A flat tax?

Syndicated to Kansas newspapers April 3, 2017
Martin HawverWell, it comes down to the state needing $400 million, maybe a little more or less, and the way that the Legislature is going to get it is to raise your income taxes. That much is sure.
What isn’t sure is just how lawmakers intend to extract that money from you. The choices are to set up a range of two, maybe three, income tax brackets so that the wealthy pay a higher percentage of their income than the poor or just a flat rate for everyone.
The first option sounds like “from each according to their ability…,” doesn’t it?
Except that a flat rate of income tax sounds, well, equalizing. We’re all contributing the same percentage of our income, and it just might be easier to figure out what we owe if it’s just a single rate.
The House and Senate, remember, a couple weeks ago tried a three-bracket formula, so that the wealthy paid a little more, the middle-and-lower paid a little less, and of course, those little LLCs paid taxes on their income that isn’t described as wages, just profits from their businesses.
Well, that three-bracket formula went singing through the House, danced through the Senate and was slapped down by Gov. Sam Brownback’s veto. The House overrode the veto, the Senate didn’t and so we don’t have a tax plan yet.
Now, the flat 5 percent tax rate is on deck in the House, and the Senate is still dressing up its 5 percent bill for a shot at Senate passage.
While the 5 percenter raises less money than a graduated tax, it’s catchy and conservatives tend to like that concept of everyone paying an equal tax on their income, no matter how much or little.
Real key to that 5 percent rate is what happens to those without much in the way of income. The poor and relatively low income Kansans…the 5 percent rate probably hits them harder, makes them decide whether they are going to be able to afford the basics—like food and housing and care for their children—that they might be eligible for state assistance for if they must pay too much of their check in taxes.
Well, the solution for that is the personal exemptions. You just set a mark, maybe $5,000 or maybe $10,000 and that money isn’t taxed. It gets them a little boost in spendable income to cover their basic needs.
Where do you set that exemption? High enough, and the poor actually won’t see an out-of-pocket increase from their current 2.7 percent rate because less of their money is taxed at that 5 percent. That’s good for them, and it sounds like you care for the poor.
Set the exemption low, and those poor pay taxes on a higher percentage of their income, which means they don’t have much money left with which to care for their needs and their children’s needs.
And, if you’re making $80 ,000 or $100,000 or more, well, you’re not going to change your lifestyle much based on the tax-free exemption.
That money that the state loses through those exemptions? It’s money that isn’t coming into the treasury to pay for education, for social services, for highways, for …well, just about anything you can think of for which the state foots the bill.
A few brackets, the wealthier paying more? That covers the exemption losses, but, well, do the better-off really want to make the state better-off?
We may find out this week…

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