Committee advances seven‑year phase‑out of corporate "throwback" rule

Representative Howard Beatty (D-95) told the Senate Revenue & Tax Committee that House Bill 1045 would phase out the corporate "throwback" sourcing rule over seven years to help attract manufacturers and distribution centers to Arkansas.

"Repealing the throwback rule will make Arkansas more attractive to manufacturers and wholesalers by not taxing income from sales shipped to other states," Beatty said, explaining that throwback can increase a company's Arkansas apportionment factor and raise the state's tax burden on businesses. He said phasing repeal over seven years was chosen to avoid an immediate, large fiscal impact and to make the change manageable for the budget.

Beatty cited an approximate $74,000,000 impact when fully implemented and said the phased approach spreads that effect rather than producing the full impact in a single year. The sponsor said the change is aimed at strengthening Arkansas's competitiveness with neighboring states that have already repealed throwback provisions.

Tucker Brackens of the Department of Commerce told the committee the department and the governor's office support the bill, saying it would encourage investment and new projects in the state. Randy Ziff, identified in the transcript as president of the Arkansas State Chamber of Commerce, also testified in support, citing defense contractors and distribution centers as examples of affected businesses.

Senator Blake Johnson moved the committee "do pass" HB1045; Senator Petty seconded. The committee advanced the bill by voice vote.