Asa Hutchinson unveils plan for tax cuts

(KATV) Republican candidate for Arkansas governor, Asa Hutchinson released a tax plan Tuesday to reduce income taxes in the state for the middle class in his first year in office.

The detailed plan is to reduce income tax from seven percent to six percent for those earning between $34,000 and $75,000 and from six percent to five percent for those earning $20,400 to $33,999. Hutchinson says it would give tax relief to over a half million Arkansans.

"I will gradually reduce the state's income tax and we will start with the middle class," Hutchinson said.

The cuts will cost an estimated $100 million, according to numbers provided by Hutchinson's campaign from 2011 tax liability numbers from the Arkansas Department of Finance and Administration. But the

Hutchinson said the cost will be covered by growth and surplus. Arkansas ended the fiscal year with a surplus of $299.5 million.

According to the{} Department of Finance and Administration the projected surplus for fiscal year 2014 is projected to be $13.8 million. That projection was figured in May and will be updated on Dec. 1.

But a person with knowledge of Hutchinson's plan says growth will be the driving factor of his tax cut plan.

Hutchinson said he has three promises to Arkansans as he plans to campaign on the proposed tax cuts over the next year.

"I will keep a balanced budget. We will maintain our commitment to maintain education. There are not any cuts involved, that's off the table," Hutchinson said.

Last month Democratic gubernatorial candidate Mike Ross proposed eliminate Arkansas' manufacturing sales tax.

"In addition to targeted income tax cuts to families who need it the most and in addition to cutting taxes for small businesses, I also want smart tax cuts that help create jobs in this state," Ross said in a statement.

As for industry targeted tax reform, Hutchinson said, "I think they miss the boat."

"For example, if you have a targeted cuts for industry, that neglects retail, mom and pop shops, agriculture. This is the only proposal that helps every sector of our economy," Hutchinson said.

In a recent press release, Ross called for state income tax reform.

"I believe we need state income tax reform, but I think it needs to be done in a way that can be paid for, it needs to target working families and seniors who need it the most and it needs to target job creation in this state, all while protecting the funding of vital state services," Ross said.

Ross' campaign responded to Hutchinson's plan today saying Ross has supported tax reform since the beginning of his campaign for governor.

"Since launching his campaign, Mike Ross has said he would implement income tax cuts that target working families who need it the most, and we are pleased to see Asa Hutchinson has come around to Mike Ross's position. {}However, as a proven fiscal conservative, Mike Ross has pledged to cut income taxes in a fiscally responsible way that maintains our state's balanced budget and protects essential state services like education, public safety and Medicaid for working families and seniors."