Sam Brownback Wants to Eliminate the Kansas Income Tax: Is This Idea Too Radical?
Last week, Kansas Governor Sam Brownback sent a bill to legislators that would dramatically reduce the state’s income tax rate: the top rate would drop to 3.9% (from 4.5%) and the lowest rate to 1.9% (from 3%).
Eventually, Governor Brownback hopes to eliminate the income tax altogether. Proponents of this move argue that it will drive economic growth, while maintaining revenue streams from a slightly increased sales tax. Classical economics tends to reinforce this idea: taxing labor can affect the incentive to work, and as Kansans receive more in their payroll checks, they have increased incentives to become more productive. Further, this model of taxation echoes – dare I say it? – European taxation systems, which generally tax consumption across the board. However, most Western European countries also tax income at a high rate, which is clearly not the case in Kansas.
However, the burden of these changes would affect most middle- and low-income households, as consumption tends to be a larger share of their income. Without exclusions for food or certain household staples, lower earners will pay more each time they go to the grocery store or purchase clothing. But Governor Brownback doesn’t see things this way: he recently eliminated the food sales tax rebate program, along with other tax credits meant to help the poor. Consumption taxes are notoriously regressive, and current legislation in Kansas does nothing to address it.
The regressivity of the proposed tax changes is amplified considering Kansas’s existing tax environment: in 2010 Governor Brownback enacted a series of tax cuts for the wealthy, reducing the effective tax rate for the top 1% of earners. In the wake of spending cuts for schools and other programs, many are questioning whether the $700 million estimated savings are worth it. Kansas House Minority Leader Paul Davis says, "the income tax cuts that he is proposing really disproportionally benefit the wealthiest of Kansans.” Indeed, it’s difficult to see how the governor’s legislation supports his claims of support for low-income Kansans.
Even normally progressive tax legislation – like the elimination of the mortgage interest deduction – is viewed in a different light in Kansas. One would typically expect the elimination of this feature to help progressivity, since this loophole is mostly exploited by millionaires, right? Not so in Kansas: the Kansas Association of Realtors say 93% of Kansans who claim the mortgage interest deduction earn less than $200,000 per year, and 65% earn less than $100,000.
Taken together, Governor Brownback’s economic agenda for the state favors almost exclusively wealthy Kansans. Once a hotbed of progressive activism, Kansas has now redefined itself as a haven for conservatives looking to implement a particularly hurtful agenda. This Midwestern state is now the proving grounds for conservative policies, to the detriment of many of its citizens. A move away from taxing income does not have to cause hardship for citizens, but Governor Brownback seems intent on ensuring that it does.