Kansas and Taxes – a Story from America’s Geographic Center
Kansas is at the center of America in many ways. It is the geographic center of the lower 48. It is median in income and many other economic facets. It has been losing population from its rural communities and small towns.
Last year in the second and third quarters, Kansas was a national leader in economic and personal income growth. https://governor.kansas.gov/kansas-tops-nation-in-economic-growth-over-fall-2023/ It has had a low unemployment rate, reflecting in part its population outmigration. https://www.bls.gov/eag/eag.ks.htm
In 2012 and 2013, then newly elected Republican Governor Sam Brownback took office and cut the top rates of the state income tax by 30% eliminated taxation of profits from the sole proprietors and SubChapter S Corporations. His stated goal was to jump start the Kansas economy.
Over the next five years, Kansas’ economic growth lagged its neighboring states and the US growth rate by large margins. https://www.cbpp.org/research/kansas-provides-compelling-evidence-of-failure-of-supply-side-tax-cuts The tax cuts failed to stimulate the creation of new businesses. https://www.cbpp.org/research/kansas-provides-compelling-evidence-of-failure-of-supply-side-tax-cuts
Kansas’ credit was downgraded due to its cycle of budget crises; its spending on education, roads, infrastructure, health care and social services were cut substantially. https://www.cbpp.org/research/kansas-provides-compelling-evidence-of-failure-of-supply-side-tax-cuts Local governments in Kansas had to pay far higher borrowing costs due to the state government’s fiscal woes. https://www.brookings.edu/wp-content/uploads/2018/04/DzigbedePathak_MFC_6-30-18.pdf
After 5 years of economic and budgetary turmoil, the Republican-led legislature repealed Brownback’s tax cuts over his veto. https://www.brookings.edu/articles/the-kansas-tax-cut-experiment/#:~:text=The%20program%20in%20Kansas%20served,own%20growth%20in%20previous%20years. Governor Brownback resigned and took a job as Ambassador at Large for Religious Liberty in the Trump Administration. https://prospect.org/power/good-riddance-sam-brownback/
His elected successor, Democratic Governor Laura Kelly, has led Kansas back to fiscal solvency and sound growth. She has targeted enhancing economic growth in advanced manufacturing, aerospace, logistics and transportation, and agriculture. https://www.kansascommerce.gov/kansas-framework-for-growth/
In 2024, Governor Kelly announced an accumulated budget surplus of $3 billion due to the state’s economic growth, and she proposed tax cuts of $1 billion over the next three years. She proposed a bi-partisan tax cut to increase the property value threshold for payment of state property taxes, to eliminate state taxes on Social Security income, to increase the standard deduction, to cut sales taxes on groceries, diapers and feminine hygiene products, to double the tax credit for child care, and to create a sales tax holiday for back to school supplies. https://governor.kansas.gov/governor-kellys-bipartisan-tax-plan-introduced-in-kansas-house-and-senate/#:~:text=Entirely%20eliminates%20state%20taxes%20on,need%20of%20child%20care%3B%20and In other words, she proposed tax cuts to help Kansans with more limited incomes to pay for the basics.
The top Republican leaders in the state House instead proposed and passed a repeal of the state’s graduated income tax and sought to replace it with a flat income tax rate; the overwhelming share of the benefits of this “tax reform” would inure to the wealthiest Kansans. ITEP projects that Charles Koch, the richest Kansan would receive an annual tax cut of $875,000 under the Republican proposed flat income tax, while the average middle-income Kansan would get an average annual tax cut of $116. https://itep.org/kansas-tax-cut-flat-tax-charles-koch/ The Governor vetoed it calling it fiscally and societally irresponsible. https://governor.kansas.gov/governor-kelly-vetoes-reckless-flat-tax-experiment-calls-for-responsible-tax-cuts-for-middle-class-kansans/ The legislature sustained her veto with several House Republicans breaking ranks to point out the bill disproportionately benefited the very wealthy. https://kansasreflector.com/2024/02/20/kansas-house-republicans-fail-to-override-governors-veto-on-massive-tax-reform-bill/
The Kansas House has just unanimously passed tax cuts based largely on Governor Kelly’s proposal but with two graduated and reduced tax tiers instead of three. https://kansasreflector.com/2024/03/27/kansas-house-unanimously-adopts-bipartisan-bill-cutting-property-income-and-sales-tax-burden/#:~:text=Kansans%20earning%20less%20than%20%247%2C000,from%205.7%25%20to%205.65%25. It would reduce state revenues by over $1.2 billion over three years.
One would hope that the Kansas Senate would embrace the compromise House/Governor tax proposal and pair it with Governor Kelly’s proposed Medicaid expansion for the working poor citizens of Kansas.
Prepared by: Lucien Wulsin