Archive for Saturday, June 9, 2001

Assessment of tax cut under way

Department of Revenue says Bush plan will cause loss of tax receipts in Topeka

June 9, 2001


— Though it doesn't have any good figures yet, the state expects to lose at least a little income tax revenue because of the federal tax relief legislation President Bush signed.

The Department of Revenue said Friday that the bill has six provisions likely to lower the state's income tax collections. Kansans figure their state tax liability by starting with their the adjusted gross income figures on their federal tax forms.

State officials already knew that the federal legislation would cost Kansas estate tax revenues. The federal changes phase out the federal estate tax over four years, and the Kansas tax is tied to it.

The state expects to collect $40 million from its estate tax during its 2001 fiscal year, which ends June 30.

"These others will take some time to assess," said State Budget Director Duane Goossen.

The Department of Revenue said the provisions that would cost the state income tax revenues will:

Allow higher tax-free contributions for individual retirement accounts, or IRAs.

Increase the contribution limit for education IRAs.

Change how money received from tuition programs is treated for income tax purposes.

Change how money provided by an employer for education is treated.

Permit more people to claim deductions for interest paid on student loans.

Create a new deduction for higher education expenses.

However, Goossen acknowledged that federal income tax rebates that Kansans will receive under the bill could help state revenue collections.

Kansas is not among the eight states they include Iowa and Oklahoma taxing such rebates. But some legislators believe that the rebates will spur the economy by giving people extra money to spend.

"If everybody spends their rebate checks, that will help with the sales tax," Goossen said.

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