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Archive for Tuesday, February 21, 2012

House panel approves bill cutting income tax

February 21, 2012

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— A plan for cutting individual income taxes in Kansas and helping the state’s small businesses cleared a state House committee Monday, but in tinkering with a proposal from the chamber’s Republican leaders, legislators could be proposing a bigger burden for poor workers.

The Taxation Committee approved a bill Monday that contains an alternative to GOP Gov. Sam Brownback’s proposal to overhaul the state’s individual income tax code. The committee’s voice vote sends the measure to the House for debate.

The bill still contains key elements from House GOP leaders’ plan. It’s less aggressive in cutting tax rates and helping businesses than Brownback’s plan, and it scales back a tax credit for poor workers, rather than eliminates it, as the governor had proposed. Also, the plan keeps other income tax credits and deductions that Brownback would eliminate.

The committee’s plan also reduces the state’s sales tax to 5.7 percent from 6.3 percent in July 2013, a promise lawmakers made in 2010 when they boosted the rate to help balance the state budget. Brownback had proposed keeping the rate at 6.3 percent to help offset other tax cuts.

Brownback and House GOP leaders said they want to overhaul the state’s income tax system to encourage businesses to expand or to come to Kansas. The governor and the committee want to cap the annual growth in state spending so that the state can further reduce income taxes in future years.

“We know what we’re doing now doesn’t work, right?” said Rep. Scott Schwab, an Olathe Republican, who voted for the bill even though he didn’t think it was aggressive enough. “Money’s going to go where it’s wanted. This bill at least takes a couple steps forward.”

Disaster in the making

But Democrats saw a disaster in the making, for poor families, the state budget and an ongoing, 10-year program of highway improvements enacted two years ago. Rep. Nile Dillmore, of Wichita, the committee’s ranking Democrat, called the cap on spending “arbitrary” and said it’s intellectually dishonest to claim that cutting taxes will create economic growth and then prevent the state from tapping that growth.

He and other Democrats — and advocates of highway projects — also are upset because the bill would borrow $351 million from the state’s transportation program over two years to prop up other state programs, paying the loan back over seven years.

“The transportation program creates jobs,” Dillmore said.

Brownback’s plan would exempt the earnings of about 191,000 partnerships, sole proprietorships and other businesses from income taxes. House GOP leaders liked the idea, but they and the committee proposed phasing in the change over six years.

The governor’s plan became politically unpalatable for many legislators within a week of being unveiled last month. The governor proposed ending the tax credit for poor workers and boosting social services spending, but internal administration figures showed taxpayers with adjusted gross incomes of $25,000 or less would be the only group seeing a collective income tax increase — one exceeding 5,100 percent.

House GOP leaders avoided the problem by proposing to cut the tax credit for poor workers in half. With other changes in their plans, all classes of taxpayers would see their income taxes decline, and the percentage drop for the poorest group would far outstrip the decline for others.

Refund changes

That might not be true for the House committee’s plan, though the Legislature’s staff still must calculate the figures. The committee not only proposed scaling back the tax credit, but ending refunds greater than the taxes owed. For example, a worker who’s due a credit of $500 but has a tax liability of only $100 receives a $400 refund.

The Department of Revenue believes the credit would go from providing $91 million in tax relief to poor workers and their families to providing about $30 million.

But the same no-refund policy would apply to other tax credits, including ones tapped by businesses or wealthier taxpayers.

Rep. Caryn Tyson, a Parker Republican, said limiting such tax credits would allow the state to “buy down” income tax rates more quickly, benefiting more taxpayers.

Comments

Michael LoBurgio 2 years, 10 months ago

A Kansas fairytale: Cut income taxes, without taking a hit

Our state leaders want to believe the fairytale pawned off by economist Arthur Laffer (whom the task force has hired for $75,000), who is telling them with lower income taxes, Kansas will attract enough growth to offset much of the lost revenue.

Laffer may be the only renowned economist in America who believes this bunk. If we cut or abolish our income tax, Kansans will pay for it, one way or the other.

Read more here: http://joco913.com/news/a-kansas-fairytale-cut-income-taxes-without-taking-a-hit/#storylink=cpy

chootspa 2 years, 10 months ago

He doesn't believe that bunk. He just writes it up to make it sound good, and then "Ooops, we don't have money. I guess we'll have to cut school funding. Again. Because we couldn't possibly raise taxes"

That's the way this game is played. They cut taxes claiming (even though they know better) that it will bring in more money. When it brings in less money, they claim they can't raise taxes, and then they cut taxes again, claiming it will bring in more money....

Michael LoBurgio 2 years, 10 months ago

Brownbacks tax cuts = Class Warfare To compensate for these reductions in income taxes, the Governor’s plan eliminates itemized deductions (including home mortgage interest and charitable contributions). It eliminates incentives for 529 education savings programs and long-term care insurance premiums. It eliminates the refund for sales tax on food for low-income Kansans. I also understand it eliminates part of the Homestead property tax refund.

The plan also eliminates tax credits for: * Adoption * Alternative fuel tax * Assistive technology contribution * Child and dependent care * Child day care assistance * Community service contribution * Disabled access * Earned income (EITC) * Environmental compliance * Historic preservation * Individual development account * National Guard employer health insurance * Small employer health benefit plan * Temporary assistance to families contribution * and more.

It appears that this plan moves the tax burden from the richest Kansans to the middle class and poorest Kansans. For example, sales tax is the most regressive tax we have. Making the 1% sales tax increase permanent not only reneges on our promise to remove the sales tax increase, it puts a disproportionate burden on low-income families. Removing the refund for sales tax on food and the Earned Income Tax Credit is a double whammy for the poorest working Kansans. In fact, President Ronald Reagan once said the Earned Income Tax Credit was “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”

Eliminating the deduction for home mortgage discourages home purchases for the middle class. Cutting the upper marginal income tax rate benefits the richest Kansans the most. Low-income Kansans can buy a Big Mac with their income tax cut while the folks at the top can buy a yacht with theirs. Not only that, when the income tax is eliminated altogether, there will only be sales and property taxes left to pay the bills.

Michael LoBurgio 2 years, 10 months ago

Under figures provided by the Kansas Department of Revenue, the group of Kansans with adjusted gross incomes of $25,000 or less currently receive a total tax refund of $1.7 million.

Under Brownback’s plan, they would have to pay $86.5 million in taxes, which has been calculated as a 5,102 percent increase. All other income groups would see a tax cut with the largest percentage cut being 18.5 percent for people making $250,000 or more per year.

Cant_have_it_both_ways 2 years, 10 months ago

While you are looking over you shoulder blaming everyone else for you lack of prosperity, you are missing other opportunities to prosper.

Personal responsibility includes doing what ever you need to do to make yourself better. Not blame someone else.

deec 2 years, 10 months ago

In 2010 half the people in the U.S. made $25,000 or less.

jafs 2 years, 10 months ago

Actually, the irony is that bluekansas, from previous posts, is doing quite well.

Many people like to "personalize" these conversations, which is a mistake.

Ron Holzwarth 2 years, 10 months ago

Rich = Enough to eat and a warm place to sleep. That's the definition of "Rich" in 90% of the world.

scott3460 2 years, 10 months ago

And the money changers win another round. Well, right wing hypocrites, what would Jesus do?

voevoda 2 years, 10 months ago

This plan benefits people who make a lot of money, but don't have children and don't donate to charity. It doesn't do anything specific to increase jobs in the state or the amount of wages those jobs pay. Instead, it takes money from the poorest working Kansans, and transfers it to the richest (maybe even non-working) ones.
If the goal is have money "go where it's wanted" as Rep. Schwab said, it's wanted most by the people who need it most--the working poor.

JackMcKee 2 years, 10 months ago

I don't have very much faith in the House.

JackMcKee 2 years, 10 months ago

And the Kansas Cfamber is basically just a front group for the Kochs.

Brownback's approval ratings seem to indicate they are not succeeding.

chootspa 2 years, 10 months ago

Who cares if only 1 in 3 Kansans like him, as long as he can get more than half the voters that hate him to stay home.

verity 2 years, 10 months ago

Vote in the next election.

Register as a Republican so you can vote against the radical right candidates who work for those who are trying to get rid of the moderate Republicans and destroy Kansas.

Historically, Democrats, moderate Republicans and Independents have cooperated in Kansas and Kansas did quite well. The radical right will not cooperate with anybody---they only try to force their dogma and disproven ideology on everybody.

Vote!

verity 2 years, 10 months ago

Ah, loaded questions at their best.

Does she have an opt-out button?

I certainly hope my Republican family never finds out. My reputation as the family black sheep would take a big hit and they might start inviting me to family reunions.

chootspa 2 years, 10 months ago

How many radical lefties are currently serving in Kansas seats? Just curious.

chootspa 2 years, 10 months ago

Some would define Reagan as one these days.

voevoda 2 years, 10 months ago

The bottom 50% already pay something--a much higher percentage of their disposable income (after paying for the most basic food, clothing, shelter, and medical care)--than the top 50%. The Brownback plan would mean that many of them would no longer be able to cover even the basics. And you think that they should suffer that kind of deprivation so that the well-to-do can keep a little more of their money to expend on personal luxuries?

KU52 2 years, 10 months ago

When are Kansans going to understand the fact that tax breaks (or tax cuts) for the rich do not mean any more in-state jobs or any improvement in the State's economy. When the wealthy get that extra cash, it leaves the state. It is spent on world travel, fine art, a condo in Aspen, European cars, investment in New York banks, etc. The hard working middle to lower income citizens tend to spend what they have locally. Their extra money goes to the grocer, the lumberyard, the hardware store, the sports arena, area medical service, etc.

So, which group should get the tax break? It's obvious that it should not be the 1%. Instead of swallowing the right-wing propoganda, study the facts and think about the better answer.

Armstrong 2 years, 10 months ago

The working class hero song and dance are tired. F Y I the new definition of rich is $ 200/k. The above fantasy life of the rich you dislike so much is now watered down to the economy version. Not to worry in a few more years anyone left with a job will be classified as rich

kochmoney 2 years, 10 months ago

Aww, poor little 200k per year earners. That's only in the top ten percent of wage earners and four times the median US wage. Clearly not the sort of people who invest their money and take out of state vacations.

kochmoney 2 years, 10 months ago

That seems to be the strategy the super wealthy have been taking lately, yes.

Brownback's plan would lower my taxes, but I don't support it. I back sound fiscal policy, and that means I don't support giving extra tax cuts to the richest few on the premise that it generates economic growth. That idea is provably false. If you're going to give anyone a tax cut to stimulate growth, give it to the working class.

deec 2 years, 10 months ago

Playing the victim card is entirely appropriate when, in fact, the majority of the world's people are being victimized by the uber-wealthy and their paid-for politicians. Don't believe me? Go ask ordinary Greek citizens. Or Italians, Spaniards, or anyone driven out of their job or home by the machinations of the banks and multinational corporations.

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