It could be time to say goodbye to the most progressive part of Asa Hutchinson’s tax plan, the part that scales back capital gains tax cuts for the super-rich. Under the governor’s plan, the capital gains tax exemption had been reduced to 40 percent. A tax cut bill (HB1402) reinstates the old 50 percent tax break on capital gains and an incredible free pass on taxes for capital gains income that exceeds $10 million. The bill passed quickly out of committee Thursday morning with an amendment to phase it in over two years. With the two year phase-in amendment, HB1402 is estimated to hand over $6 million in state general revenue to some of the wealthiest folks in Arkansas in 2016, and $11.8 million in 2017.

With a requirement for a balanced budget each year, those millions of dollars are going to be sorely missed in the state’s budget. A complementary tax increase somewhere else is unlikely, and that leaves programs like pre-k, child welfare, and juvenile justice on the chopping block.

Scaling back taxes on capital gains income helps wealthy Arkansans almost exclusively. 75 percent of the benefits of the cut to the capital gains taxes will go to the top one percent.  A 50 percent capital gains tax cut saves someone in the top one percent of Arkansas earners about $4,200 a year. That same tax cut saves the typical middle-income Arkansan only about $2 a year. Research shows that tax breaks like this don’t attract businesses to the state or help create jobs, they are nothing more than yet another tax break for the extremely wealthy.

Tax-free capital gains income over $10 million a year is also a clear win for millionaires. The top one percent of taxpayers (those making over $330,000 a year) already have the lowest state and local tax burden of any income group; they pay less than six percent in taxes as a percent of their income. The lowest 20 percent of taxpayers (people making less than $16,000 a year) pay 12 cents on every dollar, or twice the rate as their wealthy neighbors.

Here’s an excerpt from the bill:

“The amount of net capital gain in excess of ten million dollars ($10,000,000) from a gain realized on or after January 1, 2014, is exempt from the state income tax.”