The Lawrence Journal-World, Jan. 22
Gov. Sam Brownback has set a bold agenda for the current legislative session including a major overhaul of the state's income tax system.
While the plan he has put on the table may have some merit, the disproportionate burden it places on low-income Kansans is raising questions that demand the close attention of state legislators.
The governor's plan is good news for most higher-income taxpayers and especially for small business owners, but it holds considerable bad news for Kansans at the low end of the income spectrum. Figures compiled by the Kansas Department of Revenue estimate that the amount of income tax paid by Kansas residents overall would decrease by about 12 percent under Brownback's plan. However, the way that saving is distributed is cause for concern.
The Revenue Department figures show that the 564,328 Kansas tax filers with adjusted gross incomes of $25,000 or less received a total refund of $1.7 million in the 2009 tax year. Under the Brownback plan, that same group would owe a total of $86.5 million, an average of $156 per filer. At the same time, the 21,158 Kansans with adjusted gross incomes of $250,000 or more would pay an average of $5,239 per person less under the Brownback plan.
The governor's plan also eliminates a number of tax deductions that would have a significant impact on low-income taxpayers. Key among those is getting rid of the Earned Income Tax Credit, which benefits about 255,000 Kansans, generally low-income workers, by helping them keep more of what they earn. The plan does away with deductions for mortgage interest and child care expenses, which will have a significant impact on Kansas families with low or moderate incomes. The governor also is proposing that the state sales tax, which was scheduled to drop to 5.7 percent in 2013, be maintained at its current 6.3 percent. Sales tax is a particularly regressive tax, especially when it is applied to the sale of groceries, as it is in Kansas.
Also eliminated in the governor's plan is the income tax deduction for charitable contributions, which likely would suppress donations to the very nonprofit organizations that could provide a helping hand to low-income Kansans. However, Revenue Secretary Nick Jordan and economist Arthur Laffer, who acted as a consultant on the Brownback tax plan, told legislators last week that money saved by eliminating tax deductions would be plowed back into social service programs to help needy families.
Making low-income people pay more taxes so that more money is available to fund programs for needy Kansans is a questionable strategy. Traditional conservatives would say that people know better than the government how to spend their money and could do so without adding the administrative costs of a government program to redistribute the funds to the "needy." Is that the best justification the Brownback administration can offer for a plan that places additional tax burdens on low-income Kansans?
Laffer, who is considered the father of supply-side economics, maintains that the tax plan will pay off in the long run for low-income Kansans because it will lure more business to the state and create jobs. That certainly is a desirable goal, but Laffer's economic theory is controversial and, some economists say, unsound.
Given today's economic climate, the governor and state legislators face a serious challenge in how to update and improve the state's income tax laws for the benefit of all Kansans and the state. It's not an easy task, but most states are facing a similar challenge. Kansas lawmakers must give their best effort to devising a state tax plan that is fair and balanced for Kansas taxpayers. It's time for a genuine nonpartisan study of the state's income tax laws, not finger-pointing and political posturing.
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The Iola Register, Jan. 21
State lawmakers don't have the moxie for KPERS
Kansas lawmakers got their first look Tuesday at a proposal to create a 401(k)-style pension program for state employees. It was put together by a committee studying KPERS, which is under-funded by $8.3 billion.
Critics say Kansas can't afford KPERS, which promises lifetime pensions at levels set by formula.
Given the Legislature's past performance, the critics are right. It is far too easy for the lawmakers to skimp on the annual appropriations needed to keep a defined benefit program solvent; the temptation to yield to state employee unions when they ask for increases in pension payments is too great.
General Motors and other major corporations also dug themselves into bottomless pits with their generous — and wildly underfunded — pensions.
The 401(k) plan, which ties pensions to investment returns and makes no promises, is a solution.
Making the change won't make KPERS solvent. It will take very substantial additional appropriations for years into the future to do that. But it will keep the hole from getting deeper.
It's a bullet that needs biting.
Those already retired and those about to retire should get the pensions promised. New and recent employees should be switched to 401(k)s and perhaps have the opportunity to make additional contributions to their plans to earn richer pensions for themselves.
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The Hays Daily News, Jan. 19
Attack on the poor
When Kansas Gov. Sam Brownback announced his intentions to change the state's tax policy, yet have its overall effect be revenue-neutral, it was easy to predict there would be winners and losers.
While we might have suspected most of the winners would be at the higher end of the spectrum, we didn't imagine all the losers coming from the state's poorest households. Not with 377,000 Kansans already living at or below the federal poverty level. Not when almost 24 percent of Kansas children already living in poverty. Not when Census figures prove those numbers are on the rise.
But here is what the governor's proposed tax reform accomplishes, according to figures from the Kansas Department of Revenue:
—Taxpayers with adjusted gross incomes of $25,000 or less will pay $88 million more in taxes starting in 2013. Forty-one percent of Kansans are in this category, and will pay $156 more on average.
—The remaining 59 percent, about 819,000 filers, will receive decreases. Those with adjusted gross incomes of more than $250,000 will pay almost $111 million less as a group.
To ensure the plan is revenue-neutral, Brownback plans to keep the state's sales tax at 6.3 percent instead of having it drop to 5.7 percent. As poorer people pay a greater percentage of household income on sales tax, they'll get to feel that sting as well. It is about as regressive a plan imaginable.
"It's Robin Hood in reverse," said Senate Minority Leader Anthony Hensley, D-Topeka Democrat. "This is stealing from the poor to give to the rich."
The administration is defending itself by pointing out the large number of affluent and middle-class teenagers working part-time who are included in the under-$25,000 group. Revenue Secretary Nick Jordan also pointed out there will be a "huge, new investment" of $113 million in social service programs to help offset the tax increases for the poor.
The plan calls for eliminating the state's earned income tax credit, which costs in the neighborhood of $90 million. As it's based on a sliding scale, this credit does result in some low-wage earners receiving payments on top of not having any income tax liability. The governor intends to split that $90 million three ways to fund an increased standard income tax deduction, public assistance programs for families, and the state Medicaid program.
But there is a huge disconnect here.
According to Tawny Stottlemire, executive director of the Kansas Association of Community Action Programs: "... Not everybody who benefits from the earned income tax credit is on Medicaid or public assistance."
State Budget Director Steve Anderson indicated a belief the groups overlapped, even though the administration has no data to support the stereotype. What the state does have is a federal study that suggests there are many fraudulent claims for earned income tax credits.
"Depending on the state, the level of abuse was between 25 and 32 percent on EITC returns," Anderson said. To prove his point, he distributed a handout after Brownback's State of the State address that identified six federal lawsuits against tax preparers, none of whom were in Kansas.
We already have witnessed the ability of the Brownback administration to get laws changed by merely claiming rampant fraud exists. Look at the Secretary of State Kris Kobach, for example. We have changed the entire voter registration and identification process by suggesting something could happen.
But the so-called tax reform will prove disastrous for Kansans at the lower end of the economic spectrum. This is what we need to spur economic development? This is how we will make the Sunflower State more competitive for businesses?
This administration is doing nothing but redistributing wealth, the very philosophy most conservatives decry. The governor and his entire administration should be ashamed. Taking food off the table of the working poor in order to fund luxuries for the rich is unconscionable.
As nearly half of working Kansans will be negatively affected by this "trickle-down" approach, we would hope this doesn't have a chance of becoming law. If ever there were a time to get politically active, even if it's merely to call a legislator, this is it. Without protest, the mostly conservative Legislature will make it legal to push even more citizens into poverty.
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The Wichita Eagle, Jan. 19
No way to make policy
President Obama killed the Keystone XL pipeline, at least for now. But politics killed it, too.
Under review for three years when Obama nixed its permit Wednesday, the proposed $7 billion, 1,700-mile pipeline from Alberta, Canada, to Port Arthur, Texas, would connect to the existing Keystone pipeline, which runs down the middle of Kansas. The Keystone XL looked like a done deal last summer, after the State Department said it found no major environmental problems with the project.
It should have been possible to address the concerns later expressed by Nebraska officials over the route's risk to the Ogallala Aquifer in a timely manner.
As Obama said on Nov. 1, when he promised that his decision would come soon, "We need to encourage domestic oil and natural gas production.. But there's a way of doing that and still making sure that the health and safety of the American people and folks in Nebraska are protected."
Yet Obama decided just days later to postpone action on the route and permit until after the November 2012 elections, looking hopelessly political in the process.
In turn, Republicans in Congress, including the Kansas delegation, made their own political play by inappropriately tying the pipeline to the payroll tax-cut extension in December and imposing a Feb. 21 deadline on the president's decision.
That allowed Obama to blame them and their "rushed and arbitrary deadline" Wednesday in rejecting the permit, while he neatly served the agenda of environmental groups that vehemently oppose the pipeline.
It also gave Republicans another opportunity to blast away at their No. 1 target for November.
"The president proved that he will kowtow to the radical environmentalist sector of his political base at the high opportunity cost of 20,000 American jobs," said Rep. Mike Pompeo, R-Wichita.
"If we allow this opportunity to pass us by, America will take a step backwards in energy security, as we are forced to continue to rely on unstable nations for our energy needs," said Sen. Jerry Moran, R-Kan., vowing to work with Congress to "clear the unnecessary hurdles" to a project promising "tens of thousands of jobs."
Can't this country make big decisions anymore? Or even agree on the facts?
As experts have noted throughout this debate, pipeline proponents have inflated the project's potential to create jobs, lower oil prices and reduce U.S. reliance on Mideast oil, as opponents have exaggerated the likelihood of pipeline spills and environmental significance of oil sands production (which Canada will continue, Keystone XL or not).
This is no way to make energy policy or help the economy. It's sure to further erode trust in government, however.
