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Governor's tax proposal leaves questions

Rep., 70th District

The legislative session began Jan. 9 and the legislature is now in full swing. I remain on the following three committees: Agriculture and Natural Resources, Corrections and Juvenile Justice, and Judiciary.

Gov. Sam Brownback delivered his State of the State address Jan. 11. I hope to read all the details soon. He outlined his goals for the 2012 legislative session in his speech, and I am addressing his primary topic in this week’s column: taxes.

The governor wants to substantially cut the income tax rates for individuals. Currently the tax rates are 3.5 percent (under $15,000; or $30,000 for couples), 6.25 percent (from $15,000; $30,000 to $30,000; $60,000) with a top rate of 6.45 percent (over $30,000; $60,000). The governor would reduce the three brackets to two: a low bracket of 3 percent for incomes under $15,000, $30,000 for couples, and an upper bracket of 4.9 percent for incomes over that. He proposes to eliminate income tax on business income, leaving wage income and investment income as about the only taxable items.

The governor states his proposal won’t reduce Kansas revenues because he also intends to eliminate: itemized deductions of mortgage interest and charitable contributions (and others); subtractions from federal income (will that include KPERS, Social Security, etc.?), the education savings programs, long-term care premiums. He would also eliminate most or all credits, including the child care credit, day care assistance credit, earned income credit, historic preservation credit, and all those “incentive” credits (mostly business related), the well-plugging credit, and the severance tax exemption on new pool oil and gas wells (with exceptions). There are surely ones you will applaud and some you oppose. Time will tell how much each of us is impacted.

Gov. Brownback expects that with lower income taxes, the economy will grow, that more people will be working, and the state will receive more tax revenue. He sets a maximum 2 percent growth of spending and intends to use extra revenue above that to keep lowering income tax rates until the rates reach zero. He wouldn’t use revenue increases to pay down our state debt, or to simply keep up with inflation — right now at about 3 percent. The governor does intend to use gambling income to lower state debts.

While I want to slow the growth of government, I wonder if we limit state spending to 2 percent, but inflation is over 2 percent, would we shove operational costs from the state onto local governments? I prefer to reduce tax rates year by year, not by an automatic formula, to avoid unintended consequences.

Gov. Brownback intends to keep the sales tax at 6.3 percent. Well, the state business organization that vilified me for supporting the temporary increase in 2010 now advocates keeping the sales tax at 6.3 percent to fund the elimination of the income tax; if it was harmful then, wouldn’t it be now?

My current concern: the extra sales tax brings in over $300 million a year and it sunsets in 2013 down to a 5.7 percent state rate. The increase was designed to stabilize our state economy during the recession and stave off an almost certain property tax increase in 2010; I think it did exactly that, but with that big sales tax revenue decrease approaching, is it wise to establish a march-to-zero on the income tax?

I support lowering our tax burden, including the sales tax sunset. I also support restructuring the tax system so we quit picking winners and losers with our tax code (one value of the three-legged stool is to avoid favoritism to one segment of our economy and population), and the governor’s plan would help that in the income tax arena. How about repealing the pipeline exemption? Hmmm?

I encourage you to review the governor’s proposal and consider the consequences for you, your neighbor, and all areas of Kansas. You may recall my explanation in past years of the three-legged stool from a column in March; if you can’t find it, contact me and I’ll send it to you. Putting that knowledge to use, let me ask you: Is it sound for the state to operate without the income tax? Will these reductions improve or imbalance our tax structure?

You may email me at: Brookens70@sbcglobal.net or write me at either 201 Meadow Lane, Marion, KS 66861 or Kansas State Capitol Building, 300 SW 10th, Topeka, KS 66612; or call me at (620) 382-2133 or (785) 296-7636.

Last modified Jan. 19, 2012

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