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Opinion

Opinion

Editorial: Tax balance

Canceling the state sales tax decline and eliminating the mortgage interest deduction on income taxes will help the state treasury but hurt many low- and middle-income Kansans.

January 23, 2013

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As Gov. Sam Brownback pushes toward his goal of eliminating state income taxes in Kansas, he is recommending a couple of tax measures that will offset the loss of state revenue from lower income tax rates but may be a hard blow for low- and middle-income people in the state.

During his State of the State address last week, Brownback said he wanted to continue to phase out income taxes but would maintain the state sales tax at 6.3 cents on the dollar instead of allowing it to drop to 5.7 cents as it is scheduled to do in July. What he didn’t mention in his address to the Legislature is that he also is recommending the elimination of the mortgage interest deduction on Kansas income tax, a move that would take about $162 million out of the pockets of Kansas property owners and move it to the state treasury.

The sales tax is a regressive tax because it disproportionately affects lower income Kansans who spend a higher percentage of their income on the necessities of life, including groceries. Although Kansas lawmakers have considered the idea of exempting food from state sales tax, as most states do, they say the state simply can’t afford to lose that income. The impact of the food sales tax on low-income Kansans is even higher now because the state eliminated the food sales tax rebate program last year.

Although Brownback said last week that the mortgage interest deduction “is largely used by upper income taxpayers,” statistics distributed by the Kansas Association of Realtors dispute that contention. According to federal income tax data, 65 percent of taxpayers who claim a mortgage interest deduction earn less than $100,000 per year; 91 percent earn less than $200,000 per year. That includes a lot of middle-class people. According to the Realtors, about 315,000 Kansans currently claim an average state mortgage interest deduction of about $516 per year.

The Realtors group is particularly interested in the impact that eliminating the deduction will have on property values and home sales, which already are declining in many areas. Another factor to consider is that landlords also can claim the mortgage interest deduction on their rental properties. If they decide to compensate for that loss by raising their rents, the impact will trickle down to their tenants — many of whom likely are low-income.

If the governor succeeds in his goal to completely eliminate state income tax, the mortgage interest deduction, of course, no longer will be an issue. Doing away with income tax, however, will have a profound impact on the traditional “three-legged stool” of state tax revenue, which seeks to distribute the tax burden among three tax categories: sales, property and income. Upsetting that three-tax balance is bound to produce winners and losers. State lawmakers need to make sure low- and middle-income taxpayers in Kansas aren’t carrying too much of the load.

Comments

Michael LoBurgio 1 year, 3 months ago

Lynn731

look out texas here comes kansas

Governor Brownback is doing his damnedest to make Kansas more like Texas: more regressive, worse schools, more poverty, and less worker protections. You can find some disturbing facts about the state of Texas below:

 27% of Texas children live in poverty, ranking Texas 42nd nationally.
18.5% of all Texans live below the poverty line, good for 40th nationally.
 24% of Texas’s population is uninsured, the highest rate in the nation.
Texas also leads the nation in uninsured children with 17% of Texas children having no insurance. In Kansas, only 8% of children are uninsured.
9.5% of TX workers make minimum wage and receive no medical benefits, making Texas the state with the most workers at earning minimum wage.
28% of Texas 4th graders read at or above a proficient level 39th nationally. In contrast, 36% of Kansas 4th graders read proficiently or better, good for 12th best nationally.
Texas has the 7th most regressive tax system, taking over 12% of the bottom 20% income while only receiving 3% of the wealthiest 1% income.

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ccrugg 1 year, 3 months ago

Of course officials can't exempt food from the sales tax because they need the revenue. What did they think would happen when tax rates were cut? How could anyone in his or her right mind think that cutting taxes spurs business when it hasn't worked at the federal level, and has been unsuccessful at the state level as well? I maintain this a concerted effort at starving the beast. It's not that the state does not have the resources it needs to meet its obligation to its residents. It's that Republicans want to starve the beast and cut government. They cut taxes, and revenues fall. Revenues fall, and programs have to be cut. Programs get cut, and the argument becomes we don't have the money to care for our vulnerable, and pay for education and infrastructure. It's a self created and self fulfilling prophecy handed us by Republicans. How much devastation is enough for them to understand their positions are outdated and ineffectual? Well, they've been effective at meeting their agenda but not at dealing with the needs of the state. If it's any consolation, destroying the state should take Sam out of consideration for the presidency.

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JackMcKee 1 year, 3 months ago

The Tea Party is over. Everywhere but Kansas.

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funkdog1 1 year, 3 months ago

I'm confused gr; are you saying poor people eat less food and don't need to spend as much on medical care as poor people?

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gr 1 year, 3 months ago

What about fair and equal taxes for everyone?

Anytime you increase taxes or reduce deductions, you hurt someone. Is someone worth hurting more than others? If you have the same tax rate across the board, everyone is treated the same.

You could give the poor a break, like they have now, and give them a deduction of a certain limit of income from taxation, making everyone else pick up the tab for them. But still, the comment about the necessities of life, should some people not pay any of their way? Their necessities would be small and therefore they would not pay much total amount if they paid the same rate as everyone else.

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Charles L Bloss Jr 1 year, 3 months ago

In TX property taxes are frozen for people age 65 and above. There is no tax on groceries. The tax on cars is in the area of $ 30 a year, and they must be inspected once a year. All of these things are progressive and should be like this every where. KS is so backward, and money grubbing. Brownback wants to make good changes, but he cannot get the cooperation of the legislature. Yes I want to move back to TX.. Unless I get a divorce from my wife of 27 years, I cannot. All of her family is here and she refuses to move. So I likely will die here. I wish KS would be as progressive as TX, but seems that will never happen.

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Richard Heckler 1 year, 3 months ago

Brownback is still infected with the beltway disease that is chronic and likely incurable .

The repub party declared the day Obama was elected their primary function would be to make Obama a one term president.

Consequently their millions of NO votes became the disastrous campaign against women,The USA and jobs for Americans. http://www.guardian.co.uk/commentisfree/2012/jun/09/did-republicans-deliberately-crash-us-economy

Meanwhile the GOP continue their efforts to destroy the USA and state economies over super charging aka stimulating new economic growth.

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Phillbert 1 year, 3 months ago

If you're making $100,000 in Kansas, you're making twice the median household income and don't need a tax cut or a mortgage deduction. It's the sales tax and the Republicans' elimination of deductions claimed by the poor that are the real shot at middle and lower income families, not to mention the property tax hikes that will trickle down as the state cuts back.

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Gandalf 1 year, 3 months ago

Evilsam doesn't care if it hurts middle and low income people, as long as it benefits the rich.

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