As budget discussions get more serious in the Kansas Legislature, at least a few legislative leaders are becoming more willing to look at some tax increases to help avoid more drastic cuts to education and other state services.
As they consider possible sources of additional state revenue, the state’s income tax deserves a look.
So far, most of the tax talk has been focused on the sales tax and targeted taxes. A higher overall sales tax rate has been suggested for a limited period along with eliminating some sales tax exemptions, including the one on utilities such as natural gas, water and electricity. Various proposals also are on the table to increase the tax on cigarettes and alcohol and perhaps even add a sugar-based tax on soft drinks.
Only around the edges have a few legislators floated the idea of adding a new income tax bracket for the state’s highest-income residents. The state’s current income tax brackets were set in 1992, with a tweak for single-filers in 1998. Is it time to take another look at the system?
Kansas currently has three income tax brackets. Married Kansans filing jointly pay a 3.5 percent tax on income up to $30,000 and 6.25 percent on income between $30,000 and $60,000. The tax rate on income above $60,000 increases only slightly to 6.45 percent. That rate applies to income over $60,000 whether it’s someone who earns $61,000 or $610,000 a year. These rates are collected on taxpayers’ adjusted gross income after various credits and deductions are taken out.
The people in the lower tax brackets shouldn’t be targeted for an increase, but what about those who earn well above $60,000? According to the Kansas Department of Revenue’s 2009 annual report, about 11 percent of Kansas taxpayers had adjusted incomes over $100,000 in 2007, and 1.7 percent were above $250,000.
Although the governor and some legislators have noted that a sales tax increase may be one of the easier budget-balancing measures to pass, it is a regressive tax that places a heavier burden on low-income Kansans. That is especially true because Kansas collects sales tax on food, a situation that would only be exacerbated by removing the exemption and starting to collect sales tax on other basic life needs like heat, lights and running water.
These taxes clearly weigh hardest on people who are least able to pay. On the other hand, adding a new income tax bracket with a higher rate for the state’s highest-income residents would shift some of that burden to people who already pay a higher portion of state taxes but arguably are most able to afford a tax increase. Where that line should be drawn isn’t obvious, but it’s worth taking a look.
Raising any tax is a difficult political issue, but Kansas lawmakers aren’t facing any easy choices this year. A change in the state income tax structure probably isn’t the whole answer, but it might be part of an acceptable budget package.
Comments
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headdoctor (anonymous) says…
There are plenty of ways to fix the tax problem instead of trying to make little gouges here and there to avoid what needs to be done. They are politicians. There is no chance that they will do the right thing. The State tax code keys mostly off of the Federal tax code. I am not so sure there is a problem with the State tax brackets as much as there is a problem with how the adjusted gross income is arrived at because it is set, except for a few add back adjustments at the Federal level. What good will another tax bracket do if the wealthy that it targets still has more ways to avoid or shelter money that would be taxable?
Jhammons (Jeffrey Hammons) says…
There are plenty of ways to fix anything, but that doesn't mean we have any idea what those solutions are. I personally believe that the State's brackets are out of date. The Federal brackets are a little more elaborate and I think the state should take a look at them. They could very easily create a 150k+ bracket that pays 7%. Or you could add 2 brackets. 100k-250k @ 6.75% and 250k+ @ 7%.
The fact that in Kansas you can have someone making 60k and someone making 600k, while both falling into the same tax bracket proves that things need to be updated. The tax brackets should be updated every 5 to 8 years, not left alone for 18 years and expect things to stay the same. If you want to be a successful businessman, you don't keep your prices the same and expect to make the same amount of profit. Inflation, minimum wage, and natural resource prices (plus many more factors) all affect how much you pay for your final product. Therefore, it's your job as an efficient businessman to adjust your sale prices to ensure you still make adequate revenue to pay for all expenses, while still making profit. Government is just like a business from the financial aspect. You have to keep up with the times.
commuter (anonymous) says…
You can always get rid of some of the credits. I personally get tired of the the lower income people not having their income taxrate increase slightly and people who make more have their's increase a lot more.
commuter (anonymous) says…
You can always get rid of some of the credits. I personally get tired of the the lower income people not having their income taxrate increase slightly and people who make more have their's increase a lot more.
skinny (Richard Johnson) says…
Jhammons, So what you are telling me is that if I work harder and or work two jobs so that I have more money I should pay more in taxes than the guy next door who is lazy and refuses to work? How is that fair? You can't rob Peter to pay Paul! I think everyone should have to pay the same amount of taxes, period!
Jhammons (Jeffrey Hammons) says…
@Skinny
When you say the same amount of taxes, what do you mean? Do you mean everyone pays the exact same amount, or do you mean everyone pays the same percentage? It isn't just a matter of laziness. There are a wide varitey of political inequalities that make financial progress hard on many individuals. We all know that those born into money are most times a lot better off in terms of their own financial success than those born into poverty. No one chooses what family they are born in, so why should we make it any harder on them than it already is.
Not to mention your tax proposal would decrease the governments revenue by about 95%. You think we're in a deficient now? If your plan was implemented the United States wouldn't be in existence for more than 10 years after its implementation. And its not also about working harder. Many people make an awful amount of money without hardly working at all. And then you have a single mother working 2 jobs barely making 40k a year. Who's more qualified to keep their money? The woman working 2 jobs, or the man playing the stock market with daddy's inheritence?
sunny (anonymous) says…
'No one chooses what family they are born in, so why should we make it any harder on them than it already is.'
Everyone makes choices and should be responsible for themselves.
Jhammons (Jeffrey Hammons) says…
Ha! You prove yet another point! Reading comprehension is a rare skill these days. What you're implying is that you have the ability to choose what family you're born in? If i would have known that then i would have chosen a super rich family instead of a middle-class one!
Kontum1972 (anonymous) says…
oh brother....now we are in for it...!
goldwater (anonymous) says…
Why is it that low income people will defend the wealthy and believe they should pay a greater percentage of their income in taxes than weathly people?
oneeye_wilbur (anonymous) says…
keep raising taxes and drive off more people who might consider moving to Kansas, drive out the retirees, kansas is going to kill itself before it heals itself.
As far as schools go, they are gettting plenty of money for each child. I doubt there are very few if any parents in lawrence who pay kansas state income tax and property tax(ks portion) that even comes close to what is returned per child.
You know anyone who pays $10,000 in state income tax? huh? What family might that be in Lawrence. You know any family in Lawrence that pays $40,000 in real estate property tax, actually it would take more than that. gosh, a whole lot more since the state doesn't even get 25% of the total of real estate taxes.
New slogan. Come to Kansas and live in poverty.
oneeye_wilbur (anonymous) says…
keep raising taxes and drive off more people who might consider moving to Kansas, drive out the retirees, kansas is going to kill itself before it heals itself.
As far as schools go, they are gettting plenty of money for each child. I doubt there are very few if any parents in lawrence who pay kansas state income tax and property tax(ks portion) that even comes close to what is returned per child.
You know anyone who pays $10,000 in state income tax? huh? What family might that be in Lawrence. You know any family in Lawrence that pays $40,000 in real estate property tax, actually it would take more than that. gosh, a whole lot more since the state doesn't even get 25% of the total of real estate taxes.
New slogan. Come to Kansas and live in poverty.
notajayhawk (anonymous) says…
goldwater (anonymous) says…
"Why is it that low income people will defend the wealthy and believe they should pay a greater percentage of their income in taxes than weathly people?"
Maybe it's an alien concept around here, but perhaps some people have a little personal responsibility and don't think it's their right to take from someone else just because they have more?
notajayhawk (anonymous) says…
paulette2 (anonymous) says…
"In the 1950s, corporate income tax yielded one-third of federal tax revenue. What changed?"
Um - the population of the country, for one thing.
"Who is working for whom?"
Are you implying the corporations are supposed to work for us? Is that the way it works on your planet?
"The right to earn enough to provide adequate food and clothing and recreation"
How about the right to work for it? Strange FDR doesn't mention that.
"Take the example of Koch Industries ..."
Hmmm there's a word for a direct quote without attribution - what was it again - plagiarism?
Maybe you didn't want to mention that the source is a blog written by student journalists in Budapest.
feeble (anonymous) says…
Freidrich von Hayek and Adam Smith both saw the need for public services outside of the market place and for taxation. That so many of their would be disciples disagree strongly implies that these disciples don't know how to read.
Hayek
"Nor is there any reason why the state should not assist individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance, where, in short, we deal with genuinely insurable risks, the case for the state helping to organise a comprehensive system of social insurance is very strong. There are many points of detail where those wishing to preserve the competitive system and those wishing to supersede it by something different will disagree on the details of such schemes; and it is possible under the name of social insurance to introduce measures which tend to make competition more or less ineffective. But there is no incompatibility in principle between the state providing greater security in this way and the preservation of individual freedom."
Smith
"the expense of defending the society, and that of supporting the dignity of the chief magistrate, are both laid out for the general benefit of the whole society. It is reasonable, therefore, that they should be defrayed by the general contribution of the whole society, all the different members contributing, as nearly as possible, in proportion to their respective abilities."
"When the toll upon carriages of luxury, upon coaches, post-chaises, &c. is made somewhat higher in proportion to their weight, than upon carriages of necessary use, such as carts, waggons, &c. the indolence and vanity of the rich is made to contribute in a very easy manner to the relief of the poor, by rendering cheaper the transportation of heavy goods to all the different parts of the country."
skinny (Richard Johnson) says…
"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."
Dr. Adrian Rogers
LiberalDude (anonymous) says…
This is the best editorial that I've seen in the LJW in a long time.
defenestrator (anonymous) says…
Apparently Dolph didn't write this editorial.
I agree LD. I was actually shocked when I read this!
Let us contact our representatives and let them know that this need reformed.
thefisherman (anonymous) says…
What everybody seems to forget to mention is that while Kansas may collect sales tax on food from everybody at the point of sale, all you have to do to get that money back is make less than appx $23k per year and do the free state e-file. They'll send the money right back if you keep track of how much you spent on groceries.
tomatogrower (anonymous) says…
oneeye_wilbur (anonymous) says…
"As far as schools go, they are gettting plenty of money for each child. I doubt there are very few if any parents in lawrence who pay kansas state income tax and property tax(ks portion) that even comes close to what is returned per child."
Yesterday, someone posted about his sister-in-law who taught at a nice private school where she earned a lot of money and the kids did very well. The parents were paying $10,000/year for tuition. Once our public schools are getting $10,000/year for each student, then you can tell me they are getting plenty of money. You are pretty clueless how much it costs to educate a child. The Kansas legislature isn't clueless. In fact, I think their own study, which they did a few years ago while fighting the lawsuit, found that a quality education would take about $10, 000/student. I think that was the figure. You get what you pay for.