August 29, 2016
To this day, one of the more upsetting aspects of the ongoing income tax-cut disaster in Kansas is that critics predicted it would happen more than four years ago.
The tax reductions will “have an enormous impact on everything from public education to public health coverage to infrastructure to other vital social safety-net services,” Shannon Cotsoradis, then-president of Kansas Action for Children, said on May 22, 2012, as Gov. Sam Brownback signed the plan into law (see photo).
Since then, the law unfairly has allowed hundreds of thousands of Kansas LLC owners to get out of helping to pay for state services, as a Star Sunday story reiterated, a practice decried even by many who benefit from it.
The cuts haven’t led to the creation of added revenue, as Brownback and others had pledged. The predicted job bonanza is nowhere to be found; the state has limped along with near-zero employment gains the past 18 months. And to balance the state budget, Brownback has been forced to make moves that have adversely affected universities, children’s services and roads maintenance.
But now what?
That’s the essential question Brownback and the Legislature will have to answer in the next year or so.
First up, the 2016 elections could have a huge effect on future policies.
In the Aug. 2 primaries, a good-sized number of moderate Republican House and Senate candidates in Johnson County and elsewhere in Kansas defeated conservative GOP incumbents who have supported Brownback’s fiscal plans in Topeka.
Looking ahead to the Nov. 8 elections, an even larger number of moderate Republican and Democratic candidates continue to call for a ratcheting back or elimination of the tax cuts. They say this is a popular approach with voters.
Ultimately, if a majority of these House and Senate candidates are elected, that will create a welcome opportunity for sweeping changes in the 2017 session.
A few noteworthy suggestions already are circulating among candidates running for office this fall.
▪ Repeal the ability of owners of LLC businesses to not pay most state income taxes. As The Star story emphasized, most owners don’t get nearly enough in tax cuts to afford hiring new workers, one big goal of the action. A complete elimination of the LLC break could boost state revenue by an estimated $250 million a year.
▪ Eliminate or reduce the income tax rate reductions that were put in place for many Kansans. Again, hundreds of millions of dollars a year in higher receipts are at stake.
▪ Get rid of some sales-tax exemptions handed out by the Legislature. The Star has long decried the fact that, for every dollar of sales that is taxed in the Sunflower State, about two dollars go untaxed. This practice helps many businesses and charities, and some exemptions undoubtedly benefit the state. But they also are subsidies for selected businesses, while burdening others with higher sales taxes than might be required.
Many other options will be available for lawmakers to consider.
They could include a higher fuel tax to help pay for road improvements, which could be reasonable after Brownback’s unfortunate decision to divert more than $1 billion in revenue from those upgrades.
On the flip side, many lawmakers want to reduce or get rid of the state sales tax on groceries, which would benefit lower-income shoppers. Kansas is one of a handful of states that fully taxes groceries. Of course, this move would slice into public receipts.
Getting a more balanced and fairer tax system in place in Kansas should be a top priority for Brownback and the new Legislature. It’s encouraging that the governor now says he’s willing to revisit state policies.
It would be even more encouraging if the governor and the supporters he has left in Topeka acknowledged that the tax cuts have not lived up to their grand promises. That could make it easier to approve solid reforms in 2017.