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.

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.

On Sept. 24, 1980, a few weeks before Ronald Reagan was elected president, Alaska Gov. Jay Hammond signed into law a bill abolishing his state’s personal income tax. In the past 31 years, no other state has taken that step. But lawmakers in Kansas, Missouri and Oklahoma are talking seriously about it.

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TOPEKA —State tax code. Just the phrase may make you want to stop reading and do something more exciting, like eat cold oatmeal.

Lower taxes, spending cuts and elimination of government regulations often are cited as a sure path to growing jobs and the economy in Kansas. “Economic freedom” usually is shorthand for this recipe for governing.

Reliable research does support the notion that healthy economies are relatively open, supporting the free movement of goods and capital. However, the world’s major economic-growth theories recognize other equally important ingredients to wealth creation and employment expansion. We should not ignore them.

Read more here.

Conservatives in think tanks and state legislatures have long fantasized about a day in which citizens and businesses would pay little or no state taxes on incomes or earnings.

Those dreamers now have an ally, Sam Brownback, in the governor’s office in Kansas. In Missouri, they have a benefactor, Rex Sinquefield, who likes to sink millions of dollars into pet projects.

That kind of firepower should prompt a wake-up call in both states. While no one likes paying taxes on the fruits of their labor, jettisoning the income tax would result in higher prices on goods and services and would likely force even more drastic cuts to public education and other services.

Both scenarios would be ruinous for poor and-middle-income households.

HOUSTON — Texas is home to at least one-third of the jobs created nationwide since the recession ended. The state’s economy is growing about twice as fast as the national rate. Home prices have remained stable even as much of the country has seen sharp declines.

Is Texas lucky, or has the state benefited from exceptional leadership? As Gov. Rick Perry campaigned Monday in Iowa for the Republican presidential nomination — with the economy dominating the national political landscape — the answer to that question is central to his candidacy.

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Two studies recently ranked the states on their economic performance and outlook, reaching vastly different conclusions about Kansas.

A new study out today ranks Kansas as one of the top states for businesses. The state was the eleventh best in the nation according to new business station CNBC.

The state got high marks for workforce (#13), business friendliness (#14), and cost of living (#7).

Local economic development group, Kansas Economic Progress Council, which represents a number of businesses and chambers of commerce around the state, says that the study shows businesses look for both low taxes and quality of life when relocating to a state.

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