June 5, 2015

Cost of doing business could increase by $130 million under new tax proposals

TOPEKA – After another failed attempt to usher a tax package through the Kansas Legislature, the Kansas Center for Economic Growth today shared data illustrating that plans to raise the state sales tax is not in the best interest of Kansas businesses or families. In fact, proposals that would raise the state sales tax to 6.65 percent would increase the cost of doing business in the state by over $130 million. 

“In 2012, Gov. Brownback told Kansans that income taxes hampered our state’s economic potential,” said Annie McKay, Executive Director at the Kansas Center for Economic Growth. “In reality, sales and property taxes consistently burden the private sector far more than income tax. When the original Brownback plan was enacted, Kansas businesses actually paid nine times more in sales tax than individual income tax.” 

Kansas Businesses Pay Nine Times More In Sales Taxes than Individual Income Taxes

Kansas Businesses Pay Nine Times More In Sales Taxes than Individual Income Taxes

This isn’t the only indication that the misguided focus on income tax is failing to provide the economic boom promised: 

  • Kansas experienced the 7th highest level of out migration in the nation in 2014
  • To date, Kansas ranks 45th in job creation in 2015
  • Kansas private sector job growth ranks 2nd worst in the region since the start of the Great Recession
  • In the last year, national employment growth doubled that of Kansas’ 
(2.2 percent nationally, compared to 1.1 percent in Kansas)
  • As of April 2015, Kansas wage growth trails the national average at 1.6 percent (compared to a nationwide average of 2.3 percent) 

“After countless proposals spanning three years, no real ‘fix’ for the Brownback tax experiment has surfaced because it simply can’t be fixed – it needs to end,” said Duane Goossen, former Kansas budget director and senior fellow at Kansas Center for Economic Growth. “You cannot eliminate half the state’s revenue, cut critical economic investments like schools, roads, and public safety, increase the cost of doing business by hundreds of millions of dollars, then expect Kansas businesses and families to prosper.” 

“Kansas is now hours away from a potentially devastating state government shutdown, yet lawmakers are no closer to a solution,” said McKay. “This is an economic emergency. Rather than attempting to band-aid a failed policy with another damaging stopgap, lawmakers should repeal the 2012 law and start fresh next year with what Kansas businesses and families really need: property and sales tax relief.” 

Read the full post here

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ClayCost of doing business in Kansas could increase $130 million under tax proposals