Topeka Gov. Sam Brownback's administration worked Wednesday to contain the potential political damage from the release of internal figures showing that his sweeping plan to overhaul individual income taxes would increase the collective tax burden for the state's poorest households.
Revenue Secretary Nick Jordan told a state Senate committee that any increase in the total burden for taxpayers with adjusted gross incomes of $25,000 or less would be wiped out by a larger commitment to social services in Brownback's budget proposals. Also, Jordan said the group of taxpayers in question — 41 percent of all individual income tax filers — includes affluent and middle-class teenagers with part-time jobs.
Brownback's plan cuts individual income tax rates and exempts 191,000 operators of partnerships, sole proprietorships and other small businesses from any income taxes on their business earnings. To offset the potential loss of revenue to the state, the plan would eliminate tax credits and deductions and keep the state's sales tax at 6.3 percent instead of dropping it to 5.7 percent in July 2013 as scheduled.
According to the Department of Revenue's own figures, the only class of taxpayers that would see an increase in its aggregate tax burden would be the one with people whose incomes are $25,000 or less, while the largest percentage cut would go to the group with incomes exceeding $250,000. As a group, the lowest-income taxpayers actually get a net payment from the state, so the tax change they face is calculated as an increase of more than 5,100 percent.
But Jordan told the budget-writing Senate Ways and Means Committee that plans to boost spending on temporary cash assistance and state health insurance coverage to needy families ultimately will provide more help to struggling Kansans than the one-time annual check many of them receive through a tax credit designed for poor, working families.
"It's inaccurate to say that this is hurting low-income people," Jordan said after the committee's meeting.
Some legislators already were wary of Brownback's plan because lawmakers promised the 6.3 percent rate would be temporary when they raised the sales tax in 2010 to help balance the budget. But the release of figures Tuesday about the average effects of Brownback's plan on broad groups of taxpayers led critics to call it "Robin Hood in reverse."
Brownback's fellow conservatives, who control the House, appeared to be sticking by his plan as a way to make the tax system simpler and stimulate economic growth. But Democrats stepped up their criticism, and moderate Republicans who control the Senate distanced themselves from the plan.
"It's a significant problem in the eyes of many legislators because it appears to be increasing taxes for the poor and decreasing taxes for the rich," said Sen. John Vratil, a moderate Leawood Republican.