when you go back and look at your yellow pages, I'll think you do that. Now, one way you can find out and say, what is that number that we're looking at? And I know people probably shudder if you say this, but one way you can give companies, say, fill them out both ways because large corporations are doing that anyway.
Then you know what revenue is out there. DF&A is going to know what revenue is out there. Then if you want to say, okay, we can use part of it, it puts the tax system in yours. If you want to just take all that tax, increase in revenue, and turn it back into tax credits or tax incentives or whatever, you can do it. but it gives you the control of it. All I'm asking you for to do is to consider starting a debate, and this legislation will start the debate. And I don't think it hurts to let it run for a little bit and see what's out there.
Representative John Burris
Unverified
1:20:41
I heard a very wise man on the radio the other day say that a lot of the legislators that got elected this time didn't show up to learn the system. They show up to change it. And I think especially with this committee, I think you're going to see a proactive approach when it comes to tax policy in the state and how it affects us and how we can change it. That's great. Thank you.
Speaker 165
1:20:58
Thank you. And you guys got a great opportunity to
do that. Appreciate it very much. MR. Thank you, Phil. Thanks for being here. Okay. Mr. Jackson has spoken for the bill. Is there anyone from the audit that would like
to speak against the bill? Seeing none, Rich Huddleston from the Arkansas Advocates has signed up to speak for the bill.
Speaker 167
1:21:17
Rich, you're recognized. MR. Thank you. Rich Huddleston, Arkansas Advocates for Children Families. families. I think you've heard all the arguments in favor of the bill by Professor Pomp, by Representative Nichols, our small business owner, and the former chair of this committee, so I'm not going to repeat those other than just to say that Arkansas Advocates supports the bill. We think it would be good for tax fairness, possible tax reform, and also has a way if the committee so chose to use the revenue to support vital programs, education, Medicaid,
I mean, we all know that revenue is at a premium right now. So other than just to reiterate all the good arguments that have made previously, I'll stop at this point in time. And let me just say that I also really want to thank the committee for spending an hour and a half today on this issue because I think it's a really complicated issue that has many dimensions to it. I mean, I really appreciate all the good questions that you asked of our expert when he was here.
So thank you very much for doing
Speaker 169
1:22:27
that. Thank you, Rich. Rich, do you want to take any questions?
Speaker 167
1:22:32
Sure. Happy to. I don't know that I can add much more than the expert that was here earlier said, but I'll
Chair
Unverified
1:22:40
try. Okay. Representative Meeks, we recognize for a
Representative Stephen Meeks
Unverified
1:22:43
question. Thank you, Mr. Chairman. Just a quick question, and it may be a matter of opinion. But the main
thrust that I hear, the reason why we should vote for this today, is for fairness. Is it your thought or your opinion that even though we've heard testimony that there would probably be no practical benefit to our small businesses,
and like I said, I'm employed by a small business, so it's important to me the vitality of our small business community, that there's no practical help to small businesses here? Is it fair to potentially create a new burden, new harm on our large employers who do provide jobs and, you know, a lot of other benefits for our
Speaker 167
1:23:25
state, all in the name of fairness? Well, I think we did hear one small business owner say that in her particular case, it might not impact her bottom line,
but I would say that there are other small businesses out there that would become more competitive, and so you could see their profits potentially go up. But I do think fairness is a big issue. I mean, you all have seen the data in terms of what it looks like, in terms of what low- and middle-income taxpayers pay in state and local taxes as a share of their income compared to other taxpayers. And it's going to take revenue to address that situation.
I mean, there are a number of good bills out there already right now that could impact the tax burden for low-income, I mean, middle-income families. But those tax cuts will take revenue to pay for. And I don't want to set up a situation where at the very time that we're trying to help low- and middle-income families through the tax code that we take away revenue that's needed to pay for the program programs that many of them use, you know, education, health care, things like that.
Thank you. Thank you, Mr. Hettleson. Appreciate you being here. Thank you. Rich Hettleson has spoken for the bill.
Speaker 169
1:24:50
Does anybody like to speak against the bill? If not, Mr. Rich Nagel has signed up
Speaker 175
1:25:03
to speak for the bill. You'll recognize. Thank you, Mr. Chairman, members of the committee. I'm Rich Nagel, Executive Director of the Arkansas Education Association, and we're here today to lend our support for passage of
Speaker 176
1:25:16
this measure virtually all in the name
Speaker 175
1:25:18
of fairness. We've got a strong position within the organization for a fair, equitable tax structure for the state of Arkansas. Many of you know that we've communicated to you, as well as members in the Senate Revenue and Tax Committee, that we have a position against any further exemptions unless the revenue is replaced.
I will say, though, that our commitment to fairness sometimes gets in the way of that. Even though there's a significant amount of general revenue that's been lost to the state, and I think I can say even to public education, we've consistently supported the reduction of the sales tax on food, recognizing the unfairness of the tax, the regressive nature of the tax, and the impact that it has on poor families.
So it's with that spirit and commitment to fairness that we ask that you support this measure. Thank you.
MR. Representative Westman, I'm sorry I missed you earlier. Is it – do you have any – I'll
recognize your question for the – okay, I'm sorry. My apologies. Representative Viviano, you reckon. MR. Thank
Representative Mark Biviano
Unverified
1:26:53
you, Mr. Chairman. Do you think this is the only area of the Arkansas tax code that would be deemed unfair?
Speaker 175
1:27:01
MR. No, sir, but it's a significant one, I believe. So you
Representative Mark Biviano
Unverified
1:27:06
would agree that we probably need to look at an overhaul of the entire tax code to make it entirely fair? MR. Yes, sir. This
Speaker 180
1:27:14
would be a good place to start. Okay. Previous witness
Representative Mark Biviano
Unverified
1:27:17
testified that we need tax reform in the state of Arkansas. Do you agree with
that? MR. I think yes. MR. Okay. And in general, tax
reform for most people means some form of tax reduction.
Speaker 175
1:27:31
Would you agree with that? MR. Yes. Also some shifting. MR.
Representative Mark Biviano
Unverified
1:27:42
Okay. And this bill doesn't address any types of tax reform that requires any reduction for small businesses. Is that correct? MR.
Chair
Unverified
1:27:52
That's correct. MR. Thank you. MR. Harris, recognize
Representative Justin T. Harris
Unverified
1:27:57
for question. MS. Thank you, Mr. Chair. I have two questions,
if that's okay. All right. Thank you, Mr. Nagel.
I would – first question is, do you agree with me that Wal-Mart, since we've been talking about Wal-Mart, gives millions of dollars into education and into lower-income families in certain areas? MR. MR. I'm not familiar
Speaker 175
1:28:20
with a lot of specifics of what that would entail. I want to make it clear, we're not here to speak for or against any business interest in the state of Arkansas.
MS. I understand that. MR. We recognize the important role that businesses and communities play in the support of great public schools for every student. So to us, this is an issue of fairness. These questions I'm asking you have
Representative Justin T. Harris
Unverified
1:28:52
everything to do with this bill, because in my district, Walmart has provided a computer lab. I know you're not talking about one particular group.
So do you think that this will have an impact, a $90 million on a company in Arkansas, not just Walmart, that it would affect their charitable giving into school districts that make better schools, better time for educators, easier time for educators and students to learn more? I think there
Speaker 175
1:29:23
was some testimony earlier that if we really knew about the amount of the advantage that this would play, we could probably answer that question better. My personal view is that I don't think with the size of that corporation that it would
Representative Justin T. Harris
Unverified
1:29:38
make much difference. And you oppose all tax cuts in the state of Arkansas except for one. one. Is that correct at this time? Would you restate that, please? AEA does not support any tax cuts in the state of Arkansas except for the
Speaker 175
1:30:00
grocery reduction tax. Well, I think there's one other. There's a correction to the tax table for... Low-income families. Yeah, we've supported that one as well.
Representative Justin T. Harris
Unverified
1:30:09
How about the back-to-school tax that would help families, lower-income families? We're not supportive of
Speaker 175
1:30:15
that measure. I don't know that it would be exclusively for those who have children going back to school. Thank you. Okay. Thank you, Mr. Nagle, for being here today,
for testifying. I don't see anybody else that signed up to speak for or against the bill. Is there anybody from the audits that would like to speak for the bill, against the bill? Seeing none, Representative Nichols, would you like to close for your bill?
Representative Jim Nickels
Unverified
1:30:54
somebody from the Revenue Department come up here to the tax revenue because there's been some technical issues that have been discussed, and they may be able to address that if members may have some questions from our state tax folks. Is that permissible? I mean,
Chair
Unverified
1:31:11
if they're willing to come up and speak for or against the bill, I think that's kind of where we're at. I
mean, does anybody have any questions from DF&A?
I mean, if they do, we'll do it. Does anybody have
Representative Stephen Meeks
Unverified
1:31:26
a question for DF&A? I don't have a question, Mr. Chairman. I guess it's a question. Has DF&A
Chair
Unverified
1:31:31
taken a position on this bill? Nobody signed up to speak for or against the bill, so I'm seeing
heads shaking. Is it none? Just follow me if anybody's got any questions. I don't see that anybody's got any questions, Jim. So if not, you're recognized to close for your bill. Thank you, Mr. Chairman. Thank you, committee.
Representative Jim Nickels
Unverified
1:31:54
The presentation today has presented, in my view, compelling Arkansas-specific evidence refugiating the key objection to mandatory combined reporting, that its enactment will harm the state's economic prospects. However, much they might object rhetorically to combined reporting, the vast majority of the state's major employers have willingly submitted and adopted to combined reporting based on income in other states.
We as Arkansas policymakers can confidently join those in a growing number of states that are enacting this critical corporate tax reform without worry about negative impacts on the state's economy. I will close with Sherwood Tire. That's who I started with. Is it fair for Sherwood Tire to pay 100% tax on their income, but their competitors to pay less than 100 percent on their income that is earned in Arkansas.
With that, I realize this is a controversial issue. It is a fairness issue, and I would appreciate a good vote. Thank you,
Chair
Unverified
1:33:14
committee. Thank you, Representative Nichols. Representative Linderman, you recognize. Motion
do pass. Committee, the motion is due pass. Any discussion for the motion, against the motion? If not, all in favor of the motion, say aye.
Aye. All opposed, say no. No. Okay, no's have it. No,
Representative Jim Nickels
Unverified
1:33:39
the bill's failed. Thank you,
Representative Nichols. Thank you for your time and interest. Okay, before I forget, I'm going to have most people here. The following bills, these are all shell bills, We're going to drop to the deferred list without objection, 2172-2176-2208-2231-1906-1919-1922-1964-2051-2065-2069-2101-2103.
So without objection, we're going
Chair
Unverified
1:34:11
to put those on the deferred while they're in their current form. It takes us down to SB 275, Senator Sample. Representative Jink passed. Senate Bill 276 is going to pass. HB 1552 and 1553 passed. Senate Bill 270, Senator Madison passed. HB 1703, I think, is in engrossing. HB 1724, I think Representative Altus is withdrawing that.
HB 1737, Representative Ingram passed. 1757, Representative Link. pass okay if you're you're ready we're ready one seven five seven you recognize explain your bill Thank you, Mr. Chair and committee.
Representative Kelley Linck
Unverified
1:35:17
I'm probably as surprised to be up here running this today as you are.
In my best interest of this bill, I've been making the best plans possible to have members of volunteer fire departments to be here. As we know, volunteer fire departments are run by volunteers and their plans keep falling through. In the interest of time, knowing we've only got three or four weeks left of this session, I decided to go ahead and present this to you today to see if you have interest in this. Volunteer fire departments have a great deal of exemptions on products that they could purchase.
Most everything that they can use in their daily processes of helping people in their fire districts is exempt from tax except for their utilities. And this was brought to me by a couple of my different volunteer fire departments that said, hey, this would save us a fair amount of money each year that we could do better services for the people with. I agreed that I would put this out there for the committees to look at. And unfortunately, again, thanks to them being volunteers,
I've not been able to be here by my side. You can see the impact to state revenues if all of you have caught up with the bill yet. I was surprised by how high this was. Obviously, we've got a lot of volunteer fire departments. I personally have 27 in my district. But the impact to state revenues for fiscal year 2013, which would be the first full year of enactment of this, would be $570,000. Obviously, being in a rural district with 27 rural fire departments,
I am of great interest of taking care of these folks that take care of us. What we found in our area, which is north-central Arkansas, is we've got a great deal of newer, larger, more expensive homes being built out in the woods. And it is most critical of these homes and the cost of insurance of these people that are building these and such that we have capable, well-equipped fire departments to take care of those and to help with our emergency services, including first responders.
Very seldom when a person has an automobile accident or other kind of emergency in my district is a professional, the first one on the scene. It is typically a first responder is the first one on the scene. And, again, I hope that
these folks can have good services. So with that,
Chair
Unverified
1:37:41
I'd be glad to take any questions. Thank you, Representative Burris. Rick can ask for a question.
Representative John Burris
Unverified
1:37:46
Thank you, Mr. Chairman. Mr. Link, you know, I've got a high-priced lobbyist from Walmart waiting on me at Doe's for lunch.
Yeah, that was a joke. Yeah, they left. Could you kind of – I didn't get a chance to talk to you before, so I feel comfortable because I support you and certainly I think you support the concept of your bill. Would you like to have this passed out of committee today? Would you be okay if we maybe waited maybe when more members were here and had a little more time to digest? Just kind of tell me where you are. I'd be glad to put this in front of you,
Representative Kelley Linck
Unverified
1:38:20
let you digest it, let you think about it, talk to your folks back home.
And I'd be glad to ask for a vote another time.
Okay. Representative Collins-Smith, you're recognized for a question. Thank
Representative Linda Collins-Smith
Unverified
1:38:33
you, Mr. Chair. Representative Wink, do you have the number of fire departments that there are across the state of Arkansas, just for my information?
Representative Kelley Linck
Unverified
1:38:46
I do not. How many? Approximately 900. That would sound accurate to me. Of the volunteer variety,
Representative Linda Collins-Smith
Unverified
1:38:52
yes. Exactly. Okay. Just need that information for our processing.
Thank you. Representative Link, I also want to commend you. I mean, I know we all have volunteer fire departments in our area, and those volunteer firefighters, they're certainly out there and helping the communities and a lot of times risking their life for not a whole lot of benefits. So I appreciate you bringing it. You know, I guess at this point, you know, without any objection, we just let you pull it and we'll circle up another day.
See you now, if that's okay. Absolutely. That would be wonderful. Thank you.
Chair
Unverified
1:39:37
Thank you. Thank you very much. All right. That takes us down to 1760, Representative Summers. Representative Meeks, what purpose?
Representative Stephen Meeks
Unverified
1:39:44
Question of the chair? Yes. At what point do we lose a quorum and are
unable to continue business? Well, the chair sees a quorum, so it takes a lot, you know, until somebody wants to challenge that in form of a motion that we have a quorum. Okay. Okay.
Chair
Unverified
1:40:02
1760, pass. 1761, pass. 1-7-7-1 pass, 1-7-9-2 pass, 1-7-9-4 pass, HB 1-8-0-2, Representative Rogers, you recognize, explain your bill.
Representative Tiffany Rogers
Unverified
1:40:35
Thank you, Mr. Chair. I'm glad I finally won the lottery in the number. H.B. 1802 is an act concerning agricultural exemptions for the sale and use tax. It's an amendment. What we're attempting to do is amend current statute to include water that's provided by a public surface water delivery project to replace in-ground water use in whole or in part or to reduce dependence on the groundwater use for agriculture.
What this would do is provide an exemption on the sale of water for agricultural purposes. There is currently not any tax that's being implemented on the sale of water, And this is a proactive measure in light of the different water districts that are being formed and the projects that are around the state that are being formed, such as the White River Irrigation District and the Balmito Project that are in Lone Oak, Prairie, and Arkansas counties and probably affect others as well.
I would be happy to attempt to answer any questions. And with me, I have Jeffrey Hall from the Arkansas
Chair
Unverified
1:42:00
Farm Bureau as well. Representative Ingram, you're recognized. Does this
have a revenue impact? No, sir, it does not.
Representative Tiffany Rogers
Unverified
1:42:10
It doesn't, or there's just not one? We have asked and gotten, John Tice is here, and he's made a statement to us that there is no
Chair
Unverified
1:42:18
impact. There's a zero impact, and that's why there's not.
Zero impact. Is that accurate? They're nodding. Okay.
Speaker 203
1:42:24
Please observe. All right. Representative Bell, you
Representative Nate Bell
Unverified
1:42:30
question. As a poultry producer, obviously we purchase large quantities of water from our local water utility, which is derived from a surface source. Does this language that's in this bill, public surface water delivery projects, specifically exempt water utilities providing for
our poultry, or would we also be included in that exemption?
Because if so, it appears there's a
Speaker 206
1:42:58
revenue impact. Mr. Hall, you're recognized. Do you want to answer the question? Representative Bell, I do not – this is for
Speaker 208
1:43:05
irrigation districts to replace the use of groundwater
Representative Nate Bell
Unverified
1:43:08
for irrigation. Correct. That specifically is my question. The language Public Surface Water Delivery Project, does that exempt water utilities?
My understanding is that some of them have been designated as surface water delivery projects. Maybe I'm missing something here, but I'd just like to clarify that.
Speaker 208
1:43:29
I think I would pitch this to Mr. Tice to answer that.
Speaker 171
1:43:35
I appreciate it. Mr. Tice, you recognize the answer to
Speaker 212
1:43:41
the question. Thank you. Mr. Chairman, members of the committee, I'm John Tice with DFA. The lack of a revenue impact is based on the fact that our understanding of the bill was it's only surface water projects that are replacing in-ground or ground source water
and that the water purchased from a public utility would not qualify. If I'm understanding from Representative Bell that our assumption is incorrect, then that That may require that we look at it again, but our understanding is that a water utility does not qualify. I'm
Representative Nate Bell
Unverified
1:44:15
by no means certain that that assumption is correct or incorrect. It's simply a question to educate me. I do have some question about it because what little background I do have in the water business indicates to me that some of our water utilities do have that designation,
and maybe that's an incorrect assumption, but I certainly believe I'd like for somebody to come back and clarify that for
Speaker 101
1:44:38
us. Representative Gene, you're recognized. Motion at the proper time.
Okay. I don't see any more questions. Is there anybody from the audience that would like to speak for the bill,
against the bill? If not, Representative Rogers, would you like to
Representative Tiffany Rogers
Unverified
1:45:01
close for your bill? I'm close, but I would appreciate a good vote on this.
Thank you. Representative Jeanne, you recognize for a motion. Motion do pass. Committee, motion do pass. Any discussion on the motion? If not, all in favor of the motion say
Chair
Unverified
1:45:23
aye. Aye. Any opposed? Okay, motion carries. Thank you very much, committee. 1804. Okay. 1809, Representative Hyde. 1857, Representative McLean. SB 364, Teague. Pass. HB 1899, Mr. Vinger, will be recognized for under bill.
Representative Keith M. Ingram
Unverified
1:45:47
Thank you, Mr. Chairman. Thank you, Committee. I'd like to ask Marsh Jenkins
with AEDC to come sit next to me and if we have any questions. H.B. 1899 really is correcting an error that was in it. There's three agencies, ASTA, ADFA, and ADC, that jointly administer this program. The existing code incorrectly states that ASTA is the program administrator.
The other thing that this bill does, it more clearly states that the income tax credit purchased can be used in the year purchased and for nine years beyond the year of purchase or until the credit is exhausted, whichever occurs first. These are just technical corrections that have to do with the equity investment incentive tax credit. I'll be happy to take any questions. Members, any questions? Anybody, Representative
Love, be recognized for a question.
Motion in the proper time. Very well. Anybody from the audience want to speak before the bill? Against the bill? Okay. Representative Love, what's your motion? Recommend do pass. Okay. Committee, motion to do pass. All in
Chair
Unverified
1:47:09
favor, say aye. Aye. Any opposed? Motion carries. Thank you. Thank you, Mr. Chairman, and thank you, committee. All right. Y'all hang with me. We're moving along here. 1906 Woods, pass. 1919 Johnson, pass. 1922 Johnson, pass.
1-9-6-4 King, pass 2-0-4-2 Elliott, pass 2-0-5-1 Diviano, pass 2-0-6-4 Cowling, pass 2-0-6-5 2-0-6-9 Cowling, pass 2-1-0-1 Burris, pass 2-1-0-3 King, pass 2-1-0-5 Gillum, pass 2-1-7-2 2-1-7-6, 2-1-8-8 2-2-0-8
Chair
Unverified
1:47:57
okay we're passing over them no other business we shall stand adjourned
Agenda
Call to Order
HB1495
HB1757
HB1802
HB1899
Adjournment
Documents
No documents posted.
Speakers
Chair
Unverified
Representative Homer Lenderman
Unverified
Representative Davy Carter Chair
Unverified
Representative Jim Nickels
Unverified
Speaker 11
Speaker 13
Representative Nate Bell
Unverified
Representative Mark Biviano
Unverified
Representative Fredrick J. Love Chair
Unverified
Representative Justin T. Harris
Unverified
Speaker 60
Speaker 66
Speaker 67
Representative Ed Garner
Unverified
Representative Charlie Collins
Unverified
Speaker 89
Representative Linda Collins-Smith
Unverified
Representative Stephen Meeks
Unverified
Speaker 82
Speaker 127
Speaker 142
Speaker 144
Speaker 149
Speaker 152
Michael Parker
Unverified
Speaker 116
Speaker 156
Representative John Burris
Unverified
Speaker 158
Speaker 165
Speaker 167
Speaker 169
Speaker 175
Speaker 176
Speaker 180
Speaker 71
Representative Kelley Linck
Unverified
Representative Tiffany Rogers
Unverified
Speaker 203
Speaker 206
Speaker 208
Speaker 171
Speaker 212
Speaker 101
Representative Keith M. Ingram
Unverified
Speaker 110