What will be the effect of these proposed tax cuts? The Arkansas Department of Finance and Administration estimates that the income tax cuts will ($483.5 million in the first year, because the calendar and fiscal years don’t line up and this is retroactive for all of 2024). Property tax cuts will cost (this doesn’t come out of the state budget, but instead is funded out of a special 0.5% sales tax).

But what will the effect be for Arkansas taxpayers? The $75 property tax credit is straightforward: every primary residence in Arkansas will get the same benefit. For the personal income tax cuts, the savings received will depend on your level of income, but any Arkansas taxpayer with taxable income over $25,000 will receive some benefit. The table below shows several sample taxpayers and the benefit they will receive from the proposed reduction of the top marginal tax rate from 4.4% to 3.9% (note: income figures are for taxable income, which is after subtracting the standard deduction or other tax deductions, and they also include one personal credit):

It is also worth considering that the current proposed income tax cuts are the next step in a long series of tax reductions in Arkansas that began in 2015. The cumulative effects of these tax cuts, including the current proposal, result in very large tax reductions for middle-class households. Keep in mind also that dual-income families are taxed separately, so the benefit could be twice as large as the following table shows. This table compares the tax system in Arkansas before the first cuts in 2015 (when the top rate was 6.9% and many other features were different) were enacted with the proposal currently before the legislature to reduce the top rate to 3.9%:

For more information on the history of tax reform in Arkansas and ideas for future reforms, see our 2023 book The Future of Arkansas Tax Reform jointly published with the Tax Foundation.

2024 Women in Economics Symposium at the St. Louis Federal Reserve

Seven women from ACRE’s Women in Economics program had the opportunity to attend the 2024 Women in Economics Symposium at the St. Louis Federal Reserve. This symposium has been an annual event since 2018 and highlights the importance of women and underrepresented groups within the field of economics. Roughly 2,000 guests participated in this event, with some joining the in-person session and others viewing from watch parties across the country.

The theme of this year’s event was “Our Past, Present, and Future,” with Oksana Leukhina (Economics Policy Advisor at the St. Louis Fed) showing how female involvement in economics had changed over time and the distinct gaps in representation that are still occurring. Additionally, the keynote speaker Adriana Kugler (Federal Reserve Board Governor) shared insights into her unique approach to research questions and her personal experiences with this discipline.

Left: ACRE Staff Elise Ormonde, Heidi Saliba, Terra Aquia, Joyce Ajayi

Right: BT����Students Dami Osundolire (Junior), Veronica Bertolusso (Junior), Hannah Dolan (Senior)

To better understand what economics majors can practically do with this degree, this symposium hosted three distinct panels where presenters shared their career experiences both within and outside of academia. The new President and CEO of the St. Louis Federal Reserve also delivered a small speech to share his commitment to supporting women in economics. Throughout the entirety of the event, female mentorship and networking were stressed as ways to promote successful careers in economics and to help this field progress.

For more information, the St. Louis Federal reserve also hosts a , emphasizing women’s careers and research accomplishments in Economics.

ACRE Researchers Present Economic Work at the Society of Business, Industry and Economics (SOBIE) Conference in Destin, Florida

The SOBIE conference brought together numerous universities across the country and celebrated the importance of academic research on student growth and career development. The Keynote Speaker, Justice Will Sellers, from Alabama delivered his insight on how the Magna Carta changed the perception and concept of government and consequently law economics during his speech, “The Common Law Economy.”

Students and a staff member from University of Central Arkansas presented original research that spanned K-12 education, corruption, occupational licensing, and health economics within the state of Arkansas. This state-relevant research remains important in shaping public policy and promoting open discussion around certain issues.

Perla Zapata (Faculty Mentors: Thomas Snyder, Heidi Saliba) and Anna Turgaeva (Faculty Mentor: Weici Yuan) both received research awards, which celebrated their work on occupational licensing.

Perla Zapata, Elise Ormonde, Dilliran Kadariya, Anna Turgaeva, David Tooley

The individual research projects are outlined below:

Elise Ormonde, ACRE Research & Program Coordinator

“Assessing the Impact of Chronic Absenteeism on Arkansas K-12 Schools and Student Achievement: A Pre- and Post- Pandemic Analysis”

Motivated by recent national media attention on “chronic absenteeism,” which is loosely defined as a student missing ten percent of the school year for any reason, Ormonde analyzed patterns of student attendance in Arkansas across several years. Furthermore, she investigated school district efficiency using per pupil expenditure data and standardized testing scores to estimate costs associated with poor attendance.

Dilliram Kadariya, ACRE Student Research Fellow, Collin Hodges

“Exploring the Relationship Between Screen Time and Substance Abuse Among US High School Students”

Kadariya explored the relationship between heavy screen time and risky health behavior among high school students in the U.S. Utilizing data from the Youth Risk Behavior Survey, this study investigates the correlation between heavy screen time (5+ hours spent in front of screen not including school or work purpose) as a dependent variable and risky health behaviors such as drinking, smoking, illegal drug use and risky sexual activity as independent variables. Kadariya fund that heavy daily screen time is associated with increased probability of substance abuse (prescription drugs, marijuana) early age drinking (<17 years), binge drinking chain smoking, sex at an early age (<16 years), and decreased probability of having 3+ sexual partners in 3 months.��The findings shed light on the evolving landscape of adolescent health behaviors over time, offering valuable insights for educators, policymakers, and public health professionals.

David Tooley, ACRE Student Research Fellow (mentor: Mavuto Kalulu)

“Ethics Committee’s and Corruption: Do Ethics Committee’s Reduce Corruption Cases Within State Legislatures?”

In general ethics committees are self-regulating, self-governing bodies that formulate and recommend legislative standards and conduct for the senators, house members, and legislative employees. Tooley examined the relationship between the presence of an ethics committee within the state legislature and its impact on corruption in the state legislature. Preliminary findings showed no relation, which may imply that legislators introduce ethics committees to signal that they are serious about rooting out corruption in the legislative body. This signal could be in response to internal or external pressure to address corruption.

Anna Turgaeva, ACRE Student Research Fellow (mentor: Weici Yuan)

“Does the Easing of Occupational Licensing Burden Enhance Labor Mobility? Evidence from Policy Regime Changes”

Turgaeva investigated the migration decision of individuals whose occupations are likely affected by Universal Licensing Recognition (ULR). Using a difference-in-differences model, she found a sizable difference in in-migration rates among ULR states relative to control states on the post-ULR period. The effect becomes more pronounced two years after the policy implementation. This suggests that ULR may effectively attract professionals from other states.

Perla Zapata, ACRE Student Research Fellow (mentors: Thomas Snyder and Heidi Saliba)

“The Effect of Occupational Licensing Reforms on DACA Residents”

Zapata’s research, co-authored by Thomas Snyder (Economics Faculty) and Heidi Saliba (Research Associate), analyzed the state occupational licensing laws for Deferred Action Childhood Arrivals (DACA).�� Most states deny occupational licenses to DACA recipients, but some have passed laws lifting the prohibition. Using various sources, Perla estimated the economic benefit of the remaining states lifting the prohibition and allowing DACA recipients to obtain an occupational license.

From reading groups and guest speakers, to professional development for educators and media mentions by the White House, ACRE has had another successful semester of economics, education, and policy research. We hope you’ve been able to come to one of our events on campus, or read some of our many materials online.

Distinguished Speaker Series & Colloquium

Michael Munger (right) with Jeremy Horpedahl

Our final guest speaker for the Fall 2023 semester was Michael Munger from Duke University, who gave a public talk on “Monopoly Power, Political Power, and the Problem of Platforms,” and also joined BT����students in several classes. Munger followed two other speakers this semester: Emily Hamilton from the Mercatus Center, who spoke about housing policy and affordability; and David Bernstein from George Mason University Law School, who spoke about the history of racial classification in the United States. Professor Bernstein was also the keynote speaker for and a participant in our annual ACRE Colloquium, which brought students and professors from across Arkansas together for a weekend to discuss the ideas in Bernstein’s book.

Fall Reading Groups

Students in Dr. Jacob Held’s “Landmark Supreme Court” reading group

Our reading groups set an ACRE record this semester! More students applied than ever before, resulting in a wait-list to participate. One of those groups visited Southern Methodist University in October for a weekend discussion event with students at other universities, and keynote speaker Dr. Bart Wilson from Chapman University. Our Spring 2024 reading groups will be announced soon, and we look forward to having another good response from BT����students.

K-12 Programs

ACRE’s K12 program has hosted a number of professional development opportunities for educators across Arkansas. This past month’s engaging topics included: “Economic Mysteries in Economic History: What was Roaring about the Twenties?” and “The 2023 Economics Nobel Prize: Claudia Goldin, Women, & Work.”  Looking ahead, the ACRE educator reading group will continue this spring. For a full list of K12 offerings, to sign up for the K12 newsletter, or request a classroom visit this spring, go to

Government Transparency in Arkansas

AFOIA in the State Constitution:

Lately in Arkansas there has been a lot of discussion about government transparency, both during the Special Session of the Arkansas General Assembly in September and in the aftermath of the legislative session, from which a citizen initiative emerged proposing the incorporation of Arkansas’s Freedom of Information Act (AFOIA) into the state constitution. ACRE Policy Analyst Dr. Joyce Ajayi has continued tracking these developments and offering her expertise to help support the public debate on the issue. In November, she participated as a panelist at a town hall meeting on this topic in Conway and also authored an op-ed, “,” published in the Arkansas Democrat Gazette. In the piece, she elaborates on the consequences and implications of incorporating AFOIA into the state constitution, emphasizing the need for careful consideration of both advantages and drawbacks.

Looking ahead, Joyce, along with a team of researchers across Arkansas, is co-authoring the Arkansas Civic Health Index. This publication will offer a comprehensive analysis of Arkansas’s civic health, including aspects like web transparency. The report, set to be released in December, will provide insights into the civic and political engagement landscape in Arkansas, showcasing strengths, weaknesses, challenges, and opportunities.

Media

As part of my role as Director at ACRE and a BT����professor, I regularly appear in the media and write popular essays about economics. A few of those outreach activities stood out as especially interesting and important this semester.

• I once again appeared on PBS’s Arkansas Week program and how that relates to public policy, such as the state budget.
• The Charles Koch Foundation featured an essay I wrote explaining . That essay summarizes a lot of the principles we use to think about fiscal policy at ACRE in our research and educational outreach.
• Lastly, a somewhat light-hearted blog post that I wrote about the cost of a , surprised me by getting picked up by a lot of media sources, as well as the a claim the White House made. I was not expecting that, but I am glad that someone is reading my work!

New Employees

ACRE is set to accomplish even more in the coming year with the addition of two outstanding individuals to our team. Elise Ormonde and Heidi Saliba each bring unique skillsets and perspectives to ACRE’s research and outreach. We are fortunate to welcome them, and you can read more about both here.

All of us at ACRE hope that you have a wonderful last few weeks of 2023, and we look forward to sharing more about all of our events, research, and student programs in 2024.

The Arkansas Center for Research in Economics (ACRE) welcomes Heidi Saliba and Elise Ormonde as two new, dynamic team members. These gifted people offer a multitude of expertise, a variety of skill sets, and a common enthusiasm for improving not only Arkansas’s economic climate but the lives of all individuals who reside here as well.

Heidi Saliba: A Multidisciplinary Asset

Saliba comes to ACRE with a multifaceted background and is set to focus on occupational licensing and property rights. Her current projects include collaborating with Dr. Rania al-Bawwab to explore the economic implications of free speech violations, working with Dr. Mavuto Kalulu and Dr. al-Bawwab to learn about perceptions of corruption in the US and South Africa, and examining the role of risk management in occupational licensing projects with a team that includes Dr. Thomas Snyder and BT����honors student Perla Zapata.

Economic transparency is important to Saliba. “I think it’s important to make scholarly work available to everyone,” she says. “This dedication of ACRE is in line with my objective to offer suggestions that minimize obstacles for individuals and safeguard their Constitutional rights.”

Saliba’s unique contribution to the team lies in her diverse experiences, ranging from healthcare research and administration to journalism and web design. She is drawn to ACRE’s commitment to making scholarly work accessible to all Arkansans.

She is also working with Elise Ormonde on a spring event for the College of Business, celebrating research and recognizing the accomplishments and contributions of UCA’s students.

Speaking about her philosophy, Saliba remarked, “Integrity and truthfulness are at the core of my work. I place value on bringing out the strengths and talents of others and learning about the intersections of culture and society.”

Elise Ormonde: Bridging Gaps in Education and Economics

Ormonde joined ACRE at the beginning of September. A 2022 graduate of Hendrix College, she brings a background in economics and psychology. Ormonde’s research focuses on K-12 education, emphasizing transparency in COVID funding for education and exploring health economics.

Ormonde views herself as a connection between students and instructors, encouraging student participation in academic programs. She is very passionate about student involvement in order to enhance educational experiences and set students up for success post-graduation. Elise is in a unique position to work on student programming because she is a recent graduate, making her well-informed about the preferences and needs of students.

Her decision to work at ACRE was fueled by an appreciation of ACRE’s narrowed focus on Arkansas. Ormonde explains, “I’m excited to be part of an Arkansas-based research center like ACRE, addressing specific challenges in healthcare and education with a non-partisan, research-based approach.”

Ormonde believes ACRE improves Arkansans’ lives by contributing valuable economic research, connecting people with academic resources, and bringing people together within the community. She actively engages in student programs, running an economic reading group, mentoring student fellows on research projects and helping to develop a Women in Economics program on BT����campus.

Ormonde participates in a number of student-focused initiatives, demonstrating her dedication to helping create a more robust economic community in Arkansas.

As ACRE continues to grow, the addition of Heidi Saliba and Elise Ormonde further strengthens its commitment to impactful, community-driven economic research. Their unique skills and dedication to ACRE’s mission promise a future of continued success for the research center. Read more about ACRE’s team members here.

2023 Colloquium attendees

By Terra Aquia, Educational Programs Manager

The ACRE Colloquium brings together students and faculty from universities across the state of Arkansas. Attendees spend a weekend reading and discussing economic topics from collections of primary & secondary sources. The 2023 Colloquium program was organized by Dr. Wendy Lucas, History Chair and Professor at the University of Central Arkansas, and held at the Winthrop Rockefeller Institute on October 13-15. The topic for the weekend was Creating and Categorizing Race.��

David Bernstein and colloquium attendees

David E. Bernstein, Professor and Chair at the Antonin Scalia Law School at George Mason University, attended the event and presented the keynote address on his book Classified: The Untold Story of Racial Classification in America. Bernstein’s work outlines the history and current issues surrounding the use of racial classification in the United States. Alongside the book, colloquium attendees read a collection of historical articles that explored the origins of various racial classifications and their use throughout history.

Throughout the weekend, students and faculty discussed the topics through formal structured discussions, as well as casual discussions over meals and during breaks. Attendees consisted of students and faculty from a variety of disciplines including history, economics, philosophy,

ACRE Director Jeremy Horpedahl and colloquium attendees

political science, business, and more. The interdisciplinary backgrounds of attendees allowed for rich discussions from a variety of perspectives.

The ACRE Colloquium is hosted annually. Past topics have included The Political Economy of Special Interest Groups, Free Enterprise & Socialism, and The Morality of Profit. University faculty interested in attending or having their students attend the event can reach out to Educational Programs Manager Terra Aquia at tvotaw@uca.edu for more information.

The Arkansas Center for Research in Economics continued its Fall 2023 Distinguished Speaker Series with a presentation from Dr. Emily Hamilton on October 26. Dr. Hamilton is a Senior Research Fellow and Director of the Urbanity Project at the Mercatus Center at George Mason University. Her research focuses on urban economics, land use policy, and housing affordability. She is often asked to testify before various state legislatures and the U.S. House of Representatives to share her expertise on these topics.

Emily Hamilton and ACRE Director Jeremy Horpedahl

Throughout Dr. Hamilton’s presentation, students, faculty, and community members learned the background and history of zoning policy and the relationship between local land-use regulations and rising housing costs in American cities. She explained how higher costs contribute to slower economic growth and prevent cities from being affordable places for people to live, even if they are regions that are offering beneficial job opportunities and competitive wages. In particular, Dr. Hamilton argued that are one of the most important zoning rules that increase the cost of housing, because they prevent construction of more houses on a given piece of land.

Pointing to Houston, Texas, as an example of a city with relatively high levels of housing affordability compared to other U.S. cities, Hamilton highlighted their lack of use-zoning and how residents have voted against adopting a zoning ordinance every time a proposal has been present on a ballot. Dr. Hamilton’s work allows us to better understand the economic implications of housing prices under supply constraints and the effects of housing policies.

The final public lecture for the ACRE Fall 2023 Distinguished Speaker Series will conclude with a presentation on November 28, by Dr. Michael C. Munger on “Monopoly Power, Political Power, and the Problem of Platforms.”

By Elise Ormonde, ACRE Research & Program Coordinator

BT����students participating in the ACRE Fall 2023 Economics Reading group had the exciting opportunity to travel to Dallas, Texas for a weekend summit hosted by the Southern Methodist University (SMU). This event was a collaboration between UCA, SMU, and Western Michigan University, featuring student reading discussions and a presentation by Dr. Bart J. Wilson on his upcoming book, Meaningful Economics.

The reading group program has provided students with the chance to investigate economics beyond the classroom and how it relates to this session’s theme: Humanomics: Economic Freedom & the Not-So-Dismal Science.��Humanomics aims to incorporate human conduct into traditional economic theory and to answer questions such as: What are markets and do free markets promote the development of moral behavior? Are economists’ simplifying assumptions about human behavior and decision-making causing them to miss key components of the world? Students were already familiar with some of Dr. Wilson’s past work surrounding humanomics due to the inclusion of his and Vernon L. Smith’s book, Humanomics: Moral Sentiments and the Wealth of Nations for the Twenty-First Century, in this fall’s curriculum. Consequently, Wilson’s presentation on “Meaningful Economics” sparked relevant student conversation and many insightful questions.

The ACRE Economics Reading group will continue in the spring and focus on morality in markets.

David Bernstein and ACRE Director Jeremy Horpedahl

The  Arkansas Center for Research in Economics kicked off its Fall 2023 Distinguished Speaker Series with a lecture from Professor David E. Bernstein. Professor Bernstein holds a University Professorship chair at the Antonin Scalia Law School at George Mason University. During his public lecture, he shared work and research from his newest book, Classified: The Untold Story of Racial Classification in America.

In the discussion with reference to his book, Bernstein outlines the history and current issues surrounding the use of racial classification. As the recent ruling in the 2023 Supreme Court Case Students for Fair Admissions v. Harvard College & UNC has declared Affirmative Action unconstitutional, Professor Bernstein’s research into this issue has become especially relevant. He argues a need to re-examine how these groupings are defined, why we use them, and if they are serving their intended purpose, especially in institutional settings.

Bernstein explains that the formal racial categorization of people is a relatively new practice that was implemented by U.S. federal bureaucrats in the 1970s. They initially created these racial categories to collect statistical data during a time when America primarily consisted of black and white people. Although the country has changed significantly since then and now consists of many different groups of people from different backgrounds, there has been little change to the formalized racial categories to reflect the evolving demographics across the country.

Dr. David Bernstein speaks to BT����students

Bernstein’s discussion highlighted cases in which individuals’ self – identification is contested and offered examples of legal issues arising from arbitrary racial classification. In this manner, Bernstein calls attention to the lasting influence of what he deems to be haphazardly constructed racial classifications and what he considers to be the necessary steps moving forward.

The ACRE Distinguished Speaker Series will continue on October 26, 2023 with guest lecturer Emily Hamilton.

Arkansans have seen multiple reductions to their taxes, especially income taxes, in recent years. Starting from a top income tax rate of 7 percent a decade ago, income tax rates have gradually been reduced. The top individual income tax rate has already been lowered to 4.4 percent, and there have been other changes made to reduce income taxes for lower-income Arkansans (who don’t pay that top rate) as well.

What has been the effect of all those changes? And what are the next steps for tax reform in Arkansas?

In our latest publication we have once again teamed up with experts at the Tax Foundation to look at those questions in detail. Our 2016 book with the Tax Foundation comprehensively overviewed the tax system in Arkansas seven years ago. Much has changed since then.

Our new book:

• has the latest tax information since 2016,
• focuses on ways that the income tax burden in Arkansas could be reduced, both for individuals and businesses, and,
• provides suggestions for new reforms – since many of those we suggested in 2016 have now been enacted.

There has been a lot of conversation over the past few years about in Arkansas, but no one has laid out a path to achieving this goal. In our book, we show what it would take and how long it would be before the income tax could be eliminated. It could take as long as 27 years under a conservative approach, but it could also be done as quickly as 8 years under an aggressive approach with some budget cuts.

In addition to eliminating the income tax, our book suggests several other intermediate and other tax reforms that would benefit Arkansas taxpayers, including a reduction of the top personal income tax rate to 3 percent (from the current 4.4 percent). The table below shows the effect of that change on several sample taxpayers. The income levels of the first four sample taxpayers represent the in Arkansas for different family structures, with the fifth sample taxpayer roughly representing a taxpayer at the 95th percentile (just inside the top 5 percent).

Notes: calculations assume that taxpayers are taking the standard deduction, and that two-earner families have income evenly split between earners. Does not include the one-time $150 credit in 2024.

The table shows taxes owed under three scenarios. The first scenario assumes that there were no changes made in 2015 or any year afterwards – this is the highest tax burden in the table and is provided for historical context on the importance of recent tax reductions. The second scenario is current tax law, as it will apply in 2024 (and future years if no further changes are made). The final scenario shows tax burdens under a hypothetical 3 percent top income tax rate in Arkansas. Finally, the table shows the savings compared to current tax law under a 3 percent top rate, or if the income tax is eliminated. The results are also presented in the figure below, showing the potential tax reductions as a percent of income for these same five families.

In addition to these potential individual income tax rate reductions, our book discusses several changes to the corporate income tax. The first change is also about tax rates and involves reducing the corporate income tax rate in tandem with personal income tax rate reductions, as the legislature has done with most recent tax reductions. But the other changes are structural in nature, changing how the corporate income tax works in Arkansas, as well as other business taxes.

The recommended changes for business taxes include:

1. Permanent expensing of capital investment
2. Repealing the state franchise tax, which taxes the net worth of businesses
3. Eliminating the business inventory tax
4. Expanding net operating loss provisions, so that businesses are taxed over the business cycle rather than for individual years

Each of these changes individually would improve Arkansas’s competitive environment for business growth and attracting new firms. Improving competitiveness is important because currently Arkansas currently ranks 40^th in the Tax Foundation , trailing all of our neighboring states and having the second lowest rank in the South (only Alabama is slightly lower).

There are many paths that Arkansas could take to move forward with future tax reforms. Our latest book provides a menu of options for policymakers to consider when making further reductions in the tax burden imposed on individuals and businesses.

The newsletter from Monday also talked about the balance between different policy goals that all governments must strike. When it came to the balance between the public’s right to know what their government is doing and concerns about safety and efficiency, many legislators and members of the public thought the initial proposed changes to Arkansas’s FOIA law didn’t strike the right balance. As our policy analyst Joyce Ajayi explained in , as well as blog posts on Tuesday and Wednesday (co-authored with our policy analyst Joseph Johns), the initial bills didn’t just address the Governor’s personal safety, but also would have severely reduced state government transparency in other ways. A bill was ultimately passed (), but it was significantly slimmed down to only directly address issues related to safety and security.

The bill to reduce income taxes that I discussed last week in a blog post had a much smoother path to acceptance by the legislature (the bill is ). Starting in 2024, over 1 million Arkansans will now pay lower income tax rates (down from 4.7 to 4.4 percent for the top rate), and most Arkansans will also receive a $150 credit on their 2023 taxes. These changes continue the process of making Arkansas competitive with neighboring states, but, just as important, it will more closely restore the balance between taxes and state government spending.

And here’s a preview of something else coming up soon on taxes from ACRE: within the next month we will be releasing an updated book on tax reform in Arkansas, once again co-published with the Tax Foundation. This book will assess all of the tax changes in Arkansas since 2015, including this special session, and offer concrete plans of how to further reduce taxes in Arkansas. We’re excited for that book to be published, and we hope you are too.