Spring 2017

Arkansas has a rich history of business and entrepreneurship, but in recent decades bad government policy has stifled economic growth.”

Dr. Jeremy Horpedahl, ACRE scholar and UCA professor, says that Arkansas is a great economic powerhouse on par with Texas, New York, and California. To see why,  look at Arkansas’s six Fortune 500 companies. We rank 11th in the nation. An even closer look reveals that these six companies are old. The youngest, Wal-Mart, was established in 1962.

The old age of these companies indicates that something has changed in our state. Dr. Horpedahl says it’s a decline in entrepreneurship. The cause: government policy. As there has been a five hundred percent increase in government spending per person, we have had to greatly increase tax rates, stifling economic growth.  Not only that, the state has established large regulatory burdens on businesses and entrepreneurs.

If Arkansas were to reform policies to remove special interest tax exemptions, lower taxes, and decrease regulatory burden, we could see new businesses in our state. Efforts to do so have already begun.

  • ACRE Director Dr. David Mitchell, Scholar Dr. Jeremy Horpedahl, and Policy Analyst Jacob Bundrick were guests on Newsradio 102.9 KARN on May 1, 2017 where they discussed Arkansas tax reform and other state issues.

“Arkansas forfeiture laws need to be strengthened to protect the property rights of Arkansans, and that’s something individuals on any end of the political spectrum should consider.”

ACRE affiliated Research Analyst Maleka Momand says there is an issue receiving both bipartisan and public support in Arkansas that is in need of reform: civil asset forfeiture laws. Currently, authorities have the ability to confiscate personal property without convicting the property owner of any type of crime, as long as there is a preponderance (“more likely than not”) of evidence that said property could have potentially been involved with criminal activity. This seized property is often used to pad police department budgets, incentivizing police to abuse their authority. Worse yet, forfeiture victims who want their property back must face a lengthy court process that often costs more than the value of their taken goods.

In Arkansas, $6 million has been taken from its residents, earning the state a “D minus” rating from the Institute for Justice. Recently, state legislators voted on whether a criminal conviction should be required for items to be retained; unfortunately,  the bill failed to pass. Regardless, Arkansas should work to join the growing number of states who recently changed asset forfeiture policy to have greater respect the property rights of its citizens.

“The beauty of school choice is that students are not restricted to schools that are not performing well. Students from schools that are performing poorly have the opportunity to transfer to schools that are performing better. The fear of losing students should be an incentive for all schools to provide a better education in order to retain their students or, better yet, attract more students.”

ACRE policy analyst Dr. Mavuto Kalulu challenges the notion that school choice in Arkansas would promote the defunding of public schools. Rather, allowing parents of students to choose gives them the option to attend the school that most fits their student’s needs – whether it be a public, private, or charter school. If money followed the student instead of going directly to the school, parents could decide with their children what educational opportunities to pursue, without being confined to a poor school simply because the parents can’t afford another option or are zoned for a specific district. This freedom would incentivize schools to provide the best quality education in order to compete with neighboring districts for student enrollment, creating a better environment for education in Arkansas.

“Arkansas desperately needs more transparency in its economic development incentive programs. These programs allow public officials to provide tax breaks and subsidies to select businesses in return for the promise of jobs and investment. Not only does the academic research indicate this is misguided policy, but tax breaks and subsidies are ripe for potential corruption and cost Arkansas taxpayers millions of dollars every year.”

Policy analyst Jacob Bundrick explains why Arkansas needs more transparency in economic development programs that hand out tax breaks and subsidies to businesses in return for jobs and investment. Not only are these programs expensive, costing the state $2.06 billion from 1984 to 2015, but they are also lacking in accountability: Arkansas residents have no accessible way to monitor specific projects, evaluate the merits of tax handouts, or to judge public officials use of financial incentives.

If Arkansas provided an accessible online portal for evaluation of these programs, the state’s government could see large gains in transparency.

  • ACRE Director Dr. David Mitchell and ACRE Scholar Jeremy Horpedahl were guests on the Paul Harrell Program on January 4, 2017. They discussed the complexity of Arkansas’s tax system and possibilities for tax reform.