U.S. Senator Blanche Lincoln’s
“Arkansas Plan”
A package of tax cuts and tax code simplification measures to help move Arkansas’s hardworking families and small businesses forward.

Arkansas’s working families and businesses are fighting valiantly to survive the current economic crisis and U.S. Senator Blanche Lincoln has designed an “Arkansas Plan” of tax cuts that will help them get ahead.

Senator Lincoln: “With our current economic crisis, it is more important than ever to give working families and businesses the tools they need to succeed.  Hard work and entrepreneurship have fueled the Arkansas small business economy for decades.  I have designed this package of tax cuts and tax code simplification measures specifically to help move our state and hardworking families forward.”

Lincoln’s Arkansas Plan initiatives are designed to: 

• Allow working families and small businesses to get ahead and emerge from the economic crisis stronger and more competitive;
• Create new jobs and cut our nation’s dependence on foreign oil by encouraging innovation and entrepreneurship; and
• Reduce the burden on working families and small businesses by simplifying the tax code.
  
  

Allow working families and small businesses to get ahead and emerge from the economic crisis stronger and more competitive

Lincoln’s Small Business Health Options Program (SHOP) would make health insurance more affordable, predictable, and accessible for small businesses and the self-employed.  SHOP offers tax incentives to encourage states to reform poorly functioning small group insurance markets and encourages the development of state purchasing pools backstopped by a voluntary, nationwide pool.  

The majority of uninsured Americans are self-employed individuals and employees of small businesses.  Small businesses are the number one source for jobs in Arkansas, yet only 29 percent of businesses with fewer than 50 employees offer health insurance coverage because it is simply too expensive.  Of Arkansas’s total uninsured population, more than 56 percent, or approximately 295,000 Arkansans, are employed by a firm with 100 or fewer employees. 

Another Lincoln bill would help Arkansas taxpayers who have seen their investments disappear alongside deteriorating economic conditions.  Lincoln’s measure would allow taxpayers to deduct up to $10,000 for 2009 (up from $3,000), and indexed for inflation going forward, as the amount an individual can deduct annually for capital losses suffered.  More than 100,000 Arkansans count on such investments and Lincoln’s proposal would provide much-needed relief for those that have seen their investments disappear. 

Lincoln’s Savings for Working Families Act of 2009 would encourage low- and middle-income families to establish savings accounts for the purchase of a first home, a college education, or to start a business.  These Individual Development Accounts have a proven track record of success in Arkansas.  

Lincoln’s Family Tax Relief Act of 2009 would help the families of more than 140,000 Arkansas children afford the cost of child care.  

Finally, Lincoln’s bill to update rules for S corporations would allow businesses to access capital and have the opportunity to expand and create jobs. 

Create new jobs and cut our nation’s dependence on foreign oil by encouraging innovation and entrepreneurship

Lincoln’s USA Jobs Act of 2009 would offer a new Research and Development bonus incentive to companies that both research and manufacture their products in the United States.  Hard work and entrepreneurship have fueled the Arkansas small business economy for decades.  As our nation faces record unemployment, with more than 540,000 Americans put out of work last month alone and 90,000 jobless Arkansans, it’s more important than ever that we encourage the creation and preservation of American jobs. 

Another Lincoln proposal would create an even playing field for all renewable energy production.  To encourage the production and use of renewable energy, the federal tax code includes an income tax credit for the production of electricity produced from renewable energy resources.  Under current law, some energy resources receive a higher-level credit than others.  As a result, certain new renewable energy technologies have a more difficult time finding the necessary investment capital.  This is particularly problematic for the pursuit of renewable energy opportunities in Arkansas, where biomass is a predominant renewable resource, but only receives half the tax credit that many other resources receive.  Lincoln’s proposal would provide parity in the value of the credit for all renewable energy resources by increasing the value of the credit to full credit level for those resources that currently receive only a partial credit.  

Lincoln has authored another bill to provide certainty for producers and consumers of biofuels.  The tax code includes credits to encourage the production of biodiesel and renewable diesel, which are proven alternative fuels that will help us lessen our dependence on foreign oil.  These incentives have been extended on a short-term basis in recent years and are scheduled to expire at the end of 2009.  Without these incentives, these new-technology renewable fuels would be priced significantly higher than petroleum diesel and, as a result, would not be competitive in the fuels marketplace.  Arkansas’s biofuels producers and consumers need the certainty that these economic incentives will continue to be available to help sustain this new market.  Lincoln’s proposal would provide a ten-year extension of the credits (through 2018) to provide a stable environment for the creation of a strong domestic biofuels industry.  

A Lincoln proposal also would allow electricity from biomass used on-site to qualify for the Section 45 Renewable Electricity Production Tax Credit.  Under current law, self-generated biomass electricity does not qualify for the credit.  According to the American Forest and Paper Association, in 2005 the timber industry produced 28.5 million megawatt hours of biomass-based electricity, which avoided the use of more than 200 million barrels of oil.  The use of biomass electricity, whether produced on-site or purchased from a utility, has the same positive impact of reducing fossil fuel consumption and should be encouraged. 

Reduce the burden on working families and small businesses by simplifying the tax code

Lincoln is working to simplify tax incentives for higher education expenses so that more Arkansas families can take advantage of these incentives. 

Implementing consistent federal definitions for education expenses is a common-sense way to simplify federal financial assistance for college education and the tax code, while at the same time maximizes the tax benefits available for low- and moderate-income students and their families.  

Under current law, various tax incentives exist to help taxpayers offset their higher education expenses. However, eligible expenses vary by incentive and therefore can be difficult to understand and use correctly.  To further complicate matters, the Higher Education Act (HEA) uses its own definition for higher education expenses to calculate student need for grants and loans. 

The complexity of the education tax provisions has prevented hundreds of thousands of taxpayers from claiming tax preferences to which they are entitled or not claiming the tax preference that would be most advantageous to them. This is particularly true for first-generation college students, many of which are not familiar with college costs, the tax incentives, or the student aid process.  

Lincoln’s proposal would simplify the qualifying expenses definition under all education tax incentives so that they are consistent with other federal financial assistance programs for postsecondary education.  

Lincoln also is working to provide Arkansas taxpayers greater protection from identity theft.  

In today’s electronic age, identity theft is a concern for all hardworking Americans, with more than 800,000 cases of reported theft across the country in 2007.  The Taxpayer Advocate has reported an increase in the number of tax-driven identity theft cases in recent years, as individuals have stolen Social Security numbers and other identifying information in an effort to obtain fraudulent tax refunds.  It’s imperative that the Internal Revenue Service act vigilantly to protect taxpayers from identity theft and to inform them of any misuse of their identity. 

Lincoln’s proposal would require the IRS to notify taxpayers that may have been the victim of an unauthorized use of their identity for tax fraud purposes.  This proposal will help to provide taxpayers with peace of mind that the IRS is on their side and making sure they have all the information they need to protect themselves from fraud.