First, I’d like to thank John Sturn for giving me multiple opportunities to help readers make their own educated decisions about tax and education issues every time he makes false statements.
In What Was Really the Matter with the Kansas Tax Plan, I cited our 2012 dynamic analysis of the Brownback tax plan, which showed that a one-time reduction of less than 9% in spending inefficiencies (or smaller amounts spread over three years) would have balanced the budget. State spending could then grow as revenue increases and always have healthy reserves.
Services would not be eliminated but provided more efficiently, and the book explains how to do it.
Every state provides the same basket of services (education, transportation, social services, etc.), but some states do so at lower costs, and that is why they can have lower taxes. The more a state spends, the more it must tax citizens. In 2012, Kansas spent $3,409 per resident. That was 37% more per resident than in states with no income tax. Governor Brownback and legislators in both parties just needed to eliminate some of the wasteful spending.
Instead, spending grew exponentially. In 2021, Kansas spent $4,932 per resident; that was 74% more than the collective average of South Dakota, New Hampshire, Nevada, Wyoming, Alaska, Texas, Florida, Tennessee, and Washington (states without a personal income tax).
Sturn is also wrong about the economic impact of having lower taxes.
Bureau of Economic Analysis data shows that states with lower tax burdens have superior economic growth and job creation. For example, between 1998 and 2021, the states with no income tax recorded 57% growth in private-sector employment, compared to just 25% for the rest of the country. We also compare the ten states with the highest and lowest combined state and local tax burdens; the low-burden group grew jobs by 42% compared to only 27% for the high-burden group.
It’s true that the flat tax plan would save more money for people with higher incomes, but that is because they pay the vast majority of the tax burden in Kansas. The Kansas Department of Revenue says Kansas residents with adjusted gross income (AGI) above $100,000 had 61% of total AGI but paid 70% of the income tax, while those with AGI below $50,000 had 17% of total AGI but paid only 9% of total state income tax.
What’s more, people with lower incomes get a bigger break on their tax bill with Senate Bill 169 proposed earlier this year.
Look at the impact on two families who take the standard deduction and have two children; one has an income of $40,000 and the other makes $200,000. At current tax rates, the first couple owes $713, and the other family owes $9,516. SB 169 exempts the first $12,300 of income from taxation and imposes a 5.15% tax on the remainder. On that basis, the first couple owes $551 in tax, and the other owes $8,791.
SB 169 reduces the first couple’s tax bill by 23%, compared to just 8% for the other family. Many other families of four with lower incomes would have their tax eliminated by SB 169.
Legislators will have another chance to give Kansans a break when they convene in January. Excess tax collections have led to $4 billion in reserves, so the money is there to reduce income tax for everyone and still have a healthy surplus.
Dave Trabert
Wichita
CEO of Kansas Policy Institute
