KEPC UPDATE: State borrowing; Jordan: Revenue drop in June; Fiscal Cliff/Capital Gains; Medicaid expansion

  • State borrowing nearing Great Recession level
  • Jordan says revenue will drop again in June
  • Memo hints revenue drop was not all fiscal cliff/ capital gains
  • Medicaid expansion with a Kansas twist

 

State borrowing nearing Great Recession level

Former Kansas Budget Director Duane Goossen told a meeting of the Newton Area Chamber of Commerce last Friday that the internal borrowing recently authorized by the Kansas Finance Council is nearing the same level as during the Great Recession.

The comments came a day after Governor Brownback and legislative leaders approved $675 million in borrowing from idle funds over the 2015 fiscal year to help the state by expected tight times caused by lower than predicted revenues.

Internal borrowing in the 2009 fiscal year was $775 million. Last year it was $300 million.

Goossen, now the VP for Fiscal and Health Policy at the Kansas Health Institute says the increased borrowing is a signal that the state is entering a period of “defensive budgeting.”

Governor Brownback and Republican legislative leaders are taking strong exception to some of the reporting on the revenue drops and the borrowing.

You can get a flavor for the debate by listing to a story by Stephen Koranda of Kansas Public Radio at the University of Kansas.  Listen to the audio report on the State Fiscal Council meeting last week where the idle fund borrowing was authorized.

 

Jordan says revenue will drop again in June

Kansas Secretary of Revenue told the Topeka Capital-Journal this week that he expects state revenues collections to fall about $10 to $20 million below official estimates for June, following a drop of $310 million below estimates in April and May.

The Administration has attributed the drop to investor fears about federal tax changes that caused a surge in investment sales to take advantage of lower capital gains taxes. Officials pointed to a report by the Rockefeller Institute of Government to support their claims.

However, as we reported on June 7, Rockefeller Institute economist Lucy Dadayan told the Wichita Eagle her research was misrepresented by those administration claims.

“The large declines in Delaware, Kansas, and North Dakota are mostly attributable to the legislative changes that cut income tax rates as well as restructured tax brackets,” she said.

Dadayan also said in that story that Kansas might have to make budget cuts in the near future.

Memo hints revenue drop was not all fiscal cliff/capital gains

A memo to the Kansas Legislative Budget Committee dated Monday, June 9th, has a slightly different analysis regarding what caused the $310 million drop in estimated revenues coming in to the State of Kansas.

Funds flowing into the state’s treasury in April and May were $310 million less than the official estimates published in mid-April.

The biggest piece of the estimate that went askew concerned individual income taxes. They were $282 million less than expected, or 12.3 percent, according to Legislative Research.

The memo agrees in part with what the Administration says caused the difference.

“The reduction in individual income tax receipts was believed to be at least partly attributable to a taxpayer behavioral adjustment that occurred late in 2012. This development was known but the impact had been underestimated in Kansas and a number of other states.”

The memo goes on to say:

“In addition to the aforementioned Fiscal Cliff/capital gains issue, it appears that some of the fiscal notes associated with various income tax law changes enacted in 2012 and 2013 were understated. Additional study will be needed to provide updated information for the Consensus Group in November on the magnitude of the shortfall relative to the most recent estimate – regardless of the reason or combination of reasons that caused the shortfall.

Read the entire memo. And, you can also learn more from a KHI special report.

 

Medicaid expansion with a Kansas twist

The Kansas Hospital Association will propose Kansas-specific legislation in 2015 to expand Medicaid in the state, according to a report by the Kansas Health Institute News Service.

The report says in part:

“The legislation being drafted by the hospital association will be tailored specifically to Kansas, though it will borrow elements from so-called private sector expansion proposals in other states. Pioneered in Arkansas by a Democratic governor attempting to overcome opposition from a Republican-led legislature, the private-sector approach has been adopted by an increasing number of Republican governors seeking an alternative to expanding public coverage.”

Here’s a link to the story on the KHI News Service.

KEPC UPDATE: Weather, tax debate, constitutional amend passes Senate, fixtures bill, deadline, income tax cuts don’t cause growth

In this issue …

  • Weather shortens the legislative week
  • Tax plan will be debated in Senate
  • Education constitutional amendment passes Senate
  • Legislative Post Audit released on fixtures bill
  • Deadline coming up
  • Study: income tax cuts don’t grow small business
  • Find your legislator

 

Weather shortens the legislative week

This has been a very short week.  Due to the weather, the legislature and much of state government was closed down Thursday.  There will be little activity on Friday.  Much of next week will be spent on the floor of the House and Senate debating bills.  Much of the committee work scheduled for Thursday and Friday will be pushed into next week.

 

Tax plan will be debated in Senate

Most of Governor Sam Brownback’s proposed tax plan is expected to be debated in the Kansas Senate next week after coming out of the Senate Taxation Committee this week.  House Bill 2059 will cut Kansas individual income taxes even more in the future, but raise revenue sooner to fund the budget.

It’s basically the Governor’s tax plan.  It raises money by extending the temporary statewide sales tax increase enacted in 2010.  It also eliminates the individual income tax deduction for mortgage interest, a change strongly opposed by the Kansas Association of Realtors.  The bill does NOT include elimination of the real estate property tax deduction, as proposed by the Governor.  That was removed in committee.

House bill 2059 was originally the cleanup trailer bill to last year’s income tax bill.  It corrects the tax basis problem and fixes the unexpected $2.5 million tax increase on individuals who are owners of bank holding companies.

The Senate Taxation Committee amended Senate Bill 78 (most of the Governor’s plan) into House Bill 2059.  This is widely seen as a parliamentary maneuver to send the bill to the House and put it into a conference committee.  Such a move would avoid a full debate in the House of Representatives where amendments could be debated and voted up or down.

 

Education constitutional amendment passes Senate

By a vote of 27 to 13, a constitutional amendment designed to sidestep the recent school finance court decision has passed the Kansas Senate.  The court decision requires Kansas to put $480 million more into K-12 education.  It is being appealed to the Kansas Supreme Court.

Senate Concurrent Resolution 1608 would change the Kansas Constitution to make it clear that education financing is exclusively a legislative power.  Constitutional amendments must be approved by a 2/3 vote of both the House and Senate in order to go to the voters.  If approved by the Legislature, the vote would take place in the April statewide elections this year.

It now goes to the Kansas House of Representatives, where its chances of passage seem slim.   Speaker of the House Ray Merrick is quoted as saying it’s a “tossup” whether the resolution could get the 2/3 majority needed to pass.

84 votes is a 2/3 majority in the House.  42 votes would stop it.  All 33 House Democrats are likely to oppose it.  All it would take is at least nine Republicans to vote no.  It’s believed there are a minimum of a dozen moderate Republicans.

 

Legislative Post Audit released on fixtures bill

The Legislative Post Audit report on the machinery and equipment vs. fixtures issue has been released and was reviewed by the House Taxation Committee on Wednesday afternoon.

The audit stems from a legal dispute between Montgomery County and a nitrogen fertilizer company over the firm’s 2008 tax assessment.

Machinery and equipment acquired after 2006 is exempt from property tax in Kansas.  The appraiser said some property previously classified as machinery and equipment was actually fixtures, and thus real property subject to property tax.  The quarrel started after the Kansas Court of Tax Appeals upheld the Montgomery County Appraiser’s valuation and classification. 

Major findings of the Post Audit report:

  • Targeted review of three ethanol plants identified a number of problems with how county appraisers classified certain property (including problems within the same plant).
  • Inconsistencies in the way county appraisers valued property.
  • Although the state’s computer assisted mass appraisal system works well for most properties, it does not work well for complex manufacturing plants. This contributed to the classification and valuation issues identified.
  • The state’s Division of Property Valuation does not provide sufficient oversight and guidance for appraising complex manufacturing plants.
  • Last year’s Senate Bill 317 would reduce property taxes between $170 million and $500 million annually, over the long term.  It would have broadly redefined commercial property.
  • The Post Audit report makes a number of recommendations to the Division of Property Valuation aimed at improving their assistance and guidance on how to classify and value complex manufacturing plants.

During the House Taxation Committee meeting on the Post Audit report, the auditor provided some additional information, saying that last year’s SB 317 would have affected apartments, day care facilities, and other non-manufacturing properties.  Local government officials say the audit supports their concerns about property tax shifts.

Meanwhile, a hearing on this year’s fixture bill, House Bill 2085, has been postponed until Monday afternoon.  It had been scheduled for a Thursday hearing, but was cancelled due to the weather.

 

Deadline coming up

An important legislative deadline is coming up next week that will mean many bills will not move forward in the Legislature.  March 1 is the “turnaround” or “House of Origin” deadline.  That means House bills must have passed the House, and Senate bills must have passed the Senate.  If not, they are dead for the rest of the session, but can carry over into 2014.

There are exceptions for bills that come from certain committees, such as Taxation, Federal and State Affairs, and the budget committees.

 

Study: income tax cuts don’t grow small business

A study released this week by the Center on Budget and Policy Priorities cites extensive evidence that state income tax cuts do not grow small business.  The paper pounds away at the assertion that state income tax cuts, such as those that have passed in Kansas and are proposed elsewhere, have a positive impact.

Some legislators who have read the CBPP report say the evidence presented is stunning.

The study concludes, in part:

“There is almost nothing in economic theory or empirical research to support an assertion that cutting state personal income taxes will have a significant impact on the emergence, success, or job-creation performance of small businesses. The vast majority of any revenue forgone from such tax cuts will flow to people who don’t own businesses, and of the limited tax savings that does happen to flow to business owners, the vast majority will be received by people with no intent or authority to hire additional people.”

Read the full study here.

 

It cites studies by the U.S . Small Business Administration, the Kansas City based Kauffman Foundation, and even a 2006 study published in the journal of the libertarian Cato Institute to support its conclusions.

 

Find your legislator

Want to contact your legislator by letter, phone call, or e-mail to let them know what you think of legislation?

Here’s a quick and easy way to do it.  Just go to:  http://openkansas.org/

Enter your full address.  This site will give you contact information on your legislators, including office and home phone and e-mail.

KEPC UPDATE: Moody’s warning, NY Times, cash vs. confidence, Sen. Haley

In this issue …

  • Moody’s warns about Kansas tax and government cuts
  • NY Times features Kansas vs. Maryland
  • Lots of cash, no confidence
  • Sen. Haley is a Pro-Jobs Transportation Leader

 

Moody’s warns about Kansas tax and government cuts

In two separate reports recently, Moody’s, the bond credit rating organization, has expressed concerns about the Kansas income tax cut legislation and slow economic growth in the state caused by shrinking government payrolls.

In a June 13 Moody’s report on the income tax reduction bill, Moody’s says the cuts will have a manageable impact on the 2013 budget, but a more serious problem after that.  Their forecast:

“No improvement in economic growth as a result of the tax cuts is assumed by the forecast, although improved economic growth is the legislation’s policy goal.”

“Unless it is able to implement corresponding spending cuts or achieve faster economic growth than currently anticipated, the state forecast shows out-year operating budget deficits and depletion of fund balances, which would cause downward credit pressure.”

Here’s an excerpt from a July 5 Moody’s report on the overall economic health of Kansas:

“A shrinking public sector poses the biggest hurdle to a more solid recovery. Further, lackluster performance in goods production has kept the state’s growth below average.”

“Prospects of additional public sector retrenchment will remain the biggest threat to the recovery. Federal government payrolls were hit especially hard last year, with state and local employment declines not too far behind.”

 

NY Times features Kansas vs. Maryland

Wall Street isn’t the only place in New York that’s noticed Kansas income tax cut.  A July 11 story in the New York Times compares Kansas (which has cut income taxes) with Maryland (which has raised them) and some other states.

Part of the story quotes Governor Brownback:

Mr. Brownback said that he initially had hoped to pay for some of the lost revenues — which are expected to reach a little over $800 million, or 13 percent of general fund revenues, next year — by ending a number of popular tax deductions, and by phasing in the cuts slowly. But he could not find support for that, so, even as other states are beginning to add spending again, he has been looking for savings and more cuts to offset the projected loss in tax revenues.  “We are going to be going through everything with a fine-tooth comb,” he said.

Read the full story here.

 

Lots of cash, no confidence

Companies are continuing to hold onto their cash rather than invest in new equipment or new employees, unsure of what will happen to the economy.

That’s the conclusion of a survey of private company Chief Financial Officers by the American Institute of Certified Public Accountants.

The survey, which was released June 7, surveyed 1,250 senior executives.  Of those, 36 percent said cash assets have been increasing from the first quarter to the second quarter of 2012.  The same percentage also said they were up at least 31 percent in cash and liquid assets from the second quarter last year.

However, 24 percent of those responding to the survey said they were uncertain about using the excess cash.

 

Sen. Haley is a Pro-Jobs Transportation Leader

We recently reported that Economic Lifelines named 68 Kansas legislators “pro-jobs/transportation leaders in recognition of their strong support for transportation’s role in creating jobs and economic development.”

Their selection was based on votes taken to support the Kansas T-WORKS program and against efforts to take funding from the program.

Economic Lifelines inadvertently left Senator David Haley (D-Kansas City) off the list and we repeated the error when we re-published it.

Thanks to Senator Haley for his strong support of transportation.

KEPC UPDATE: “dynamic scoring,” response to cuts lukewarm, OK tax cut may fail, correction, About Bob

In this issue …

  •  Administration’s “dynamic scoring” implies low growth
  • Business response to tax cuts appears lukewarm
  • Oklahoma income tax cut may fail
  • Correction
  • About Bob

 

Administration’s “dynamic scoring” implies low growth

At the ceremony where  Governor Brownback signed the large income tax cut bill Tuesday, officials once again circulated “dynamic scoring” documents predicting the tax cut will add 23,000 new Kansas jobs by 2020, over and above normal growth.  Administration officials also indicated their analysis showed 35,000 people will move to Kansas as a result of the tax cuts by 2020.

A review of Kansas labor and census information strongly suggests such growth would be extremely low by historic standards and contradicts the administrations claims that the legislation will be “a shot of adrenaline into the heart of the Kansas economy.”

Current Kansas employment in April was 1,357,100, according to the Kansas Department of Labor.  An addition of 23,000 new jobs would be less than 1.7%.

In fact, a May 18 news release by the Labor Department said Kansas job growth was over half the touted 23,000 new jobs in just one month:

“Private sector employment grew by 13,900 jobs since March 2012, a 1.3 percent increase. These gains were caused by seasonal changes, showing a pause in the overall improvement of the labor market.”

Here’s how Kansas employment grew in the five year period after the September 11th downturn and the beginning of the Great Recession in 2008.  Figures come from the Kansas Department of Labor web site.

2003-2004                   11,800

2004-2005                   8,100

2005-2006                   20,700

2006-2007                   26,200

2007-2008                   10,600

That’s an increase of 66,800 jobs in the period, or 5% growth of employment before the recession hit.  An additional 23,000 jobs over the next seven years would certainly be welcome, but it’s hardly “a shot of adrenaline” compared to what Kansas has been able to do in a normal recovery.

So, what about the projection that Kansas will add 35,740 new residents?

Kansas current population, according to the U.S. Census Bureau, is 2,871,238.  The addition of 35,740 new residents by 2020 would only be a 1.24% increase.

According to U.S. Census Bureau estimates, Kansas beat that percentage population growth in eight of the ten years of the decade from 2000 to 2010.

Here are the estimated Kansas population growth rates from 2000 to 2010.

2000                8.5

2001                0.5

2002                0.9

2003                1.2

2004                1.6

2005                2.0

2006                2.5

2007                3.2

2008                4.0

2009                4.8

2010                6.1

Kansas population grew by 164,294 during the decade beginning in 2000.

That’s 6.1 percent.  An additional 1.24% increase in population would be welcome, but it’s hardly “a shot of adrenaline into the heart.”  Maybe more like a cup of regular coffee.

 

Business response to tax cuts appears lukewarm

The headline in the Business section of the Wichita Eagle Thursday morning was contradicted by the story:  Kansas small-business owners say elimination of income tax is a big help.

The actual story seems to indicate a tepid reaction to the tax cut.  An accountant points out the downsides, including the fact that a state tax cut will increase federal taxes.

A pharmaceutical company says the lower income taxes will not create more jobs at his firm.  “Tax policy doesn’t affect when we hire,” said Brian Williamson, president and CEO of JCB Laboratories.  “We’re hiring when the business dictates we need to hire.”

The President of the Wichita Independent Business Association, Tim Witsman, said the cuts are helpful to small business, but other variables have a significant effect on job creation.  Witsman was the first President of the now-defunct Kansas Inc., the state’s economic development research agency.

Read the full story here.

 

Oklahoma income tax cut may fail

Oklahoma law requires the legislature to complete its work by 5 p.m. on Friday of this week, and it’s looking more like Governor Mary Fallin’s call for an income tax cut will not happen this year.

There are not enough votes in the Oklahoma House to support a previously agreed to proposal.  The agreement fell apart after the Oklahoma Tax Commission released information showing 24% of tax filers would have an increased tax liability.

The Speaker of the Oklahoma House of Representatives, Kris Steele, says the House has kept tax cuts alive by offering up an alternative proposal.  The Senate and Governor Fallin are resisting what they consider a lesser offer.

Correction

In a previous KEPC Update, our report on education funding erroneously implied that a bill to increase local option budget authority for school districts might have passed.  It did not.

The legislature added $40 million from the state general fund to the base state aid per pupil.  There is no local taxing authority expansion.  We regret the misunderstanding.

About Bob

Like so many others, we were shocked and saddened by the tragic death of Representative Bob Bethell (R-Alden).  Bob was a moderate Republican and a great friend of the Kansas Economic Progress Council.

Tagged by many as a RINO (Republican In Name Only), he proudly displayed a mounted fake rhinoceros head on the wall of his office.  He wore a Mickey Mouse tie every day, yet was deadly serious in his concern for those who suffered from health problems, poverty, and disability.

Respected by all, he even officiated at the funeral of Representative Judy Showalter, a Winfield Democrat, in 2005.  Knowing she was dying of cancer, Judy asked Bob to preside at her service, and insisted that he wear one of his signature Mickey Mouse ties.

His own funeral Thursday at Sterling, Kansas was attended by what appeared to be most of the legislature, Republican and Democrat.  Many wore Mickey Mouse items in his honor.

Tax Study Released Today

A new study on the ramifications of lowering the state income tax was released today at a statehouse news conference. Bernie Koch, executive director of KEPC, and study author Dr. John Wong presented findings at the statehouse today. The study finds that, for every 1 job created, 1.63 are lost due to study released today finds that a lowering of the income tax would result in a loss of 1.63 jobs due to a reduction in overall state spending. The study was commissioned by the Kansas Economic Progress Council.

The press release is available here, and the ful text of the study is available here.

Dr. Wong’s slide deck is available here.

STATELINE: Gov drives rightward shift

STATELINE
January 26, 2012
By John Gramlich
In Kansas, Governor Sam Brownback drives a rightward shift

TOPEKA, Kansas — For 14 years, Sam Brownback represented Kansas in the United States Senate, a chamber known for its slow and plodding pace. Now governor, Brownback is in no mood to wait.

The Republican, entering the second year of his term, is pushing what may be the boldest agenda of any governor in the nation. While Republican leaders in other states pursue narrower agendas or steer toward the political middle in a presidential election year, Brownback effectively is betting that Kansans want to see much more, not less, of the conservative vision he started building last year.

The governor’s to-do list amounts to a blueprint for fiscally and socially conservative state government. He wants lawmakers to slash and eventually eliminate the personal income tax while getting rid of 23 tax credit programs, including the Earned Income Tax Credit for the working poor. He wants to cap state spending growth at 2 percent a year, a rate that could force deep budget cuts if it doesn’t keep up with inflation or a growing demand for state services. He is planning to overhaul a school financing formula that has been in place for two decades, favoring an approach that could result in less state money for large, poor districts. [Read more…]

The American Prospect: What’s the Matter with KS, Tax Edition

THE AMERICAN PROSPECT
January 25, 2012
By Abby Rapaport
What’s the Matter with Kansas, Tax Edition

The state aims to cut off deductions that benefit the middle class, all the while propping up big business.

While around the country, many Republican primary voters are up in arms that Mitt Romney only paid about 13 percent of his income in taxes last year, in Kansas, Governor Sam Brownback is pushing a proposal that would not only benefit wealthy Kansans but raise taxes on the state’s poorest residents. A new report released yesterday argues that the plan will benefit some large corporations but fail to create jobs.

The plan gets rid of a number of tax deductions—including those for home mortgages and charitable giving. It also takes away the earned-income tax credit and food-sales tax rebate. As the AP noted last week:

According to the Department of Revenue’s own figures, the only class of taxpayers that would see an increase in its aggregate income 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.

The new analysis left Brownback’s staffers doing spin control. Revenue Secretary Nick Jordan argued that included among the poorest taxpayers—41 percent of individual filers—are wealthy teens with after-school and weekend jobs. Shockingly, that particular line of defense doesn’t seem to have gained a whole lot of traction. Even an appearance from the father of Reaganite supply-side plans, Art Laffer, hasn’t been enough to quell concerns. [Read more…]

Pittsburg Morning Sun: Tax cuts and reactions

PITTSBURG MORNING SUN
January 24, 2012
By Burdett Loomis
INSIGHT KANSAS: Tax cuts and reactions: a puzzle

PITTSBURG — Introducing a policy agenda that’s long and deep, Governor Brownback delivered a reasonable State of the State address last Monday, with a major tax reduction as the centerpiece.  Doing instant commentary after the speech, I saw it as an interesting, if somewhat awkward, attempt to broaden the tax base a bit and lower rates – an appropriate proposal from a fiscally conservative administration.

The devil, of course, is in the details.  Like getting the House to make permanent a so-called “temporary” sales tax increase.  Like doing away with tax deductions for home mortgages and charitable giving.  Like lowering to $30,000 the break point for the top tax rate.

In short, many moving parts make up an allegedly simple plan to reduce income tax rates.  Early analyses demonstrated how unevenly the cuts would hit Kansans.  And one thing become increasingly apparent – poor Kansans would be hurt the most, largely due to the elimination of the earned income tax credit, an idea the GOP once eagerly embraced.

I was in the capitol last Tuesday as the news broke – the Revenue Department analyses concluded that the poorest fifth of Kansans would pay $156 more on average under Brownback proposal. No matter what you believe on the substance of the issue, this is flat-out awful politics, especially when newspapers, opponents, and interest groups could trumpet this change as representing a 5,000 percent increase in the poor’s taxes, all based on the Revenue Department’s own figures.

The question is – were the governor and his top staffers ready for the pushback and the storm of unfavorable news stories that resulted, almost immediately, from these analyses?

If the answer is “yes,” the administration comes off as highly calculating, to the point of cynicism, in its pursuit of lower income taxes.  If the answer is “no,” it comes off as lacking in political savvy. [Read more…]

Wichita Eagle: Tax proposal benefits big companies

THE WICHITA EAGLE
January 24, 2012
By Brent Wistrom
Report: Governor’s tax proposal would benefit big companies

TOPEKA — Gov. Sam Brownback’s tax reform proposal would be a big bonus to large companies and is unlikely to create new jobs, according to a new report by the Center on Budget and Policy Priorities, a nonpartisan think tank branded as liberal by many conservatives.

The report says Brownback’s proposal to eliminate non-wage income taxes for limited liability corporations, sole proprietorships and subchapter S corporations would make Kansas the first state in the country to exempt income that isn’t taxed at the corporate level and passes through to business owners.

It says that could benefit companies that hire few employees or none at all, including some with owners outside Kansas.

“Many pass-through businesses are very large, and a substantial share of the profit that would be tax-exempt under the governor’s proposal would be earned by large businesses, not small ones,” the report says. Secretary of Revenue Nick Jordan said his department used nationally recognized economic models and saw the potential for 20,000 new jobs over eight years on top of natural growth. He said the Center on Budget and Policy Priorities report isn’t based on facts.

“Go to Main Street anywhere in Kansas and ask the small business owners there if they file their business income on their personal tax forms. They will say yes,” he said via e-mail. “These are the folks the plan is focused on helping; they are everyone from our farmers and mom and pop stores trying to grow their businesses to high-tech startups and traditional manufacturing shops. They may employ one person or 100 but they form the backbone of our state’s economy.”

The center’s report also notes the plan proposed by House Republicans and says that it, too, misleads people to believe the tax exemption is geared toward small businesses. It says many businesses exempt from tax under Brownback’s proposal are used as investment vehicles, and it cites a U.S. Treasury Department study that showed 88 percent of the owners of such businesses spend less than $10,000 on payroll or contract labor.

“The major beneficiaries of such a giveaway are unlikely to be the small businesses and job creators that Governor Brownback says he is intent on helping,” the report says. “Instead, the benefits would flow in great measure to large, established businesses, some of which don’t even have employees.”

In addition to eliminating income taxes on non-wage business income for limited liability corporations and sole proprietorships, the governor’s proposal would reduce tax rates overall, eliminate some tax credits and itemized deductions, and keep the state sales tax rate at 6.3 percent.

KC Star: Tax plan hits impoverished the hardest

KANSAS CITY STAR
January 17, 2012
By Brad Cooper
Brownback tax plan would hit impoverished Kansans the hardest

TOPEKA — The numbers paint a stark picture of the haves and have-nots in Kansas Gov. Sam Brownback’s new tax plan.

More than a half million tax filers — earning less than $25,000 a year — will pay an average of $156 more in income taxes under the governor’s plan to overhaul the state tax code. By contrast, roughly 21,000 taxpayers — making more than $250,000 a year — will see an average cut of $5,200 a year in their tax bills.

Taxpayers somewhere in the middle, earning from $50,000 to $75,000 annually and comprised of 185,692 filers, would pay $282.90 less on average. [Read more…]