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Archive for Sunday, January 22, 2012

Tax shift

An income tax plan that puts a greater burden on low-income Kansans needs some more work.

January 22, 2012

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Gov. Sam Brownback has set a bold agenda for the current legislative session including a major overhaul of the state’s income tax system.

While the plan he has put on the table may have some merit, the disproportionate burden it places on low-income Kansans is raising questions that demand the close attention of state legislators.

The governor’s plan is good news for most higher-income taxpayers and especially for small business owners, but it holds considerable bad news for Kansans at the low end of the income spectrum. Figures compiled by the Kansas Department of Revenue estimate that the amount of income tax paid by Kansas residents overall would decrease by about 12 percent under Brownback’s plan. However, the way that saving is distributed is cause for concern.

The Revenue Department figures show that the 564,328 Kansas tax filers with adjusted gross incomes of $25,000 or less received a total refund of $1.7 million in the 2009 tax year. Under the Brownback plan, that same group would owe a total of $86.5 million, an average of $156 per filer. At the same time, the 21,158 Kansans with adjusted gross incomes of $250,000 or more would pay an average of $5,239 per person less under the Brownback plan.

The governor’s plan also eliminates a number of tax deductions that would have a significant impact on low-income taxpayers. Key among those is getting rid of the Earned Income Tax Credit, which benefits about 255,000 Kansans, generally low-income workers, by helping them keep more of what they earn. The plan does away with deductions for mortgage interest and child care expenses, which will have a significant impact on Kansas families with low or moderate incomes. The governor also is proposing that the state sales tax, which was scheduled to drop to 5.7 percent in 2013, be maintained at its current 6.3 percent. Sales tax is a particularly regressive tax, especially when it is applied to the sale of groceries, as it is in Kansas.

Also eliminated in the governor’s plan is the income tax deduction for charitable contributions, which likely would suppress donations to the very nonprofit organizations that could provide a helping hand to low-income Kansans. However, Revenue Secretary Nick Jordan and economist Arthur Laffer, who acted as a consultant on the Brownback tax plan, told legislators last week that money saved by eliminating tax deductions would be plowed back into social service programs to help needy families.

Making low-income people pay more taxes so that more money is available to fund programs for needy Kansans is a questionable strategy. Traditional conservatives would say that people know better than the government how to spend their money and could do so without adding the administrative costs of a government program to redistribute the funds to the “needy.” Is that the best justification the Brownback administration can offer for a plan that places additional tax burdens on low-income Kansans?

Laffer, who is considered the father of supply-side economics, maintains that the tax plan will pay off in the long run for low-income Kansans because it will lure more business to the state and create jobs. That certainly is a desirable goal, but Laffer’s economic theory is controversial and, some economists say, unsound.

Given today’s economic climate, the governor and state legislators face a serious challenge in how to update and improve the state’s income tax laws for the benefit of all Kansans and the state. It’s not an easy task, but most states are facing a similar challenge. Kansas lawmakers must give their best effort to devising a state tax plan that is fair and balanced for Kansas taxpayers. It’s time for a genuine nonpartisan study of the state’s income tax laws, not finger-pointing and political posturing.

Comments

camper 2 years, 3 months ago

Liked the editorial. I was interested to see Laffer's name come up. When we studied him in college, he was advising Reagen. The book was still open on his brand of supply-side economics which is often termed as Reagenomics.

Like a trade in baseball, you usually don't know if it was a good one or not. The book on the Laffer curve is at best neutral (ie the negatives and positives equal), but is mostly considered bad economics. This is mostly due to the fact that trickle down theory works in a model, but not necessarily in real-life as the extra money investors had would go back into paper investments rather than a "physical" or tangible business with property, plant, and equipment, and of course employees. In addition, recessions are almost always a result of a demand problem.....not supply. This is what we experienced in the 30's and what we are experiencing now. Supply is not the problem.

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its_just_math 2 years, 3 months ago

"Everyone pays taxes." -Fretster

Didn't I straighten you out on that falsehood yesterday? Go back in my history to yesterday and read the link again. 45% pay NO income tax-----sales/pp tax is another story. Anyone who owns property and purchases stuff pays tax, yes.

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just_another_bozo_on_this_bus 2 years, 3 months ago

Everyone should watch this excellent interview of David Stockman by Bill Moyers-- no one is better positioned to understand the damage done by voodoo economics and crony capitalism.

http://www.commondreams.org/video/2012/01/21

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spiller 2 years, 3 months ago

Another hard hitting editorial by the LJW. How about the fact that Brownback feels he has to go out of state for expert advice on Kansas issues? And then spends $75,000 of our money on a guy who's theories have been long discredited and also happens to be in trouble for a ponzie scheme in Texas???? It's just like Seidlecki. Brownback has faith but not in Kansans.

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Alceste 2 years, 3 months ago

As Lennie Pike noted in 1963: "Everybody has to pay taxes. Even businessmen that rob and steal and cheat from people everyday, even they have to pay taxes."

http://www.moviewavs.com/php/sounds/?id=bst&media=WAVS&type=Movies&movie=Its_A_Mad_Mad_Mad_Mad_World&quote=paytaxes.txt&file=paytaxes.wav

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Richard Heckler 2 years, 3 months ago

Best keep an eye on beltway republican politicians as well. Yes those from Kansas too. They are adopting much the same scenario.

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Richard Heckler 2 years, 3 months ago

"However, Revenue Secretary Nick Jordan and economist Arthur Laffer, who acted as a consultant on the Brownback tax plan, told legislators last week that money saved by eliminating tax deductions would be plowed back into social service programs to help needy families."

Yeah right.......

How many ways can I say there is no truth in that statement.

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jayhawklawrence 2 years, 3 months ago

I probably have less a problem with low income families owing another $156 than I do with giving such large tax cuts to wealthy people.

It is unnecessary to do this and it will put a larger burden on our ability to take care of our needs.

Why do the Republicans insist on doing this? Well, it is politics and aren't we sick of Kansas politics?

Only the voters can make the politicians honest and as long as the voters refuse to question their leaders, their favorite talk show hosts and political columnists this insanity will continue and we will continue to see political parties dominated by unqualified candidates.

We can only blame ourselves.

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Cant_have_it_both_ways 2 years, 3 months ago

Everyone should have to pay taxes, then they would appreciate things more.

If someone or someplace paid your electric bill in the summer, you would not care how much you ran your air conditioner. Same with taxes, if you pay nothing, then you generally dont care how much you take from the system.

We have a whole generation of those who put less into the system than they take, and we wonder why there is no money.

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FalseHopeNoChange 2 years, 3 months ago

"All men are created equal"

(from a source)

so now why is it, some men think they should not have to pay as much for something as others? What makes these men feel they are so much better than someone else that they shouldn't have to pay for the things that make their life better?

I thought all men were created equal?

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mloburgio 2 years, 3 months ago

Legislative tax committee members may have conflicts of interest on tax plan

TOPEKA — Members of the state Legislature’s tax committees aren’t just key decision makers on Gov. Sam Brownback’s tax plan — they’d also be among its biggest beneficiaries.

Twenty of the 23 members of the House Taxation Committee have business interests that would be exempted from state income tax under the Brownback plan. In the Senate, nine of 11 members of the Assessment and Taxation Committee have interests that would go untaxed.

The data is reported in the lawmakers’ statements of substantial interest, a form all state officials are required to file disclosing business interests that could affect their governmental duties.

After looking at the data gathered by The Eagle, Senate Minority Leader and tax committee member Anthony Hensley, D-Topeka, suggested that some of the members should consider recusing themselves from voting on the plan.

“They certainly ought to at least let the general public and the rest of their colleagues know that they have a conflict of interest,” Hensley said. “We have rules in the Senate that provide for that. “When a bill hits the floor on final action, you cannot be forced to vote if you have a conflict of interest and you announce that publicly before the vote takes place. It addresses this very kind of thing.”

Read more here: http://www.kansas.com/2012/01/22/2185537/legislative-tax-committee-membe...

Debt increase by presidents: Reagan 186%, Bush 54% Clinton 41% Bush II 72% Obama 23%. Source CBO.

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geekin_topekan 2 years, 3 months ago

LJWorld cuts are showing.

12 sports stories, 3 features (soundoff, horoscope, health), 3 look backs (25,40,100 yrs ago) and 3 editorials for a Sunday edition?

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mloburgio 2 years, 3 months ago

Brownback hates the poor, elderly, disabled, women and our childrens future!

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