The Kansas City Star reports that legislators are reacting cautiously to plans to cut Kansas’s income taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. after analysts have revised the estimated revenue loss through 2018 from $900 million to just $160 million. The change came from increasing projected sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. growth from 3.75% a year to 4% a year.
The plan would take effect part way through the 2013 budget year:
|
Current Bracket |
Current Rate |
Proposed Bracket |
Proposed Rate |
|
>$0 |
3.50% |
>$0 |
3.00% |
|
>$15,000 |
6.25% |
>$15,000 |
4.90% |
|
>$30,000 |
6.45% |
*For singles. Married couples have twice the bracket amount.
From the Kansas City Star:
The new estimate “could definitely be too rosy,” said Sen. Tom Holland, a Baldwin City Democrat who serves on the conference committee trying to hammer out a compromise tax plan.
“I think we need to slow the process down and understand what’s behind these numbers,” Holland said. “Let’s do some additional analysis and let’s see what they really mean.”
The plan would eliminate some tax credits and deductions, but would keep the mortgage interest and charitable contribution deductions, as well as a low-income credit. Governor Sam Brownback (R), who proposed the tax cut in January, had recommended for much of the rate cut with eliminating deductions, but that part has been pared back after opposition.
So instead of giving Kansans the choice of their mortgage deduction against a 6.45% tax, or a flat 4.9% tax, Kansans will get both or neither, depending on the revenue picture. That may be a tough sell.
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