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Archive for Wednesday, June 5, 2013

Analysis group believes new tax plan could ruin Kansas

June 5, 2013

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— A nonprofit, nonpartisan organization that analyzes tax policy warned Wednesday that the tax plan recently approved by the Kansas Legislature could put the state "on a path to ruin."

"Kansas legislators passed a plan this past weekend to drain the state’s reserves, cut taxes for the rich, raise taxes for many lower-income families and slash education in the process," wrote Nicholas Johnson, vice president for state fiscal policy at the Washington-based Center on Budget and Policy Priorities.

"The state is on a path to ruin unless it changes course," Johnson said.

The Center on Budget and Policy Priorities describes itself as a policy organization that works on federal and state fiscal policies and programs that affect low- and moderate-income families. It is sometimes described as left-leaning.

The bill that Gov. Sam Brownback has said he will sign into law will increase the state sales tax and reduce itemized and standard income tax deductions, while phasing down income tax rates, with the ultimate aim of totally eliminating state income taxes.

The proposal follows last year's cuts in income tax rates and the elimination of income taxes on profits earned by nearly 200,000 business owners. Tax analysts on the right and left have criticized those tax cuts.

But Brownback says the key to economic growth is elimination of the state income tax.

"When you put the entire package together, this is an absolute tax cut of a substantial nature and puts Kansas on the radar screen for a lot of people that are looking for places that are pro-growth," Brownback said.

Senate President Susan Wagle, R-Wichita, said, "It is exciting that we are lowering income taxes. Clearly that is the one tax you can cut to grow jobs. That is not a contested statistic or outcome," she said.

But Johnson said the tax changes shift the burden toward low- and middle-income Kansans and shortchange the budget, which will limit spending on education and social services.

"And for what?," Johnson said. "Despite promises of a boost to the state economy, real-life experience in the states and extensive academic research show that income tax cuts don't generate meaningful economic growth."

Comments

kansas_cynic 1 year, 6 months ago

Notice you didn't refute any of their facts or analysis.

chootspa 1 year, 6 months ago

Probably because I didn't disagree with it.

Jason Johnson 1 year, 6 months ago

I can't find it, what's the Bill number?

Patricia Davis 1 year, 6 months ago

They don't call us the Laffer state for nothing!

chootspa 1 year, 6 months ago

Any organization that concerns themselves with the wellbeing of poor people without trying to convert them to a religion probably has a liberal bias.

optimist 1 year, 6 months ago

"A nonprofit, nonpartisan organization that analyzes tax policy ..." Really! They may call themselves non-partisan. There is nothing non-partisan about them though. I realized that as soon as Mr. Johnson said "...drain the state’s reserves, cut taxes for the rich, raise taxes for many lower-income families and slash education in the process..." I realize he is dumbing it down to fit it into a sound bite but he is using the same language that the left-wing uses to characterize tax cuts. With no specific evidence or explanation of his statements one can't possible place any value on it.

optimist 1 year, 6 months ago

Yes. However I'm not a reporter claiming to be objective and further claiming a clearly partisan organization is non-partisan.

elliottaw 1 year, 6 months ago

maybe because its' only like a 500 word article, it would have been better if they would have at least linked to the article (blog, post, whatever) that they are summing up though

Frederic Gutknecht IV 1 year, 6 months ago

No... El Dorado... Imaginary land of gold... Of the Fool's variety...

fearthephog512 1 year, 6 months ago

I'd hate to say it, but it would be nearly an improvement ...

tomatogrower 1 year, 6 months ago

Let's see, who does most of the damage on our roads? Oh yeah, business big trucks. Yet, businesses don't have to pay income tax anymore. Who needs educated workers. Oh yeah, business people, who don't pay income taxes anymore. So the middle class and poor are going to pay more in taxes, so business owners have more money, good roads and education. I don't know about government workers, but those business people sure do want something for nothing, you're right. Kansas business owners = takers.

jhawkinsf 1 year, 6 months ago

Businesses are joining the 47% who pay no income taxes. But wait, I've heard it again and again, in this forum. Those 47% who pay no income taxes, they pay many other taxes. So they're not moochers at all. They pay. So too businesses.

chootspa 1 year, 6 months ago

Except for the sales tax exemption that businesses already enjoy. There's also property tax deductions and abatements, inventory deductions, and countless other incentive and deduction programs available to businesses and not individuals.

jhawkinsf 1 year, 6 months ago

Individuals enjoy deductions businesses do not. Businesses pay for permits that individuals do not. We could go on and on.

jafs 1 year, 6 months ago

As a business owner, aren't you entitled to all of the same deductions, etc. that other individuals get?

And, in addition, you get the business perks.

Even in a corporation, all of the individual owners (shareholders) get the same deductions as anybody else.

jhawkinsf 1 year, 6 months ago

Of course I get certain deductions. As a parent, I get to claim my minor child as a dependent, something you do not get. We all get some things that others may not get. That was my original point. Tomato's original post made it "seem like" businesses don't pay taxes. It's the same deception that those who claim that 47% don't pay income taxes. They're making it "seem like" they're not paying taxes. Both are deceptive. Both have just enough truth to make it seem plausible. But both are wrong.

jafs 1 year, 6 months ago

When "business friendly" legislation and tax policy are enacted, businesses pay less tax.

So, in addition to all of the individual deductions, etc. business owners benefit from having to pay less in taxes related to their business as well.

Business interests lobby the government hard for policies friendly to them, and they do in fact appear to me to want the benefits of government spending while having to contribute as little as possible to government revenue.

The 47% figure refers to "federal income tax", as I'm sure you know, and is made up mainly of seniors on low SS benefits and the working poor.

jhawkinsf 1 year, 6 months ago

In the decades I've been in business, my taxes have gone up and they've gone down. I've seen city taxes go up just as state taxes go down. County taxes go up just as federal taxes go down. I've benefitted when minimum wages lagged behind inflation only to have that offset by increasing costs of permits. Then when minimum wages did go up dramatically, permit fees did not go down.

I guess you're assuming that the correct amount for businesses to pay was what they paid just prior to this tax decrease. Of course, when property taxes go up to compensate for these decreases, people will say that's just the cost of doing business.

Through all this, I work about the same and my lifestyle stays about the same. Now if you really want to change the amount of my taxes, have my accountant suddenly die of a heart attack. That happened to me and boy did my taxes change.

jafs 1 year, 6 months ago

That may be.

Depending on where one lives, laws and tax policies are more or less "business friendly" - Lawrence, for some time, has been a place that wants to have a number of amenities and public services, so they're not a "low tax" place.

So, when state and federal taxes go down, it makes sense that local taxes would go up, to make up for the difference and continue funding those desired amenities.

You must like Lawrence enough that you don't move to another area with lower taxes, I guess.

I don't assume anything about the "correct amount", actually. But it's clear that in our state right now, we have extremely business friendly state tax policies and unfriendly ones for those in the lower half of the income spectrum.

Wow - that's weird. But why did your taxes changes as a result?

Also, benefiting when minimum wages lag behind inflation is benefiting from somebody else's misfortune.

jhawkinsf 1 year, 6 months ago

Benefitting at someone else's misfortune - Did you miss the part that it was offset by higher fees for permits? So the state got whatever it was that I supposedly benefitted from. Then, the state spends that money in whatever way it decides, presumably with you benefitting as much as I.

We've both said that when you present several different accountants with the same scenario, you'll get several different taxing numbers. That's what happened to me. My accountant died and the new accountant came up with some very different numbers. Was my first accountant playing fast and loose with the rules? Was the second being so tight that legitimate deductions were overlooked? I really don't know. I treat accountants much as I treat doctors. I find one that I like and trust and then I follow their advice. I defer to their expertise. I suspect both accountants were working within some acceptable range. But I can tell you this, my taxes went up more with the change than I will benefit from this tax decrease. Maybe if my business was like Koch Industries. But it's not. For me, this is no big deal.

jafs 1 year, 6 months ago

When minimum wages lag behind inflation, you benefit at the expense of those working at minimum wage jobs.

I can almost guarantee that those state permits didn't generate revenue that helped those folks.

That's very strange, and disconcerting, I think, that your taxes changed so much with different accountants. Unless there were changes to tax law, which is possible, it shouldn't be the case, in my opinion.

jhawkinsf 1 year, 6 months ago

No, Jafs. I don't benefit if the government then turns around and takes that money from me in the form of higher taxes, higher fees, additional permits. For me, it's a net wash. I don't get to keep that money. And that's what happens. Always. (Would you feel the beneficiary of a tax cut by the feds if the state then increased your taxes by the same amount? If your answer is yes, then you're just playing a cute word game, a game of semantics. But if the feds decrease your taxes by $500 and the state increases your taxes by $500, which is what I'm saying happens all the time, I'm not benefitting. And I'm certainly not benefitting at someone else's expense.)

As to the issue with accountants, it's interesting that you conclude with "in my opinion". Of course, that's exactly what happens when you present a complicated scenario to multiple accountants. They each give their opinion. It's not an exact science. Things like "does this deduction fit the IRS's interpretation of this exemption to whatever rule Congress put into this law, or does it fit into this other exemption?" If it were an exact science, we could have one very simple computer program, plug in some numbers, and it would spit out the answer. Fine for a 10-40EZ, but the reason we hire accountants, the reason large businesses hire teams of accountants and tax lawyers, is precisely because much of the tax code is open to interpretation. It wouldn't be that way with a far less complicated system. But until that happens, we have what we have.

chootspa 1 year, 6 months ago

No they don't. Not of sales and other regressive taxes.

Your contention was that businesses who are now income tax free would pay in other ways. I pointed out that they disproportionately benefit from deductions to these regressive taxes that are not available to the individual, so they, therefore, were less likely to actually pay much of anything. You're back to the income taxes. Where pass-through entities pay nothing. Nothing.

Pass-through entities get both the deductions available to businesses and the deductions available to individuals. The whole point is to avoid double taxation. Now they even avoid single taxation.

jhawkinsf 1 year, 6 months ago

I'd agree with you, if I operated my business in a vacuum. But what's likely to happen next month, or next year is that property taxes will go up as counties seek ways to make up the shortfalls from the state. (Which will hit both my business and my home) Or the federal government will raise my taxes. It'll happen sure as the sun comes up in the east. Or they'll expand some regulatory regulation forcing me to spend tens of thousands for this or that. In the end, I'll be just about where I am now.

Frankly, I couldn't care less about this particular tax cut precisely because I know the other show will fall soon enough. So give me this tax break and don't raise my property taxes, or visa versa. It makes me no never mind.

chootspa 1 year, 6 months ago

The circle goes round again.

You have the possibility of property tax exemptions for a business that a personal property owner does not. You may not get them, because you're not a rich business owner, so you can't pretend that giving you some awesome exception to the law will make the magic jobs fairy sprinkle her blessings upon the city. Either way, you still don't have to pay the sales tax on supplies, unlike personal purchasers.

Yes, the money has to come from somewhere, but increasingly the answer about "where" has been from middle class and low income pockets. This is a tax shift, not a cut.

boltzmann 1 year, 6 months ago

But fuel taxes and registration alone do not come close to funding all that is spent on roads and motorized transportation infrastructure. Much of it comes out of the general fund, so your argument is incorrect.

jhawkinsf 1 year, 6 months ago

His argument is partially correct. Of course, his comment was in response to another that also was partially correct, pretending to be correct. That comment (mine) and the one I responded to, were all partially correct, pretending to be absolutely correct. There's an awful lot of that in this forum. Too many wanting to win the talking points competition and too few wanting to tell the enlighten.

Thinking_Out_Loud 1 year, 6 months ago

sanfran, that is the most honest post I have seen here in a long, long time. Thank you!

Lee Henry 1 year, 6 months ago

Trying real hard to find another state to move to....I know you rich don't care but can't take any more taxes put on us middle class people....but taking away the deductions that they are doing is going to kill me in this state....little s for state because we are a little backward....brownie and wagle and that guy from leawood wow what a threesome...

gatekeeper 1 year, 6 months ago

I know many that have moved to CO. Better jobs out there, better economy and less nutty people (unless you move to CO Springs). Just have to get used to getting snow in Sept and May.

verity 1 year, 6 months ago

Anything left of extreme right is now left leaning.

question4u 1 year, 6 months ago

How many of those who pushed through the massive tax cut last year said then that they would be giving us a permanent sales tax increase this year? Who stood up and said what we've just done will create a major deficit unless we increase sales taxes?

Yes, there were "liberals" who warned that this would be a tax shift not a tax cut, but it's not surprising for opposing political parties to criticize each other's actions. Far more important were the voices of moderate Republicans with years of experience with the state budget. They recognized the recklessness of the Brownback tax plan. These were people who knew what they were talking about, but the Kansas Chamber of Commerce spent a lot of money to replace them with people with no experience and little sense.

Either Brownback and the radicals in the legislature knew that they would have to make the sales tax permanent and kept it secret or truly did not know the consequences of their own actions. Neither of these options should inspire confidence now.

All we were hearing last year from these people was that Kansas was going to have a significant increase in jobs. No one was talking about making the sales tax increase permanent then. No one was talking about cutting funding for higher education and prisons. Nobody said that the turnpike would be merged with KDOT. All that we heard was that Kansas was going to prosper.

What reason is there to believe now that these people know what they're talking about when they tell us that lowering the standard deduction, increasing sales tax, slashing funding to universities and prisons, failing to restore cuts to K-12 education, etc. will lead to prosperity?

Level-headed moderate Republicans were purged and replaced with the dumbest legislature Kansas has ever had. This session stretched out longer than any since 1861, and they still couldn't figure out what to do. And we're supposed to believe them when they say that everything will be coming up roses?

Who cares about what the Democrats might say or what might be in reports from the Center on Budget and Policy Priorities? Just talk to any of the moderate Republicans ousted by the Chamber of Commerce. They know the Kansas state budget, and its what they have to say about this tax plan that should make us all afraid.

jayhawklawrence 1 year, 6 months ago

I think your analysis may be missing the point.

This may have been something as simple as a payoff by people who did not care anything about the consequences.

It doesn't need to make sense. It is a game for these people and it makes them feel superior.

How else can you explain policies that make no mathematical sense?

Larry_Local 1 year, 6 months ago

What's funny, is that all the "Liberals" in Douglas and Johnson County will be able to just run over to the Missouri side of KC and do their shopping. It's all the people West of Topeka who voted for Brownback that will suffer from his budget. Thanks for lowering income taxes, and now I will be shopping online or over state lines to avoid the increased sales tax. This state is on a fast decline... 2014 can't get here fast enough.

jhawkinsf 1 year, 6 months ago

I'm not a member of an organized party. I'm a Democrat.

Of course, Will Roger's famous quote brings a smile to our face. But the sad truth is that the Democratic Party in Kansas has failed to produce what it should have provided for some time ago, a challenger to Brownback in 2014. Why do you wait anxiously for that date?

Democrats needed a frontrunner or two for the nomination for governor and they needed it yesterday. Or last month. Or last year. But no one has come forward to be that nominee. And with every day that passes, whomever emerges will be nothing more than a token candidate, so much cannon fodder that the Brownback machine will blow to pieces.

The date you should be waiting for is not 2014. It's the date Democrats become organized.

verity 1 year, 6 months ago

Damn---we are in absolute agreement. And you put it much better than I could have.

I've been running around with my hair on fire and nobody is listening.

I have to grab a beer and go plants things now.

Kate Rogge 1 year, 6 months ago

How about Jill Docking? And I'd vote for Sandy Praeger in a New York minute if she'd run as an independent (or Democrat?).

Standing_on_my_own_2_feet 1 year, 6 months ago

So many people commenting here think that the State won't collect enough tax revenue under this new plan. Simple solution............ send in more of your paycheck (voluntarily) or ask for a little less handout from the state each month. If you're so convinced that things are going to be so bad for everyone else....... step up to the plate and do your part to make a difference. Hmmmmmm. I wonder how many people will even consider that?

Trobs 1 year, 6 months ago

I do this every single paycheck. I pay state taxes to an education system I no longer use, but will pay into so long as I live in Kansas. And I'm happy for it. I want children, even if I won't have any of my own, to be educated and ready for the world.

This is about making society better for everyone. Private organizations won't do it when there is no profit in it.

chootspa 1 year, 6 months ago

I'm not going to prop up a foolish fiscal policy when that money is better spent on getting wiser leadership.

Armstrong 1 year, 6 months ago

More sky is falling rhetoric from the left

Prairielander 1 year, 6 months ago

Maybe not the sky, but some bridges have started falling. That kinda worries me.

Bruce Bertsch 1 year, 6 months ago

For all of you trying to make this a left wing straw man...Name one instance where lowering income taxes produced additional jobs and revenues. You can't because it has NEVER happened. Brownback, Wagle and the rest of the Legislature have bought into a myth created by Laffer and foisted on the public again and again. For all of you thinking Joco's will just cross the border and buy in Missouri, the sales tax in Jackson County is over 10%; so think again.

jjinks 1 year, 6 months ago

moderationman try Texas, Tennessee, Florida, to name a few but then you wouldn't let facts get in the way of a stupid argument would you?

bad_dog 1 year, 6 months ago

From the article above: " Tax analysts on the right and left have criticized those tax cuts." Did the right fall to the left, as well?

I don't need the middle to weigh in to make my determination. You sound like a city commissioner calling for yet another consultant's opinion.

"Not saying they are not right..." So you're saying they ARE right?

Thomas Bryce 1 year, 6 months ago

Ruined? Hopefully not. Messed up seriously? Yes. What ever the outcome, The Kansas GOP Super-majority led Legislature will OWN the outcome Lock, Stock, and Barrel. I hope they are willing to accept the responsibility for THEIR actions. As a voter, I certainly will hold them responsible for their actions in the form of my vote. They can't blame anyone else, although, I am sure they will try. Lets hold them responsible by voting this next election. After all is said and done, the decision is up to the ones that will vote. Let your vote be counted.

jafs 1 year, 6 months ago

I am also absolutely certain that whatever the results are, the folks in charge will take no responsibility at all - they'll probably blame Obama.

gatekeeper 1 year, 6 months ago

Everyone needs to register as a republican. Then you vote in the republican primaries so we can get moderate republicans through. Mainly the extremists turn out to vote in primaries. If all of us with a level head and more middle of the line vote in the primaries, we can oust these tea party idiots. We're all suffering the consequences of a very small percentage of Kansans voting.

As far as replacing Brownback, I think Praeger is one of the few that could beat Sam. I don't think she'll run though. She's a good lady with a level head and could do some good in this state.

Thomas Bryce 1 year, 6 months ago

I used to think doing something like registering Republican as a political tactic was a little drastic. Now I am not so sure. I will look into that. If that is what it takes, so be it. We have to do something to get Moderates back in the game.

verity 1 year, 6 months ago

Many times it can be the only way your vote makes a difference. A lot of people in my area changed parties to vote for Carolyn McGinn against Brownback/Koch's carpetbagger and she was the only person to survive the Brownback/Koch purge.

I've gotten over feeling dirty although I do take showers often.

Thinking_Out_Loud 1 year, 6 months ago

I agree with your assessment of Commissioner Praeger, gate. However, I think she has the same liability that Davis, Francisco, Ballard, et al. have: she is from Lawrence. The rest of Kansas doesn't exactly think that politicians from our fair city represent their viewpoints. I doubt that even her Republican affiliation is enough to overcome her residency here.

On the other hand, Insurance Commissioner is a statewide elected office, so I might be wrong on this point.

verity 1 year, 6 months ago

I think enough people are onto Brownback/Koch and are so angry that Sandy Praeger would have a good chance of winning. I didn't realize she was from Lawrence and I used to live there. I'm also not sure that being from Lawrence is as much of a liability as you think. My opinion (and I could well be wrong) is that most people are mainly interested in Lawrence as being the home of KU basketball. And there are a lot of fans in other parts of the state---we are all jayhawkers.

jhawkinsf 1 year, 6 months ago

Dogpatch is a neighborhood in San Francisco. Just a little FYI.

jafs 1 year, 6 months ago

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jhawkinsf 1 year, 6 months ago

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jafs 1 year, 6 months ago

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jhawkinsf 1 year, 6 months ago

Maybe I'm being a little defensive, Jafs, but when you say things like I benefitted at other people's expense, because of actions taken by the government, or actions not taken by the government, actions that I never had a say in, actions that there is no way I could know why they were being taken, yet you then make the statement that I'm benefitting at the expense of others, well, you've taken things way out of context.

jafs 1 year, 6 months ago

Not at all.

And, you are being defensive.

The fact is that when minimum wages lag behind inflation, employers benefit at the expense of employees. Employers pay less in wages than they otherwise would, and employees lose purchasing power.

If that makes you uncomfortable (and I would hope that it does), that's a good thing. Nobody should feel good about benefiting at others' expense, in my worldview.

And, we do have a general sort of influence on government, by virtue of the fact that we get to vote. If you care about minimum wage employees, and don't want them to suffer, then you can vote for the candidates that propose raising the minimum wage, rather than the ones promising to keep your costs down by not doing that.

Also, you can voluntarily pay more than minimum wage, and adjust it for inflation on your own, if you want to. Nobody's forcing you to keep paying wages that have lagged behind inflation for the last 30 years.

jhawkinsf 1 year, 6 months ago

I could also give my business away. Maybe to you. You can then run it into the ground as you clearly have zero experience but are liberal with your advice.

You keep looking at half the equation, because that half fits your agenda. That's fine. Not honest. Let me know when you wish to have an honest discussion.

Richard Heckler 1 year, 6 months ago

Where is the $47 million tax dollars that belong to Kansas taxpayers? Anyone in Topeka have a clue?

Many workers will be thrilled to know that the income taxes deducted from your paychecks each month are going to a very worthy cause... your corporate boss. Hmmmmmmmm.

Good Jobs First, a non-profit, non-partisan research center, has analyzed state programs meant to create jobs, but instead have created some $700 million a year in corporate welfare. This scam starts with the normal practice of corporations withholding from each employee's monthly check the state income taxes their workers owe.

But rather than remitting this money to pay for state services, these 16 states simply allow the corporations to keep the tax payments for themselves! Adding to the funkiness of taxation-by-corporation, the bosses don't even have to tell workers that the company is siphoning off their state taxes for its own fun and profit. Whoaaaaaaaa zero disclosure.

These heists are rationalized in the name of "job creation," but that's a hoax, too. They're really just bribes the states pay to get corporations to move existing jobs from one state to another, or they're hostage payments to corporations that demand the public's money – or else they'll move their jobs out of state.

Say adios Amigo don't hurry back.

Last year, Kansas used workers' withholding taxes to bribe AMC Entertainment with a $47 million payment to move its headquarters from downtown Kansas City, Missouri, to a KC suburb on the Kansas side, just 10 miles away. (((AMC Entertainment has since been sold to Dalian Wanda Group of China. )))

Is all of the above legal as far as the $47 million tax dollar give away is concerned?

Where is the $47 million tax dollars? How can $47 million tax $$$$$ go up in smoke?

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