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Policy Tools

Prioritize Earned Income and Child Tax Credits 

More than half of other states (31) have enacted their own state-level Earned Income Tax Credit (EITC) and 11 have their own Child Tax Credits (CTC), both of which allow working families to keep more of what they earn.1 The EITC and CTC are among the simplest and most effective policy tools we have to reduce poverty and support working families. One study finds that a state-level child tax credit would cost 2.6% of state revenue and reduce child poverty in Arkansas by 25%.2 Nationally, the temporary expansion of the federal CTC during the COVID19 pandemic lowered the child poverty rate to a record 5.2%.3  

Empower Arkansas working families with equitable taxation 

Arkansas should avoid further tax cuts that benefit high-income individuals and leave out average working families. Since 2014, Arkansas has cut $1.6 billion in personal income taxes, with the majority (67%) of those benefits going to households with incomes over $264,000 a year.4  A typical Arkansan saved $439 from these tax cuts from 2014 to 2023; during that time an Arkansan in the top 1% (over $1.6 million) kept an additional $26,984.5  

By requiring upper-income earners to pay their fair share, Arkansas can generate additional revenue to invest in crucial public services and infrastructure improvements that benefit all residents. These funds should support child care, education, health care, and other essential programs critical to a thriving workforce and enhance the overall quality of life for Arkansans. 

Bolster our workforce with investments in affordable, quality child care  

Child care is a linchpin of Arkansas’s workforce and economic growth, but it is not accessible or affordable for many families. Businesses in Arkansas are paying the price because of the lack of quality, affordable child care. Arkansas employers lose an estimated $665 million a year due to employee absence and turnover related to child care, and three quarters of parents missed work in the last three months because of problems with child care.6  

The state should prioritize accessible, affordable, quality child care services; allowing more parents to participate in the workforce and helping children build a strong foundation for their future education. By expanding state-funded pre-K programs and subsidizing child care costs for low and middle-income families, Arkansas can promote a stronger and more resilient workforce and economy.  

Other Tools 

  • Avoid further cuts to Medicaid. Ensure workers and their families have access to quality health care. 
  • Restore collective bargaining rights and remove anti-union restrictions. 
  • End state government job cuts and consider requiring the state to keep a state government workforce in proportion to state population. 
  • Restore 16 weeks of unemployment insurance. 
  • Restore child labor protections. 

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Footnotes

  1. Source: CBPP “States Can Enact or Expand Child Tax Credits and Earned Income Tax Credits to Build Equitable, Inclusive Communities and Economies” 2023 https://www.cbpp.org/research/state-budget-and-tax/states-can-enact-or-expand-child-tax-credits-and-earned-income-tax#:~:text=Budget%20and%20Tax-,States%20Can%20Enact%20or%20Expand%20Child%20Tax%20Credits%20and%20Earned,Equitable%2C%20Inclusive%20Communities%20and%20Economies&text=Eleven%20states%20have%20enacted%20a,Income%20Tax%20Credit%20(EITC) ↩︎
  2. Based on a targeted plan, with a $1,200 credit for older children and a $1,400 credit for younger children. Source: ITEP “State Child Tax Credits and Child Poverty A 50 State Analysis” 2022 https://itep.sfo2.digitaloceanspaces.com/Report-State-Child-Tax-Credits-and-Child-Poverty-A-50-State-Analysis-2022.pdf ↩︎
  3. Source: CBPP “States Can Enact or Expand Child Tax Credits and Earned Income Tax Credits to Build Equitable, Inclusive Communities and Economies” 2023 https://www.cbpp.org/research/state-budget-and-tax/states-can-enact-or-expand-child-tax-credits-and-earned-income-tax#:~:text=Budget%20and%20Tax-,States%20Can%20Enact%20or%20Expand%20Child%20Tax%20Credits%20and%20Earned,Equitable%2C%20Inclusive%20Communities%20and%20Economies&text=Eleven%20states%20have%20enacted%20a,Income%20Tax%20Credit%20(EITC) ↩︎
  4. Source: ITEP “Testimony of ITEP’s Neva Butkus Before the Arkansas Senate Revenue and Tax Committee” 2023 https://itep.org/itep-testimony-arkansas-senate-bill-8-tax-cuts/ ↩︎
  5. Source: ITEP “Testimony of ITEP’s Neva Butkus Before the Arkansas Senate Revenue and Tax Committee” 2023 https://itep.org/itep-testimony-arkansas-senate-bill-8-tax-cuts/ ↩︎
  6. Source: US Chamber Foundation “Untapped Potential in Arkansas” 2021 https://www.uschamberfoundation.org/sites/default/files/EarlyEd_ARKANSAS_2021_DIGITAL1.pdf ↩︎