After Cutting Taxes On The Rich, Kansas Will Raise Taxes On The Poor To Pay For It

BY ALAN PYKE POSTED ON JUNE 16, 2015 AT 8:00 AM UPDATED: JUNE 16, 2015 AT 9:45
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Kansas lawmakers concluded the longest legislative session in state history Friday night by approving a slate of regressive tax hikes that will balance the state’s budget by targeting low-income workers and their families.
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More than half of the $384 million in new revenue expected from the tax hike will come from cigarette taxes and sales taxes, two policies described as “regressive” because they fall more heavily on lower-income taxpayers than on the wealthy. Even though everyone who shops will pay the new 6.5 percent sales tax rate – up from 6.15 percent in previous years, and the 8th-highest of any state according to the Tax Foundation – the move is regressive because poorer shoppers already have to stretch each dollar farther than their more flush counterparts.
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The state offers a limited tax credit for grocery purchases to low-income families that slightly offsets the unevenness of the sales tax impact. But that credit is capped at $500 and cannot be claimed by families earning over $30,615 a year. A family of four that earns too much to qualify for the credit will pay nearly $700 a year in sales tax payments on their food, according to a Kansas City Star analysis of Friday’s bill that found the bulk of the burden falls on people making less than $50,000 annually.
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Families with more slack in their budgets to absorb the sales tax hike are also getting to retain the vast majority of the windfall delivered to them in 2012 and 2013 by Gov. Sam Brownback’s (R) massive tax cuts for the wealthy. Those packages drove rates up for the poorest 20 percent of the state, provided a very small net reduction in tax liabilities for middle-class earners, and gave about $20,000 a year on average back to the richest hundredth of taxpayers.
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Friday’s bill keeps those windfalls in place, while delaying a further reduction in income tax rates that was part of Brownback’s previous initiative. It barely exacts any toll from the top end of the income spectrum, mostly by reducing the proportion of property tax and mortgage interest payments that are tax deductible in the state.
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The bill also partially reverses Brownback’s most aggressive and disastrous tax cut. The governor had eliminated all state income taxes on so-called “pass-through” income, an accounting maneuver by which everyone from authors to corporate lawyers can arrange to be paid as though they were a small business owner. The much-criticized choice cost the state $206.8 million in 2013 alone as tens of thousands more Kansans than predicted rushed to join the tax-free jamboree.
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http://thinkprogress.org/economy/2015/06/16/3669801/kansas-sales-tax-hike-budget-deal/