Guest Commentary, Part Two: Close the LLC Loophole

Guest post by Rebecca Proctor, Kansas Organization of State Employees
Nov. 25, 2016

We all want good schools to send our kids to, good roads to travel down, and affordable health care for our families. We have these things thanks to the investments past generations of Kansans made in our state, all of which were paid for with taxes. But today, these valued and necessary parts of our community, and with them the very future of Kansas, are in jeopardy because of ineffective and expensive tax policy, including the LLC tax loophole.

When the 2012 tax plan was passed, income taxes for Kansas’ 333,000 LLC’s, S corporations, partnerships, farms, and sole proprietorships were eliminated. Far from the “shot of adrenaline to the heart of the Kansas economy” we were promised, Kansas’ economy still lags behind our region and the country.

As state employees, our job is to make Kansas work for Kansans. We can’t do that when funding for our schools, roads, and other parts of our government have been cut so dramatically that we simply do not have the resources we need to serve the people of Kansas at the level they expect and deserve. We’re underfunded and understaffed. We’ve seen agency budgets slashed, KPERS payments delayed, and open positions go unfilled. And for what? A tax experiment that has only hurt our state.

The LLC loophole is costly, ineffective, and disproportionately benefits high-income earners. The LLC loophole did not create jobs; less than 1% of Kansas businesses were able to hire an additional employee with their tax break. Everyone should pay their fair share of taxes. Instead, the bottom 40% of Kansas earners saw a tax increase while LLC’s pay nothing.

Kansas can’t afford to continue down this path. Instead, we need to invest in our state and in our future.

The Kansas Organization of State Employees (KOSE) urges lawmakers to close the LLC loophole immediately as part of a comprehensive tax reform plan.

To learn more, read the “Close the LLC Loophole” one-pager.

ClayGuest Commentary, Part Two: Close the LLC Loophole