April 2010
April 29, 2010
(Syndicated to Kansas newspapers April 26, 2010)Fun with numbers
Sure, it’s petty and tawdry, but wouldn’t you love to know how much money your neighbor pays in taxes? Or where you stack up in payments against most other Kansans? Or, what other Kansans weigh?
Well, we can’t help on the weight, but we got about as close as you can get on how much Kansas income tax your neighbor pays.
That income tax information was generated because there’s a proposal to increase the state’s take from income taxes, a topic that legislators haven’t seriously considered for decades because, well, you’re messing with people’s income taxes.
Here’s what Kansans, at different Kansas Adjusted Gross Income (KAGI) levels (that’s after the federal government has eaten its share of your paycheck), pay in income taxes to the state. The first figure is your KAGI:
- $10,000 or less, 275,100 returns, total taxes paid $15.6 million, an average of $56.70 per return.
- $10,000 to $20,000, 245,700 returns, total taxes paid $64 million, an average of about $260 per return.
- $20,000 to $30,000, 132,100 returns, total taxes paid $71 million, an average of about $537 per return.
- $30,000 to $50,000, 254,000 returns, total taxes paid $334 million, an average of about $1,315 per return.
- $50,000 to $75,000, 188,900 returns, total taxes paid $508 million, an average of about $2,689 per return.
- $75,000 to $100,000, 105,700 returns, total paid $515 million, an average of about $4,872 per return.
- $100,000 to $200,000, 100,200 returns, total paid $537 million, an average of about $5,359 per return.
- $200,000 and over, 22,400 returns, total paid $579 million, an average of about $25,848 per return.
In all, the state took in about 1.324 million returns last year, and the income tax raised about $2.62 billion.
Kansas Senate Democrats have a plan, and it’s not been considered by anyone yet, that would cut income taxes on all those folks paying taxes on less than $200,000 in state-taxable income. Reporting $10,000 or less in income? You’d save $1.56. Yes, that’s right, $1.56. Report income of $30,000 to $50,000? You’d save on average $26.45. Take the family to a fast-food restaurant.
Report income of more than $200,000, and your Kansas income tax bill would go up on average $3,216 per return. Hmmm…maybe lease a Buick instead of an Audi… What’s the state get from that increased tax on the, well, “rich”? About $72 million, but the Democratic plan gives nearly $30 million back to those with lesser incomes, netting about $42 million in new revenue to the state.
What’s right? Probably to increase income taxes on everyone who makes more than you do. There’s even a term for that. It’s “enlightened self-interest.”
Will an income tax shuffle make it through the Kansas Legislature when it reconvenes this week? Probably not. But these are some interesting numbers to toss around on coffee break.
And, no, nobody apparently is interested in linking income taxes to weight. That would have really been interesting…
April 22, 2010
(Syndicated to Kansas newspapers April 19, 2010)Hiring more workers when taxes are low?
If there’s a mantra that is repeated nearly every day while the Legislature is in session and trying to balance the state’s budget, it is that raising taxes will deter businesses in Kansas from hiring workers and helping to turn around the state’s ailing economy.
It’s repeated in committee hearings and on the floor of the House and Senate. The bottom line is: “Increase taxes and businesses won’t be able to hire new workers, providing jobs that the state needs.” When the Kansas legislative wrap-up session starts later this month, we’ll hear that a lot.
After hearing that chant for years, we’re wondering whether business has changed in the past while times were good and we apparently weren’t paying attention.We remember when the business of business was to produce products or services to make a profit for the owners or stockholders. Taxes are a part of the cost of doing business, and they are a component of whether a business can make a profit.
Nope, we don’t recall any law that turned businesses into social service agencies that hire workers if taxes are low and lay them off if taxes are high. If taxes are high, and you’re making an acceptable profit, you just pay the taxes. If taxes are low and you’re making a profit, you don’t hire more workers than you need just because taxes are low.
See, employees are a cost of doing business just like steel or paper or wood or nearly anything else. And in the “old days” business hired just enough workers to produce its products or provide its services and no more—except maybe the boss’s kids.
And, at least in the Kansas Statehouse where the air is admittedly thin at times, you never hear that if wood was just cheaper, businesses that use wood would hire more employees, or that if utility costs just went down, businesses would use the money they save on electricity to hire more people to stand around the same machines that are now suddenly cheaper to run.
Used to be that these things were penciled-out by business owners. If there is more demand for your product, you staff up to meet that market, and if demand is down, you get rid of workers to maintain your profits.
But the mantra is right that taxes, of course, have an effect on profits: If taxes are just too high to make the business profitable, you move the business to a lower-tax state or you just close the business. Those are tough choices, but remember, the cost of moving is penciled out…does it make more sense to stay in Kansas or to bear the cost of moving to somewhere with lower taxes? Those seem like logical business decisions, don’t they?
That’s some of the hubris that lawmakers will face when they return to the Statehouse April 28:
Do you not raise taxes because you fear damaging businesses and losing jobs? Or do you raise taxes and hope businesses pencil it out to survive? Or do you shift the tax burden downstream to local units of government where the businesspeople are even closer to the policymakers?Nobody likes more taxes, nobody likes less state services, and nobody likes the state pushing down the cost of government to local units—we’re thinking school districts—to avoid having to make decisions here at the Statehouse.
Stay tuned. If taxes go up, we’ll find out what that means for businesses…
April 15, 2010
(Syndicated to Kansas newspapers April 12, 2010)Coming down to the wire
The Kansas Legislature has 15 days left on its 90-day session clock, and hasn’t passed a single bill to indicate how it plans to finance state government next year…or even how to get through until June 30 with a couple bucks in the bank
That’s unprecedented.The wrap-up session has for decades been the time when lawmakers touch-up a program or two, maybe shuffle a little money around, and call it good and go home to campaign for reelection.
But this year it’s all in suspense. There will be a report Friday—the Consensus Revenue Estimate—that is the state’s official estimate of how much money the state will receive for the remainder of this fiscal year and next fiscal year. That estimate is basically the money available to balance the budget and provide the services Kansans are either entitled to as a matter of law or want because, well, that’s how we do things in Kansas.
It is going to come down to the decision: Does the Legislature cut budgets or does the Legislature raise taxes on Kansans? The bottom line is going to be who raises taxes.
If the state decides to balance the budget by cutting spending—and cutting spending or at least cutting the amount the state sends to local school districts is the key here—what happens?
The tax increase decision then becomes not a state function but one by members of local school boards. There is at some point a bottom line: A minimum amount that school districts have to spend to provide education to children rather than just keeping them indoors during the day. The local boards can lay off teachers and make classes bigger or they can drop programs or they can raise your property taxes.
That happens downstream from the Legislature, and to some degree lawmakers can blame the local school boards for tax increases. We’re figuring that most taxpayers don’t care where the tax increases come from…a tax increase is a tax increase, whether you pay higher state sales or income taxes or whether it’s higher local property taxes.
But the real problem is that if the state doesn’t distribute money to school districts on an equal basis some districts will finance a suitable education and some won’t. That’s the problem. Does a child in a classroom of 20 pupils and one teacher get the same education that a child in a classroom of 30 pupils and one teacher gets? Maybe, maybe not.
Is that something that the Legislature is going to gamble on?
Friday’s estimate of state revenues shapes that decision. And legislators are more than a little afraid that the estimate is going to force them to either take that gamble or raise taxes, either from Topeka or at local school board meetings this spring.
April 8, 2010
(Syndicated to Kansas newspapers April 5, 2010)To sue or not to sue?
Do you sue over politics, or over law?
That appears to be the question in the nascent race for Kansas attorney general.
Attorney General Steve Six, the Democrat incumbent, has read the federal health-care law and he says while there are political reasons for some not to like it, there doesn’t appear to be a strictly legal reason that it is unconstitutional. And, it’s the strictly-legal—not political—aspects of the law that more than a dozen other states’ attorneys general are contesting, that Six figures the U.S. Supreme Court is going to consider when that case reaches the high court.
Politically? There are thousands of Kansans, including one who is running against Six for the AG post this year, who just don’t like the federal mandate that everyone buy health insurance. Those folks want the law challenged and knocked down. The politics of challenging Congress—win or lose—are also at issue here.
One of those interested in the fight is Senate Majority Leader Derek Schmidt, R-Independence, who initially wanted to run for Secretary of State, found that the Republican primary for that office was crowded, and moved on to the race for AG, where there is to date no primary election on the GOP primary ballot.
Schmidt says that there’s nothing in the U.S. Constitution that appears to authorize Congress to order Americans to buy health-care insurance or anything else that a majority of Congress and the president want Americans to buy.
Six says the Constitution allows Congress to regulate interstate commerce, and politics and “big brother” and state sovereignty issues aside, the health-care law is an interstate commerce issue that Six doesn’t believe Kansas, or any state, can win. It would cost Kansas thousands of dollars, win or lose, to enter the fight. It cost nothing to read the outcome in the newspapers.
The clear indication here is that this isn’t about constitutional law issues or state sovereignty; it’s about a for-now unpopular law sought by the President and delivered by Congress. Do you sue over a law that you don’t like, or that a considerable number of Kansas Republicans don’t appear to like?
All those issues aside it is essentially a political scrap that we’re facing in Kansas. It’s who appears to be defending the rights of Kansans to just say no to Congress and the President.And that’s not a bad little issue in the Kansas attorney general race. Who wants to go to the Supreme Court and who figures that there are more than a dozen states already in the scrap and while chances look slim for a states’ victory, whatever the Supremes say is going to be the law of the land for all 50 states, anyway.
The real political problem? It’s timing. Don’t look for a U.S. Supreme Court decision on the health-care law until after the November general election. That means that it’s an issue not likely to brand either Six or Schmidt as correct before votes are cast. Which, of course, also means that each can claim he did the right thing for Kansans… right up until the Supreme Court makes its decision which will prove that either Schmidt or Six is wrong, and presumably one of them ought not be Kansas’ attorney general.
Makes for a pretty good shootout, doesn’t it…
April 1, 2010
(Syndicated to Kansas newspapers March 29, 2010)We vs. they fight
Nobody in the Statehouse really likes to talk about raising taxes. Nobody.
But with the budget crunch that Kansas is in, many legislators, and even Gov. Mark Parkinson, are talking about the need to raise taxes.
So far, the talk has been about sales taxes, cigarette and tobacco product taxes, maybe liquor taxes, and even taxes on sugary soft drinks.
But Democrats in the State Senate are probably touching a live wire when they mention raising income taxes.
It’s easy to talk about sales taxes, because everyone pays sales tax when you buy nearly anything. At least on one very simple level, the sales tax hits everyone equally. Whether you are buying bologna or steak, you pay the sales tax. Steak-eaters pay more than bologna-eaters, but they are spending more money.
Where it gets tricky is that chances are good that bologna-eaters are spending a higher percentage of their income on taxable items than the steak-eaters. So, while everyone pays the same sales tax rate, it probably applies more heavily to the people who spend all the money they make than to those who can take care of their basic needs and have money left over for savings or investment or, well, whatever.
That’s why people who don’t have to spend all their money for necessities generally don’t mind sales tax increases. In some cases, much of their income isn’t subject to sales tax.
But, start messing with income tax and it is a whole different deal.
Now you’re messing with people who make more money than they need to spend. That’s “their” money, and those people aren’t going to want anyone increasing the tax rate on that extra money.
The top Kansas level now for a married couple is $2,925 plus 6.45 percent of income above $60,000. Adding a new bracket means that it becomes a we vs. they fight.
And that’s where the “they” that Democrats will be pointing to are going to weigh in. There are probably folks in the top bracket who assess the state’s need for education and public safety and such and figure that they can dig a little deeper at tax time, but there are probably a lot who won’t.
Things in the Statehouse tend to get a little divorced from life as most Kansans live it, a little more theoretical, a little more abstract, where legislators look at fiscal notes and spreadsheets and such that most of us never see.
But we’re figuring that many Kansans who figure they’re paying enough income tax now aren’t going to be quite so interested in an income tax bump as they might be on a sales tax boost.
Interesting tack that Senate Democrats are considering. We’re expecting that they’ll get some interesting little notes about the adventure. Probably written on very nice letterhead.