February 22, 2016
The executive director of the Kansas Center for Economic Growth denounced the tax path the state is on at a discussion Monday evening at the Topeka and Shawnee County Public Library, 1515 S.W. 10th.
Annie McKay said the “unprecedented tax changes in 2012 and 2013 led to a fiscal crisis.” Though tax cuts reduced individual income taxes and taxes paid by about 330,000 businesses across the state, they left a budget shortfall that prompted increases in sales and property taxes.
The changes left vulnerable groups feeling the most strain, according to McKay. She said the strategy being pursued — at times referred to as the Kansas “experiment” — actually has raised the net tax rate for the lowest 40 percent of Kansas earners. Those living paycheck to paycheck struggle to access services such as health care and child care, McKay said, resulting in a quality of life that is less secure.
“This is literally taking food off the table,” McKay said.
Cuts to individual income taxes and small businesses left a revenue shortage that hasn’t been made up by the property and sales tax hikes, she said, noting that Kansas has the highest tax on groceries in the nation. Though nine other states don’t have income tax, they have other ways of generating revenue such as oil and gas or tourism, according to McKay.
Additionally, benefits touted by supporters of the tax changes haven’t materialized. In theory, paying less in income tax would mean people would have more to spend. Those making $42,000 to $68,000 are only saving $29 per year on taxes. Those earning $493,000 or more save more than $24,000 annually. However, McKay said top earners aren’t reinvesting locally.
Tax cuts on small businesses also were supposed to save companies money, leading to more workers being hired. But the savings haven’t been enough to take on more full-time employees for the majority of the businesses, and many businesses reinvest that savings in other ways, McKay said.
She also looked at the state’s budget shortfall, saying the cuts will have long-term effects, especially in regards to education.
“We’re really missing out on our future,” McKay said.
Additionally, money being transferred from the state’s highway fund to the state’s general fund is basically being “laundered,” she said. Loans that have been taken out to replace the highway fund will only cost more in the long run.
McKay said the budget challenges aren’t going to get fixed until the “underlying problem” is acknowledged by policy makers and the state reverses course on its tax policies.
McKay has been the executive director of the Kansas Center for Economic Growth since its launch in January 2013.
The event was sponsored by the Topeka chapter of Women For Kansas.
Read more from the Topeka Capital Journal here.