Monthly Archives: January 2012
What a difference a week can make in the life of a tax proposal! Last week the Kansas Legislature was just starting to examine the details of Governor Brownback’s tax reform “Pro-Growth Plan” that the governor touted during his State of the State address on January 11th. This past Friday the governor’s plan was on life support based on strong negative reaction, and the Kansas House Republican leadership team distanced itself from the plan by announced intentions to introduce their own tax reform initiative.
To recap, the governor’s plan lowered individual income tax rates by lowering the top tax rate down to 4.9 percent (versus 6.45 percent) on taxable income higher than $15,000 (single) / $30,000 (married), lowering the bottom rate to 3 percent (versus 3.5 percent) and eliminating the current top income bracket of $30,000 (single) / $60,000 (married). His plan also doubled the standard deduction for head of household filers and exempts all non-wage business income from being taxed. The plan paid for the reduction in personal income tax rates and small business income exemption by 1) eliminating all itemized deductions, 2) eliminating various income tax credits including the Earned Income Tax Credit, the Food Sales Tax Rebate, the Child and Dependent Care credit, and 3) making permanent the temporary .6 % sales tax increase passed by the 2010 Legislature.
The Institute of Taxation and Economic Policy, a non-partisan, non-profit think tank that analyzes state and federal tax policy, found that under the governor’s plan the top 20 percent of the state’s earners would see substantial tax cuts while the bottom 80 percent would see a tax hike. For example, those earning less than $20,000 in annual income would pay on average an additional $242 in taxes, while those earning between $20,000 and $35,000 in annual income would pay on average an additional $247 in taxes. Compare that to the earners bringing in $90,000 and above, who actually begin to see savings. The study further concluded that, for most middle and low-income Kansans, any benefit received from the lower income tax rates would be lost due to on elimination of income tax credits and itemized deductions as well as the higher sales tax rate.
As the Kansas economy slowly rights itself, Kansas families continue to struggle to pay their bills and put food on the table. When it comes to taxes, everyone needs to pay their fair share, especially wealthy corporations and the richest individuals. Governor Brownback’s tax plan does exactly the opposite, forcing middle-income and poor families to pay more while dramatically lowering taxes for the most wealthy. It’s time to pull the plug on this clunker of a tax plan and instead focus our attention on the real tax dilemma facing Kansas – burdensome property taxes.
Happy New Year! I hope you and your loved ones have enjoyed the holidays. The Kansas Legislature gaveled back into session last week in Topeka to work the will of the people. The legislative plate is especially full this year as K-12 school finance, tax reform, Medicaid, KPERS, water policy, immigration, abortion and other issues will be debated.
In his 2012 State of the State address, Governor Brownback talked on a variety of subjects but directed most of his comments towards his tax reform, school finance and Medicaid proposals. I found his comments about his tax reform proposal to be particularly interesting. He proposes to lower individual income tax rates for all Kansans by bringing the highest tax rate down from 6.45 percent to 4.9 percent, lowering the bottom tax bracket to 3 percent, and eliminating the middle bracket. His plan would also eliminate individual state income tax on most small businesses. The Governor proposes to pay for the reduction in income tax revenue by eliminating various income tax credits, deductions, and exemptions and making the temporary one cent sales tax increase passed by the 2010 Legislature permanent. Given how Kansas families are struggling during these tough economic times, I think that it is extremely important that everyone pays their fair share, especially wealthy corporations and the richest individuals. As the old saying goes, “the devil’s in the details”, and as more information becomes available we’ll find out who ends up benefitting most from the Governor’s proposed tax reform and who ends up paying for it.
This could make for a very interesting legislative session. During my first eight years of service in the Legislature, a coalition of moderate Republican and Democratic legislators guided the legislative agenda in Topeka. That coalition was effectively dissolved during the November 2010 elections as Democrats lost 16 House seats to more conservative Republicans. Right now the Kansas Senate is the only remaining moderate entity in Kansas state government. Given that a slew of conservative challengers have already announced their intentions to run against moderate Republican Senate incumbents in the upcoming 2012 primaries, it will be interesting to see how those dynamics, along with our once-in-a-decade redistricting process that we’ll be undertaking this session, impact the actions and accomplishments of the 2012 Legislature.
As I did last year, I will once again be conducting town hall meetings at various locations throughout the district as we progress through the 2012 session. Notice for these events will be publicized in the near future. I hope to see you there!