Moody's: Federal stimulus raised Arkansas revenues; proposed income‑tax changes would cut $2.6 billion over 10 years

Summary

Moody's Analytics told the Joint Senate Revenue & Tax Committee that federal stimulus narrowed pandemic revenue losses and that a proposal to consolidate income‑tax tables and lower the top rate from 5.9% to 5.5% would reduce state revenues by about $2.6 billion over 10 years while producing modest economic gains.

Dan White, director of fiscal policy research and public sector research at Moody's Analytics, and Emily Mandel, an economist at Moody's Analytics, told a joint meeting of the Senate Revenue & Tax Committee that federal pandemic stimulus materially changed Arkansas's recent revenue experience and that a bill to consolidate income‑tax tables and lower the top marginal rate would have measurable budgetary and economic effects.

"We estimate that without the federal stimulus, we would have been $1,100,000,000 lower in revenue, relative to where we are today," Emily Mandel said, summarizing the firm’s counterfactual modeling of sales, use and individual income tax collections during the pandemic.

Moody's presented three scenarios: actual collections, a no‑pandemic projection and a no‑stimulus counterfactual. The firm said Arkansas…

Moody's: Federal stimulus raised Arkansas revenues; proposed income‑tax changes would cut $2.6 billion over 10 years

Summary

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