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State Incentives in Arkansas: A Friendly Debate in the Arkansas Democrat-Gazette

ACRE’s analysts and economists have recently engaged in a friendly debate on an important topic: whether Arkansas’ business tax incentives and subsidies are necessary. The debate took place over the past few weeks on the op-ed pages of the Arkansas Democrat-Gazette, the state’s largest circulation newspaper.

Jacob Bundrick, ACRE policy analyst and UCA alum, started the conversation on April 9, 2016 with an op-ed titled “On the Bottom Line: Corporate Welfare Hurts Taxpayers.” Mr. Bundrick argues that offering tax incentives to business costs the state government money, which must come from other taxpayers.


Mr. Bundrick’s op-ed raised the eyebrows of the Rand Zook, President and CEO of the Arkansas State Chamber of Commerce, who responded along with Matthew Boch, a tax attorney in Little Rock. Their op-ed on April 15, “Incentives Needed: Program Creates, Keeps State Jobs,” argued that tax incentives are needed because other states give them out as well.


And today Jeremy Horpedahl, ACRE affiliated scholar and assistant professor of economics at UCA, responded to Mr. Zook and Mr. Boch. In his op-ed “Reform, Not Perks: Fix State’s Corporate Tax System,” Dr. Horpedahl picked up on something Zook and Boch mentioned in passing: we could also attract businesses by reforming the tax code. Horpedahl argues that reform should be the first priority rather than handouts to politically-favored businesses, as this would make the tax code both fairer and more efficient.


ACRE’s writers appreciate the opportunity to engage in this public dialogue on tax incentives and look forward to continuing the conversation about making the tax system more transparent, fair, and efficient for all Arkansans, not just those that have political connections. With the recent announcement that Chinese firm Sun Paper is receiving well over $100 million in incentives and other funding from the state and local governments, this is a big debate that is sure to continue.