The bracket roadblock

Syndicated to Kansas newspapers May 29, 2017
Martin HawverIf there’s a major roadblock to enactment of a new tax package for Kansas this legislative session—and nobody’s doubting the state needs more of your money—it’s this “bracket” issue.
It comes down to Gov. Sam Brownback insisting that there be no more than two brackets—setting the level at which different percentages of taxable income are paid, after deductions and credits and such.
Kansas has just two income tax brackets. A married couple filing a joint income tax return falls into one of two brackets. After the deductions and such, if you have a taxable income of less than $30,000? You pay 2.7% of that to the state. More than $30,000? The rate is 4.6%.
Brownback is a two-bracket sort of guy, and he’d take just one bracket—a flat rate for everyone who pays taxes—in a minute.
Well, that one-bracket appears dead—just three of the state’s 40 senators could bring themselves to vote for it.
Brownback’s key: Simplification. One bracket is pretty simple to calculate. It’s just one arithmetic calculation. Gets a little more difficult to make it even reasonably saleable. Lawmakers know they’d have to build into a flat tax system elaborate exemptions and deductions for the poor so that they can survive and not wind up on a state-financed welfare roll.
Kansas’ two brackets? Already that’s a simplification from four years ago before the so-called “Brownback tax cuts” which reduced us from three brackets to just two brackets (and eliminated the income tax on that pesky non-wage income of limited liability companies, some sole proprietorships and the like).
This simplification is not a bad argument, but did you notice any Missouri income taxpayers wandering into Kansas, weaving and confused, not speaking clearly because of the complexity of that state’s income tax policy?
Missouri, by the way, has 10 individual income tax brackets. Ten. The brackets range from 1.5% to 6%. Nebraska? Four brackets from 2.46% to 6.8%. Colorado, just one bracket at 4.63% (but of course that state legalized pot which may make computation more difficult), Oklahoma six brackets from half a percent to 5%, and even in Arkansas, taxpayers manage to compute their way through six brackets ranging from .9 % to 6.9%.
Neat deal about that multiplicity of brackets is that you can take more money from folks who will probably be able to afford a flaming dessert anyway, and less from the folks who check their wallets to see whether they can afford one scoop or two of ice cream after dinner.
Still, this simplification argument is one that is mostly coming from Brownback’s second floor office in the Statehouse, not the third floor where the Legislature works.
Lawmakers continue to try to craft an income tax bill that will raise enough money to keep the lights on in state offices and support public schools as the Kansas Supreme Court has directed. It’s taken the Legislature into extra innings to put together that plan, and it hasn’t worked yet.
Several legislators suggest adding in sales taxes on some services, and have tried to single out specific targets—say, hiring a private detective or boarding your dog. That’s a major philosophical issue, putting sales tax on something you can’t hold in your hand or drive or eat—while inconveniencing the smallest number of potential voters.
Issue there? What if sales taxes on services creep outward during the next few years. Lawyers, accountants, doctors—those folks aren’t interested in adding a sales tax to their bills either.
So, we’re looking at brackets again. Set them too high and the poor pay more than they can afford, set them too low and the upper-income folks can consider their state income tax bill like a cheap tip.
Gonna see how this one works out…

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