HB1750
To Repeal The Arkansas Corporate Franchise Tax Act Of 1979; And To Make Conforming Changes.
Last Action (May 5, 2025): Died in House Committee at Sine Die adjournment.
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AI-Generated Summary
House Bill 1750 aims to repeal the Arkansas Corporate Franchise Tax Act of 1979 and eliminate the associated annual corporate franchise tax. The bill removes provisions requiring corporations to file annual franchise tax reports with the Secretary of State and makes necessary conforming changes throughout the Arkansas Code to align with this repeal. Legislative findings within the bill state that the franchise tax is a burden on new, low-profit-margin, and struggling businesses because it is levied on capital stock regardless of whether a company is profitable. The bill also updates language in the Arkansas Benefit Corporation Act and the Uniform Protected Series Act to remove references to the repealed tax and its reporting requirements. Additionally, the bill amends the Educational Adequacy Fund to account for the loss of revenues previously credited from franchise taxes.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries are corporations, including limited liability companies, that are currently subject to the franchise tax. This includes small businesses, new businesses, and companies with low profit margins or those currently experiencing financial distress, as they will no longer be required to pay the annual tax or file the associated reports regardless of their financial performance.
Who Might Suffer?
The primary entity negatively impacted is the State of Arkansas and its public budget, specifically the Educational Adequacy Fund and other state revenue streams that previously relied on the collection of the corporate franchise tax. As a result of this bill, the state will experience a reduction in general revenue, which could necessitate future budget adjustments or funding changes for public services and programs.
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