Archive for Wednesday, March 30, 2011

Legislators still talking about tax cuts, despite state’s revenue shortfall

March 30, 2011

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— Discussions continued Wednesday by Republicans to make the temporary state sales tax increase permanent and use those revenues to reduce Kansas income tax rates.

Sen. Pat Apple, R-Louisburg, vice chair of the Senate Assessment and Taxation Committee, said Kansas is competing economically with Oklahoma, which has been reducing its income tax rates, and Texas, which has no state income tax.

“That debate will soon find us,” Apple said.

The 6.3 cents per dollar state sales tax, which took effect July 1, is scheduled to decrease to 5.7 cents per dollar on July 1, 2013.

The House has approved a plan that would reduce corporate and individual state income tax rates for any fiscal year where tax revenues rise above last year’s total.

Supporters of the bill, which include the Kansas Chamber of Commerce and Kansas chapter of Americans for Prosperity, say the reductions in income tax rates will attract more business and industry to the state.

Opponents say the measure is irresponsible as the state already faces a $500 million revenue shortfall that has led to cuts in schools and social services. They also argue it would increase state government's reliance on the state sales tax, which hits low-income Kansans the hardest, and will deprive education, public safety and social services of any new revenues as costs increase.

Senate President Steve Morris, R-Hugoton, has expressed concerns about the House bill and essentially prevented it from going to a House-Senate conference committee.

On Wednesday, Apple and Sen. Terry Bruce, R-Hutchinson, passed around a proposal that would make the 6.3 percent state sales tax rate permanent, and use revenue from the portion that would have expired to reduce state individual income tax rates. The current individual income tax rates of 3.5 percent, 6.25 percent and 6.45 percent would be reduced to 3.2 percent, 5.8 percent and 6 percent.

The reductions would produce a $75 million hit to the state treasury in 2012, but would essentially be revenue neutral in succeeding years as the state sales tax rate of 6.3 cents would remain, legislative staff members said.

Apple said that the idea wasn’t an official proposal but that he wanted legislators to be thinking of ways to reduce income taxes.

Comments

Bob_Keeshan 4 years, 5 months ago

So the sales tax would remain increased.

Then the lowest bracket, i.e. the folks hit hardest by a sales tax increase, would be reduced by .3.

The next two brackets would be reduced by .45, or 50% more than the reduction for the lowest bracket.

Well played, Kansas GOP. It would make too much sense to do the reverse, and reduce the lowest bracket by .45 and the highest bracket by only .3...

notanota 4 years, 5 months ago

To be fair, the highest bracket is ridiculously low in this state. Not that they'd attempt to fix that, either.

newmath 4 years, 5 months ago

Not everything is a miracle like the 5 loafs and 2 fishes. Sometimes you have to actually account for everything you need and live up to your obligations.

SeaBee 4 years, 5 months ago

I heard on NPR this morning that the state of Texas is currently facing a $27 billion budget deficit.

Maybe we shouldn't be in such a hurry to compete with them.

Bob Forer 4 years, 5 months ago

Making the sales tax increase permanent and reducing the State income tax is merely a slick ploy to payoff wealthy campaign contributors. For most Kansas families, such a scenario is contrary to their economic best interests. Kansans, let not let the sharp talking, greedy and dishonest politicians win this one.

nativeofkansas 4 years, 5 months ago

Looks like Kansas is in a race to the bottom with Oklahoma and Texas. Soon we can have crappy schools like they do!

GardenMomma 4 years, 5 months ago

"The House has approved a plan that would reduce corporate and individual state income tax rates for any fiscal year where tax revenues rise above last year’s total."

How does this allow for the buildup of any surplus? And since our revenues are not enough to cover expenditures now, what more will be cut?

Scott Drummond 4 years, 5 months ago

republican policies fail. How much more proof do we need? Have three decades of tax cutting produced anything other than misery for the middle class?

notajayhawk 4 years, 5 months ago

scott3460 (anonymous) says… "republican policies fail. How much more proof do we need? Have three decades of tax cutting produced anything other than misery for the middle class?"

Well, yes, actually. First of all, with the most recent of those cuts you're referring to, the Bush tax cuts, more went to lower income earners than went to the 'rich' in terms of dollars. In terms of percentage, it was virtually the same across the board, top to bottom. Well, not the bottom, since they weren't paying any taxes, but pretty much everyone else saw the same percentage reduction in their taxes.

Second, everybody's income has increased over the time period you're talking about. The people at the top saw a bigger increase, yes, but nobody lost anything, i.e., the gains of the rich didn't come at the expense of anyone else.

The "misery" you refer to is nothing more than class jealousy. It's like whining that you just won a brand new Chevy Malibu, but you got ripped off somehow because your neighbor won a Corvette.


Made_in_China (Paul R. Getto) says… "GHWB, "Voodoo" economics." It's still true today, but the R's keep sticking pins in the same old doll."

Quick question for ya', Paul: Did federal tax revenues increase or decrease with the tax cuts instituted by GHWB's predecessor, and later his son?

Bob_Keeshan 4 years, 5 months ago

"Did federal tax revenues increase or decrease with the tax cuts instituted by GHWB's predecessor, and later his son?"

Not as much as the budget deficits increased.

notajayhawk 4 years, 5 months ago

Nice, typically non-responsive answer. That wasn't the question, was it? As every household knows, no matter how much you increase income, there's always a way to spend more. Of course, if the deficit is the all-important factor, you must be SO pleased with the fiscal responsibility of Obama and the Democrats.

The point you - as usual - completely sidestepped is that the headline of this article carries the implicit suggestion that cutting taxes will reduce revenues further. Now, maybe you're an acolyte of the liberal economists who espouse the position that the Reagan and Bush tax cuts actually cost us money, i.e. that we would have taken in more if the cuts hadn't been made - a conveniently untestable (let alone -provable) theory. But the fact is that federal tax revenues rose - rather dramatically - with the Reagan and Bush tax cuts. And whether you believe or not in a causal relationship, that fact pretty much puts the lie to the contention that you can't cut taxes and grow revenues at the same time.

notanota 4 years, 5 months ago

Quick question for ya - Did this carefully crafted question improve or decline in propaganda value after notajayhawk's repeated asking of it?

notajayhawk 4 years, 5 months ago

A simple 'I can't answer that because the facts don't support my ideological position' would have sufficed, notanota.

notanota 4 years, 5 months ago

Yes, I hear that's what you say when someone asks if you've stopped beating your wife, too.

Edwin Rothrock 4 years, 5 months ago

Reducing taxes the same percent across all earnings levels shifts the economic burden onto the poor and middle class.

The cost of reduced public services falls much more heavily on the poorest citizens, so measuring the impact on an economic group based on income taxes paid is a flawed analysis. Look at user fees, degrading education standards in public schools, reduced public services, the cost of eroding infrastructure, and reduced access to loans, and then you'll have a fuller view of where the cost burden falls.

notajayhawk 4 years, 5 months ago

All of which is based on, again, the erroneous assumption that reducing tax rates will result in lower tax revenues.

Ever hear the story about the rich man walking along the road that's lined with a seemingly endless group of beggars? Being charitable, he gives each one money - until he gets to the end of the line and takes his own position with his hand out!

A long-term, sustainable solution can not be based on increasing the amount you take from a small group to keep supporting a larger group. Especially when one considers that tax revenues are not correlated with tax rates, but with tax base. While it would likely result in some short-term discomfort, a sustainable solution can only be predicated on expansion of that base.

tomatogrower 4 years, 5 months ago

The stupid man could have taken that money, started a business and created jobs and hired the beggars, but he didn't. It would be nice here in the US, if those who had a lot of money would do the same, but they are keeping it, or creating jobs in other countries. Trickle down does not, and has not worked. If they won't help out their fellow citizen with jobs, then they can darn well pay for their welfare. A society is most unstable when there is a huge gap between the rich and the poor. What do you think is going on in Libya? The people who can't get ahead in life see Qadaffi's brat son hiring hip hop artists at a million dollars a pop to fly in for private parties, when all they want to do is to support their families. Call it class warfare, or class envy. I call it obscene.

notajayhawk 4 years, 5 months ago

"The stupid man could have taken that money, started a business and created jobs and hired the beggars, but he didn't."

Uh, yeah. Pretty much the point there, tomatogrower.

"Trickle down does not, and has not worked."

And yet, here we are, 30 years after Reagan took over, and every income group is better off than they were back then, the percentage of the population in all income groups below $75K has shrunk, the percentage making over $100K has doubled.

Why don't you be honest, tomatogrower? Your complaint isn't that the money isn't trickling down, because it has. You just want the tap opened up full blast until more of it drains in your direction.

Everybody's better off than they were. I'll repeat the analogy I used above: It's like whining that you just won a brand new Chevy Malibu, but you got ripped off somehow because your neighbor won a Corvette.

So some people are getting more of an increase than others. Waaaaaah. That isn't coming at the expense of those others, they haven't lost anything, they've gained, too. Where do you get this idea from that income and/or wealth is, for some reason, supposed to be equitable? You say trickle down hasn't worked? It's been pretty well established that communism doesn't.

What I see as "obscene", tomatogrower, is the sense of entitlement that leads people to believe that somehow they're owed more than they're getting, the ones who think that income is something that's supposed to be 'distributed' as opposed to earned, the ones that believe if their neighbor gets a windfall, then they should get one too, for no other reason than because it's 'fair' or 'equitable'.

notajayhawk 4 years, 5 months ago

Yet another reason I don't really like these nested threads, because certain things get lost out of sequence.

. | . . . . (Scroll down) .V

Jimo 4 years, 5 months ago

More of this "the crowing rooster causes the sun to rise" bs. There isn't even a serious REPUBLICAN economist who will commit professional suicide and state that these tax cuts produced net positive tax revenue.

And why would it? Even the Kool-aid drinkers like Laffer (a/k/a, author of the Laughter Curve) do NOT claim that tax rate cuts on the low end of the "curve" produce greater revenue. Coming from a high of 93% in the 1950s to the current 35%, we've long--long!--since moved below a maximum level of efficient revenue collection.

Let's return to Reagan's marginal tax levels -- 50%. By itself, that would eliminate most of the budget deficit. Some minor entitlement and defense trimming and--voila!--surplus!!

notajayhawk 4 years, 5 months ago

"More of this "the crowing rooster causes the sun to rise" bs."

More examples of the sorrows of public school education.

See, if you had the reading comprehension of a six year old, you might have been able to follow along when I said "whether you believe or not in a causal relationship, that fact pretty much puts the lie to the contention that you can't cut taxes and grow revenues at the same time." From that you might have been able to deduce that I wasn't addressing the causality, but the narrow point that reductions in the tax rate do not necessarily result in reduced revenues, that it is actually possible (since it has actually happened) to cut taxes and grow revenues at the same time.

But I know that to you, what some academician wrote in a book saying that couldn't/wouldn't/shouldn't happen is much more significant than what actually DID happen, because the overwhelming evidence is - well, because he said so. So tell ya' what, Jimo, you stick to your faith-based economics, and let the adults worry about the real world until you get out of school, okay?

"Let's return to Reagan's marginal tax levels -- 50%."

If that was a rather pathetic attempt at suggesting Reagan approved of a top marginal rate higher than we have today, you might have considered that the 50% that prevailed for most of the Reagan years was a significant drop from the nearly 70% he inherited, and that it was down to 28% when he left office. The final cut from 38.5% to 28%, incidentally, was accomplished with Democrats in control of both houses of the legislature.

In any event, since the odds on your ever being affected by the top marginal rates is pretty much non-existent, your suggestion can be summed up as the typical rally cry of the freeloaders: 'Raise taxes! Just raise someone ELSE'S taxes!'

notanota 4 years, 5 months ago

Someday you'll be able to dazzle us with brilliance. Today you're just trying to baffle us with you know what. Now if you've actually got a point, try making it without the ad hominems and red herrings.

notajayhawk 4 years, 5 months ago

Oh, I'm sorry, do I need to use smaller words or something for you? The point - that I've mentioned more than once now - is that reducing tax rates does not automatically result in lower tax revenue collections. That is not brilliance nor BS, it's history. Now, was that simple enough for you, because I really can not put it more plainly. Perhaps you could get a school child to explain it to you.

notanota 4 years, 5 months ago

I see you still don't feel you have a strong argument.

notajayhawk 4 years, 5 months ago

And I see you still can't answer a simple question, or recognize a simple fact. Is there some point to continue arguing with a woman doing her best to impersonate all three monkeys?

notanota 4 years, 5 months ago

It all depends on how many times you'd like to continue to prove me right. You don't have a valid argument or you could make it without the ad hominems.

I feel generous today, so I'll throw you a bone. There's no guarantee that cutting taxes will decrease overall revenue in any given year, no, but cutting already low rates is pretty much a guarantee of decreased revenue. Even the Koch-owed Tax Foundation with a clear anti-tax bias says, "On the other hand, few if any of today's tax rates are so high that cutting them would generate a surge of income-producing activity so large that revenue would rise."

notanota 4 years, 5 months ago

It all depends on how many times you'd like to continue to prove me right. You don't have a valid argument or you could make it without the ad hominems.

I feel generous today, so I'll throw you a bone. There's no guarantee that cutting taxes will decrease overall revenue in any given year, no, but cutting already low rates is pretty much a guarantee of decreased revenue. Even the Koch-owed Tax Foundation with a clear anti-tax bias says, "On the other hand, few if any of today's tax rates are so high that cutting them would generate a surge of income-producing activity so large that revenue would rise."

notajayhawk 4 years, 5 months ago

It seems that one of the major differences between the top-down and the bottom-up approaches is that the latter focuses on long-term sustainability, while the other says that's not good enough, we need short-term relief for the people at the bottom. While that's certainly an understandable, even admirable motivation, there's two problems I see with that:

1) It's simply not sustainable.

2) The problem with "maintain[ing] the cash flow until we balance things out and get back to reality" is that it provides no incentive to do so. People don't change when they're comfortable, they change when the current situation becomes untenable. And one thing that's proven itself to be true throughout history is that as long as we keep giving more money to the government, that government will keep finding ways to spend more.

Bob_Keeshan 4 years, 5 months ago

Yeah, we should all be wishing for Reagan and Bush II economics -- huge deficits and the two biggest economic crashes (1987 and 2008) of our time. Brilliant reasoning.

Would love to see a link about increases in household income ("Second, everybody's income has increased over the time period you're talking about").

notajayhawk 4 years, 5 months ago

So, once again, Bob: If the deficit is the greatest evil, your support of the economic policies of Obama and the Democrats is because - why, again? Oh, forgot, because their Democrats, and you're a partisan hack.

But since you asked so nicely (and are apparently unable to use Google):

Median Household Income, United States, in 2009 dollars:

1980 - $43,892; 2009 - $49,777

Household Income, by upper limit of quintiles and top 5%, in 2009 dollars:

Lowest: 1980 - $18,553; 2009 - $20,453

Second: 1980 - $34,757; 2009 - $38,550

Third: 1980 - $53,285; 2009 - $61,801

Fourth: 1980 - $78,019; 2009 - $100,000

Lower limit of top 5%: - $125,556; 2009 - $180,001

Source: United States Census Bureau http://www.census.gov/hhes/www/income/data/historical/household/index.html (You will need to be able to open Excel spreadsheets to view the data)

Further, the percentage of the population at income levels of under $15K, $15-25K, $25-35K, $35-50K, and $50-75K all shrank from 1980 to 2007, there was a small rise in the percentage of those between $75-100K, and the percentage over $100K more than doubled.*

Again, from the Census Bureau http://www.census.gov/compendia/statab/2010/tables/10s0674.pdf (Opens a .pdf file) [*Although not stated on the chart itself, the numbers listed for Median Income make it evident the figures are in constant dollars, most likely 2007.]

Happy?

Jimo 4 years, 5 months ago

If low taxes resulted in a business bonanza, Kansas would resemble a Chinese boom-town.

Taxes, in fact, are a small (even if not insignificant) business factor. Wages, for example, for a typical business are 15 times as relevant (let alone what you get for those wages).

What's more: what those taxes are used for--education, infrastructure--matter far, far, far more to businesses. It's just that the chamber of commerce is run by human beings and human beings by nature find it difficult to resist the temptation of thinking they can get something for nothing - particularly in the limited timeframe of individual human lifetimes, whose goal is to loot as much as possible and then sit back in comfortable retirement, letting the younger generations scramble for whatever might be left. Government, by nature, has to worry about not only everyone's lifetime but the interests of those yet unborn.

Again and again, the Tea Party types say they are concerned about "the children" yet it is precisely our children who must suffer from these short-sighted, get quasi-rich quickly (while really making the rich into the super-rich) schemes.

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