June 25, 2015
The end-result of this years’ historically long session was quite predictable: taxes were raised on hard-working Kansans to cover the budget shortfall caused by the unaffordable tax cuts of 2012-13. The increases recently adopted will fall primarily on low- and moderate-income Kansans because such a big chunk of the new money will come from sales taxes, especially on food.
Prior to the recent tax hikes, Kansas’ tax system was already upside-down, in the sense that the lower a Kansas family’s income the higher share of that income they pay in state and local taxes. In fact, Kansans making less than $20,000 a year pay over three times more in state and local taxes, as a share of their income, than what the wealthiest do.
Sales tax increases throw things even more out of balance. That’s because the lower a family’s income the higher percentage of that income it ends up spending on necessities. And that’s especially true when it comes to food. Kansas today taxes food at the second-highest rate in the country – just behind Mississippi. In fact, the vast majority of states (37) don’t charge sales tax on any food purchases. Kansas’ new 6.5% food sales tax rate far exceeds the average of other states that tax food which is about 3.5%.
Consumers could very well attempt to avoid that sales tax on food by shopping in neighboring states and, Kansas grocers may feel the pinch of lost business. With almost one in five Kansans living in Johnson County alone, people going to Missouri to shop is a real possibility. A Kansas family of four could save over $670 a year on food purchases by doing just that.
And food is just one part of the tax hike. The entire tax package will mean all Kansans pay more, even those struggling to get by. Though some will be exempt from paying income tax because they earn too little, their total tax bill will still rise, mainly because of the sales tax hike. Kansans right in the middle – those making about $51,000 a year – can expect to see an average net increase of almost $300.
Of course all of this could have been avoided, had Kansas not cut taxes that which have cost us investments in our schools, roads, and our communities that bring broad prosperity and economic growth. Now, everyone else will pay more so 330,000 businesses can continue to pay no income taxes whatsoever.