Kansas, Missouri pushing to eliminate state income tax?

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Kansas, Missouri pushing to eliminate state income tax?

Post by KCMax »

Momentum grows to swap income tax for sales tax in states
The study conceded that repealing the individual income tax would blow a huge hole in the budgets of Missouri and Kansas. The tax currently provides roughly two-thirds of Missouri?s general fund and half of the general fund in Kansas ? more than $8 billion combined.

Backers of the effort argue they would replace that revenue by raising sales tax rates, although such a move alone would probably not cover the entire deficit. Tripling Missouri?s sales tax rate to more than 12 cents on the dollar, for example, would still leave the state with much less revenue than the income tax and sales tax combination now provides.
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Re: Kansas, Missouri pushing to eliminate state income tax?

Post by lock+load »

Great, Rex wants to shift more of the tax burden from the rich to the poor. 

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Re: Kansas, Missouri pushing to eliminate state income tax?

Post by shaffe »

So Missouri currently collects 4% on sales tax. Tripling it to 12% would hypothetically still not replace the lost revenue of an income tax. So in places that currently have a 10% sales tax (most places in the metro are close to or at that rate from my experience) I'd probably have to pay a 20% tax on everything I ever purchase.

But hey, the average person with $50k in taxable income (not salary, not agi, but TAXABLE income) will bring home $50 a week more. Sounds like a great idea.

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Re: Kansas, Missouri pushing to eliminate state income tax?

Post by aknowledgeableperson »

shift more of the tax burden from the rich to the poor
It has been awhile since I have studied Value Added Tax (VAT) but doesn't the sales tax act like a VAT?
I may be right.  I may be wrong.  But there is a lot of gray area in-between.

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Re: Kansas, Missouri pushing to eliminate state income tax?

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Re: Kansas, Missouri pushing to eliminate state income tax?

Post by Highlander »

The clamor to follow the Texas no-income tax model is indeed startling.  First of all, Texas' economy is not doing well because it has no income tax.  That's just laughable.  Texas has two things going for it right now; 1) a huge and extremely cheap labor pool of legal and illegal hispanic immigrants willing to work long hours for low wages and 2) the energy industry, probably the only segment of the economy in the US doing well right now and hiring big time, is centered largely in Texas.  Without the latter the ecomomic boom shrivels and falls apart.  It has absolutely nothing to do with the lack of state income tax and for Kansas and Missouri to think they will emulate Texas' "success" if they eliminate income tax is appalling to the point of fraud. 

My property taxes in Texas are just outlandish (I pay around 10 grand on a 285,000$ house - it was 12 grand last year).  In addition to hidden costs that I won't go into, the state services here are abysmal.  Just taking a simple driving test (we have 2 kids in the age range) has become an ordeal.  The economy may be doing well but the state is broke and it impacts our life in multiple ways.  Hopefully, Missouri and Kansas will reject this rather remarkable lie. 

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Re: Kansas, Missouri pushing to eliminate state income tax?

Post by aknowledgeableperson »

pash wrote: In so far as it's a consumption tax, yes. Consumption taxes are regressive. (That is, the poor pay a larger share of their income under a regressive tax than do the wealthy.)
Understand, but wouldn't that be said about Social Security and Medicare payroll taxes?
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Re: Kansas, Missouri pushing to eliminate state income tax?

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Re: Kansas, Missouri pushing to eliminate state income tax?

Post by knucklehead »

This is all just a political con game.

Rich dudes fanticise about getting rid of state income tax which would shift more taxes off the rich and onto everyone else. Sleezy politicians play along to get campaign contributions from the rich dudes. The politicians orchastrate things so it looks plausible but never actually passes. If they passed it, the contributions would end and the sleezy pols want to milk money out of the the rich dudes for years. The trick is keeping it low profile enought so they don't lose votes for supporting the repeal while still saying the right things behind closed doors so they can get the contributions.

The press loves it because the press craves "controversey" even if it is all a cyncial fraud.
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Re: Kansas, Missouri pushing to eliminate state income tax?

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Re: Kansas, Missouri pushing to eliminate state income tax?

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Kansas tax cuts could shape Missouri legislative session
After watching Missouri's neighbor to the west enact massive tax cuts last year, Senate President Pro Tem Tom Dempsey said lawmakers have no choice but to respond.

"The western side of the state isn't the only place where we are fighting to keep jobs and attract entrepreneurs, but at State Line Road it's clearly evident our policies have us lagging," the St. Charles Republican said. "Cutting income taxes will send a message to the rest of the country and the state of Missouri that we are headed in the right direction."

In May, Gov. Sam Brownback signed legislation slashing Kansas income taxes and eliminating them entirely for nearly 200,000 businesses. Legislative researchers estimate the Kansas tax cuts could create a budget shortfall of nearly $2.5 billion over the next five years.

Missouri won't be following Kansas' example entirely, Dempsey said, for fear that cuts could be unsustainable in the long run.

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Re: Kansas, Missouri pushing to eliminate state income tax?

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Collison: Supporters of the great Kansas tax experiment could learn from the high tax state of Minnesota
If cutting state taxes was the key to prosperity, why is Minnesota, one of the highest-taxed states in the nation, doing so well economically and Mississippi and Alabama, among the lowest, lagging so far behind it?

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Re: Kansas, Missouri pushing to eliminate state income tax?

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Wouldn't states want high State income tax to keep more income in state since state income tax is deductible from federal income tax?
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Re: Kansas, Missouri pushing to eliminate state income tax?

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shinatoo wrote:Wouldn't states want high State income tax to keep more income in state since state income tax is deductible from federal income tax?
Depends on what your perspective is. If you want as much revenue for your state to keep government operations funded, sure. If you want to cut taxes in your state as much as possible to be business-friendly, then no.

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Re: Kansas, Missouri pushing to eliminate state income tax?

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shinatoo wrote:Wouldn't states want high State income tax to keep more income in state since state income tax is deductible from federal income tax?
This is neither the place(ks, or mo), nor the topic, for the exercise of logic.

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Re: Kansas, Missouri pushing to eliminate state income tax?

Post by FangKC »

Kansas gets chastized again for underfunding education.

http://www.bizjournals.com/kansascity/b ... 2013-01-14

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Re: Kansas, Missouri pushing to eliminate state income tax?

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Half of Kansans gamble once a month. One-of -twelve gamble more than they can afford.

People squandering their money on gambling while schools remain underfunded. Talk about the wrong priorities.

http://www.bizjournals.com/kansascity/b ... 2013-01-14

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Re: Kansas, Missouri pushing to eliminate state income tax?

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Re: Kansas, Missouri pushing to eliminate state income tax?

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pash wrote:
loftguy wrote:
shinatoo wrote:Wouldn't states want high State income tax to keep more income in state since state income tax is deductible from federal income tax?
This is neither the place(ks, or mo), nor the topic, for the exercise of logic.
Then I won't point out that paying a dollar of state taxes in order to save thirty cents on your federal tax bill nets you negative seventy cents. ...
I was looking at it more from the States perspective than the induvidual.
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Re: Kansas, Missouri pushing to eliminate state income tax?

Post by FangKC »

Isn't the problem though that these states want to do away with the state income tax, and raise the sales tax, which isn't deductible on federal returns for most people.

Sales tax increases hurt low income and poor more as well, and seniors.

The other question to ask is would increased sales taxes affect consumer spending, which our economy is very dependent on. Would reductions in consumer spending offset any gains from having no state income tax? It just seems to me that this is switching one tax for another, and the alternative is a tax that hurts lower income and poor people, and benefits higher income residents.

In addition, let's say that Kansas has no state income tax, and raises its' sales tax. Missouri retains income tax, and has a lower sales tax. Wouldn't most Kansans just cross the border to buy things with lower sales taxes?

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