This study simulated the fiscal impacts of this tax policy using a REMI model of Arkansas and then cross checked the analysis using a fiscal impact model derived from an IMPLAN model of Arkansas. The magnitude of the findings did differ, but both approaches were able to identify benefit and cost flows that demonstrated a positive impact on the state budget from the income tax exemption and induce migration of military retirees within the time frame of this study. The simulations indicated that the smaller overhang associated with a smaller effective tax rate dominated the spending effects of the higher effective tax rate and, therefore, smaller effective income tax rates can be anticipated to generate total budget surpluses at earlier dates as compared to larger effective income tax rates.
