Monthly Archives: April 2007
Tax Cuts Focus on Kansas Seniors, Low Income Workers
One thing you can almost always count on happening in the Kansas Legislature when there are healthy ending balances in the State General Fund are tax cuts. Case in point: the FY 1997 ending balance in the State General Fund was approximately $750 million, so then-Governor Graves jump-started the 1998 legislative session by proposing $180 million of cuts in sales, income, inheritance, and property taxes in his state of the state address. The legislature went further that session, and a whopping $247 million tax reduction package for FY 1999 alone was eventually enacted.
Fast forward nine years, and we once again prove the old axiom that history indeed repeats itself. This past summer the state enjoyed a $752 million ending balance in the SGF, and Governor Sebelius subsequently proposed at the start of the 2007 session a much more modest package of approximately $12 million in business tax reductions for FY 2008. Once the legislature began work on the issue, the tax reduction package grew to approximately $32 million in FY 2008 and a little over $300 million for the five year period from FY 2008 through FY 2012.
For individuals, this year’s tax reductions 1) increase the state’s earned income tax credit from 15 to 17%, 2) exempt Social Security benefits from state income tax for Kansans with federal adjusted gross incomes of less than $50,000 for tax year 2007 and $75,000 for tax year 2008 onward, and 3) significantly expand a homestead property tax refund for certain low-income folks. For Kansas businesses, the much-maligned franchise tax will be phased out over the next five years. In the first year of the franchise tax phase out, Kansas businesses with $1,000,000 or less in net worth would no longer be required to pay any franchise tax.
We all know what happened four years following the enactment of the massive 1998 tax cuts – the Kansas economy faltered and the state’s finances hit rock bottom. It wasn’t until much later that the Kansas economy and SGF ending balances started to spring back to life. But where things are different this time around is the fact that these tax cuts are much more limited in nature and better focused – the majority of tax cuts enacted this year is going to help Kansas seniors hang onto their homes as well as put a few more dollars into the pockets of low-income working Kansans. That’s a good thing, and that’s why I supported the tax cuts.
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