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Arkansas lawmaker urges immediate repeal of throwback rule to boost competitiveness
Summary
Representative Howard Beatty presented House Bill 1500 to accelerate repeal of the multistate "throwback" apportionment rule, arguing it disadvantages Arkansas manufacturers; the Arkansas State Chamber testified in support. No committee vote was taken.
Representative Howard Beatty (District 95) told the House Revenue & Taxation Committee that House Bill 1500 would accelerate the scheduled repeal of the multistate “throwback” apportionment rule so the remaining phase-out would end in January of next year.
Beatty said the throwback rule forces multistate corporations with Arkansas operations to apportion income to Arkansas as if some sales were made inside the state, creating what he described as an "unfair disadvantage to Arkansas businesses" when competing for jobs and investment. He told the committee the phase-out had already begun but the bill would eliminate the remaining five-year phase.
Randy Zook, president of the Arkansas State Chamber of Commerce and Associated Industries of Arkansas, told the committee the rule affects site-selection decisions and plant workload within firms. Zook said the throwback calculation "really does drive backlogs in our Arkansas plants and the health and long term sustainability of these plants" and that removing the rule would help Arkansas compete for projects and sustain in-state operations.
Committee members asked about the fiscal and economic effects. Beatty and witnesses acknowledged they did not have a precise dynamic estimate of new jobs or revenue but said the rule sometimes raised corporate tax liability by "up to 10% or over 10%" for affected firms and is repeatedly raised in economic-development conversations.
The bill was presented for testimony only; the committee did not take a vote on HB 1500 during this hearing. The discussion drew sustained committee interest from members focused on site selection and statewide competitiveness.
Ending: The committee heard HB 1500 for testimony only and did not vote. Sponsors and business groups said they expect the repeal to improve Arkansas' competitiveness for multisite manufacturers; supporters asked the committee to consider the measure when it returns for further consideration.
