OP-ED: The Little Tax Experiment That Couldn’t
May 19, 2016
Some days are worth remembering. May 22, 2012 will go down as a consequential day in the history of Kansas, changing our state as we know it. On this day four years ago, Governor Sam Brownback signed legislation that set Kansas on a path to eliminate the state income tax. He called it the “March to Zero.”
The name was appropriate, because Kansas has been in a downward spiral since.
The state’s $700 million budget surplus has since turned into a perpetual deficit, leading to eight rounds of budget cuts since 2013. Kansas’ credit rating was downgraded twice, with another downgrade looming. Two sales tax increases have been enacted, shifting the burden to families who can least afford it. And every day, more unintended consequences seem to surface.
For years, supporters of the “March to Zero” denied its failure. But after revenue estimates dropped again in April – the fifth time in four years – a discussion began in the Kansas Legislature to consider revisiting the tax plan. In fact, a proposal was introduced to change the provision exempting 330,000 Kansas business owners from paying any income tax.
On the surface, the idea made sense. The LLC exemption was poorly-conceived public policy. However, though the proposal to eliminate the exemption may have been well-intended, it would not have actually solved our fiscal crisis.
Closing the “LLC loophole” does address an inherently unfair tenet of the Governor’s tax policy – that business owners avoid paying any income tax, while workers pay tax on every dime they earn. But in dollars and cents, this proposal merely moved 330,000 Kansans from the loophole (where they pay no income tax) to the “March to Zero” with the rest of us (where they will eventually pay no income tax again). The “LLC loophole” is part of a much larger problem; the reduction in individual income tax rates has done far greater damage, accounting for nearly 70 percent of the tax plan’s crippling and unaffordable price tag.
As we approach the tax plan’s fourth anniversary, think about the damage it has caused in every Kansas community. As the ink dries on the cuts the Governor signed this week, in order to balance the state budget, devastating consequences are already being felt. These cuts jeopardize children’s programs, our universities, and healthcare access for low-income Kansans, among other things. It is important to remember that approximately 40 percent of Kansas’ revenue still comes from income tax. If our fiscal situation is this dire now, imagine what will become of our schools, roads, and public safety by the time we finish the “March to Zero”.
Many legislators who vocally opposed the Governor’s tax plan, but failed to support recent efforts to repair it, have been harshly criticized. The problem is that Kansas is on fire. At this point, temporary band aids and piecemeal fixes just add gasoline to the flames, keeping our beloved state burning for another year. The Brownback tax plan cannot be repaired. The entirety of the plan must be repealed if we are to restore Kansas. After four years of chaos, those who truly want to fix this problem should support nothing less.
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