Sales taxes are hardest on low-income people in Arkansas, but cutting them would be an expensive and inefficient way of addressing that problem. The cheapest way to help low-income Arkansans who are most affected by sales tax is with Earned Income Tax Credits (EITCs).  If Arkansas was a garden, think of the EITC like a watering pail. It can precisely help the areas that need it most (low-income working families), without wasting resources on spots that already have plenty (wealthy people who can afford to pay higher taxes). In our garden metaphor, reducing the sales tax would be like a full sprinkler system. Everything would get watered whether it needed it or not, and we would use much more than if we were careful and sparing like with the EITC watering pail.

How we cut taxes matters because we need those revenues to fund programs like pre-K, the child welfare system, and juvenile justice reforms. Cutting the Arkansas sales tax would help low-income folks, but it would also threaten public programs because it would be expensive. Lawmakers should pair any cuts to the sales tax with some other revenue raising option, like getting rid of capital gains exemptions which primarily benefit the wealthy.

Online sales are particularly hard to track and frequently go untaxed. When Arkansans buy products from online vendors like Amazon.com or iTunes without paying sales tax, it puts local businesses at a disadvantage and reduces state revenues. Many consumers are unaware that they still owe taxes on the goods that they buy online. Legislators need to make policy changes that will help increase the collection of taxes on these online sales.