Kansas, Missouri pushing to eliminate state income tax?

[bobbyhawks]

Anderson said that though sales tax is often called a "regressive" tax that falls more heavily on the poor, "it's only regressive to a certain point."

“The more money you spend, the more sales tax you pay,” Anderson said.

This is the kind of quote Stephen Colbert lives for. I suppose that poor Kansans are somehow able to stop spending money in efforts to save on taxes? And rich/poor people who live on the State Line will still buy all of their goods in Kansas out of pride? People in my neighborhood growing up always crossed state lines for liquor on Sunday and gasoline.

The sales tax is only regressive to the point where it impacts the poor more than it does the rich. Other than that, not regressive at all.

I suppose I should have added sarcasm symbols (&&&), or I don't understand your point, Pash. The guy's quote (Anderson) makes no sense. At what point does a sales tax become not regressive when looking at the overall tax burden? Unless you can prove that there is a point of wealth where Kansan's suddenly start spending a higher percentage of income than would a poor person, I don't follow. The more money you have, the less you need to spend as a percentage of income, thus regressively impacting those who spend higher percentages of their income or wealth on goods and services (the poor).

It is my understanding and belief that using sales tax to collect money for the state in place of income tax (based on levels of income) is as regressive as it gets. Lower income individuals clearly have to spend a higher percentage of their incomes on goods and services, so they end up paying a higher aggregate percentage of income to taxes than would someone making a lot more. Add in the loophole for JOCO and WYCO folks to buy the same good for a lower tax burden in Missouri, and suddenly you have reached a new level of bottom as far as state revenue is concerned. Businesses may be excited to locate in Kansas, but customers may not be happy to pay Kansas sales taxes.

[aknowledgeableperson]

At what point does a sales tax become not regressive when looking at the overall tax burden? Unless you can prove that there is a point of wealth where Kansan's suddenly start spending a higher percentage of income than would a poor person, I don't follow.

It is really all a matter of perspective and how you look at it. A family with an income of $40,000 let's say spends $30,000 on sales taxable items (the balance of $10,000 is for payroll taxes, housing, etc.). A family with an income of $100,000 let's say spends $75,000 on sales taxable items (the balance of $25,000 is for housing, payroll taxes, other taxes, savings, etc.). The cost of sales tax to the second family is 2.5 times greater than for the first family.
Playing with numbers is tricky since in my example both families spend 75% of their income on sales taxable items. Not sure what numbers both sides both sides use in the arguement but I think my numbers wouldn't be that far off. Afterall a higher income family might spend more on food by buying name brands instead of store brands, eating out, buying more food for parties, etc.

[pash]

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[FangKC]

The reason sales taxes hurt lower income people more is when the household is barely getting by, and by having to pay more sales taxes on necessities, they are deprived of more necessities by the higher sales tax. It's not so much a problem if the state or municipality doesn't tax food or utilities.

If you have only $100 to spend on food, every extra dollar you spend on sales taxes might mean less food for your family to eat. Ever see the people at the checkout counter who after their purchases are calculated, they start putting things back that they can't afford? It's these people Im talking about.

If you are barely getting by, the burden of the sales tax is greater on your family. If your household is living on $18,000 a year, almost all of the household income goes to bare necessities. If your household is living on $75,000, less of your income goes to bare necessities. You have more discretionary cash to spend, and you have more choices to spend, or not spend, based on what sales taxes might be.

A household that is barely getting by has fewer choices to restrain their spending to avoid paying sales taxes. They have little or no chance to put away money in savings. They struggle to come up with the money to pay their property taxes--if they own, or pay their rent.

Income tax structures taken into account the burden extra taxation puts on struggling individuals or families--the poor. The reason rates are higher as income goes up, is that higher income families or individuals have already met their basic needs, and the extra taxation doesn't create the same burden. These households don't have to choose between turning off certain utilities, or going hungry.

Many people with low incomes don't pay any income taxes because that extra burden would only increase their poverty. The matrix often comes down to this. Does the state tax their incomes only to turn around and have to provide even more social programs to alleviate their poverty and struggle, or does the state allow them to keep their income to meet basic needs. If the state takes income taxes on the poor, it might mean the household does without food, or certain utilities. Does the state (meaning federal and state governments) tax them, and then turn around and provide them with heating assistance and food stamps? Those additional social services cost the state money to administer. So in essence, it might be cheaper not to tax the incomes of the very poor.

[KCMax]

At what point does a sales tax become not regressive when looking at the overall tax burden? Unless you can prove that there is a point of wealth where Kansan's suddenly start spending a higher percentage of income than would a poor person, I don't follow.

It is really all a matter of perspective and how you look at it. A family with an income of $40,000 let's say spends $30,000 on sales taxable items (the balance of $10,000 is for payroll taxes, housing, etc.). A family with an income of $100,000 let's say spends $75,000 on sales taxable items (the balance of $25,000 is for housing, payroll taxes, other taxes, savings, etc.). The cost of sales tax to the second family is 2.5 times greater than for the first family.
Playing with numbers is tricky since in my example both families spend 75% of their income on sales taxable items. Not sure what numbers both sides both sides use in the arguement but I think my numbers wouldn't be that far off. Afterall a higher income family might spend more on food by buying name brands instead of store brands, eating out, buying more food for parties, etc.

Yea, but isn't that the Latrell Sprewell "I need to make a lot of money because I spend a lot of money" argument. Family #2 is likely spending money on things they want but don't absolutely need. I think everyone is fine with a sales tax levied on ipads. But Family #1 is likely using their spending almost exclusively on basic human staples like clothing and food (if not exempted) and unfortunately things we've made essential like gas and cars.

[aknowledgeableperson]

I appreciate your concern over family #1 but I am just curious. How many sales tax increases issues have you voted for in the past?

[bobbyhawks]

http://apps.irs.gov/app/understandingTa ... _les02.jsp

http://www.investopedia.com/terms/r/reg ... z2ILMapnOu

[KCMax]

I appreciate your concern over family #1 but I am just curious. How many sales tax increases issues have you voted for in the past?

I can't recall. I voted against a sales tax increase for a CID in Prairie Village that amounted to a giveaway to Lane4. I'm sure I would have supported the streetcar sales tax increase had I been able to vote for it. I'm not saying all sales tax increases are bad, my argument is that eliminating the income tax and shuffling the burden on sales tax is highly regressive.

[bobbyhawks]

I'm not saying all sales tax increases are bad, my argument is that eliminating the income tax and shuffling the burden on sales tax is highly regressive.

Bingo. There has to be a balance. In all this talk of either/or, nobody is talking about balance because balance is boring. (alliteration b-b-b-b-b-bonus)

Sales tax captures money spent in your jurisdiction and is a way to get a benefit from tourism, cross-state spending, and exploitation of local resources. Sales tax "brackets" are nearly impossible to enforce considering the number of people outside of your jurisdiction and the logistics, though we try in a way with tax deductions. You can incent spending by decreasing sales tax, but the loss in tax revenue has to be realized somewhere else for it to make sense, so a balance must be found. You can also disincentivize spending by increasing sales tax, especially if tax payers are not looking at their overall tax burden or see an opportunity to sink money into another economy for cheaper.

Income tax brackets are ways to make sure the poor aren't taxed into a point of desperation, while people who have been more successful give a higher portion of their "income," as classified, back to the community so that the overall quality of life is increased. We know that poorer people will likely spend close to 100% of their income (and often times more than that), putting money back into the economy, and aren't hiding funds in 401Ks and paying themselves through capital gains. If we tax the rich too much, they could move to another country or find creative ways to avoid income taxes. If we tax the poor too much, crime rates and unrest will grow. If we tax the rich too little, they distance themselves from the poor. If we tax the poor too little, a whole host of things can happen depending on many factors.

And I won't even go to capital gains or property tax, but balance is key in all things...

[FangKC]

On Kansas City in Review tonight, Dave Helling said that it is clear that Brownback is clearly trying to shift the tax burden in Kansas from the wealthy to the poor.

[pash]

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[AJoD]

On Kansas City in Review tonight, Dave Helling said that it is clear that Brownback is clearly trying to shift the tax burden in Kansas from the wealthy to the poor.

That seems like an irresponsible thing to say. Whether that is the effect or not of Brownback's policies, I highly doubt it is the intent. I don't see how framing it that way moves the political discourse forward at all.

[Highlander]

On Kansas City in Review tonight, Dave Helling said that it is clear that Brownback is clearly trying to shift the tax burden in Kansas from the wealthy to the poor.

That seems like an irresponsible thing to say. Whether that is the effect or not of Brownback's policies, I highly doubt it is the intent. I don't see how framing it that way moves the political discourse forward at all.

You are right. Brownback clearly sees the booming state economy of Texas and then makes the mistake the false assumption that the well being of the economy is somehow related to the lack of state income tax. This seems to be the mantra of an influential group within the republican party (and is the creed of the liberterian party) but its absolutely erroneous. Texas's economy does "well" because of cheap labor and a booming oil and gas industry. Where else can you buy a brand new 3000 sq ft suburban house in a booming city for under $300,000. I don't see Kansas having either of those attributes (it has oil but it's hardly going to be the economic driver in Kansas as it is in Texas - the companies doing the work have their technical labor force elsewhere).

Regarding the poor, however, I saw an article recently saying that the very poor of Texas were among the poorest of the poor in the nation. It's not a tax burden issue per se (according to the article) but the poorly developed state services which are starved for funds (another downside of no state income tax). if I can find the article, I will post it. Anyway, Brownback's intention is clearly to emulate economies in places like Texas and if that doesn't happen (and it's unlikely to happen), the end result will be shifting the tax burden.

[knucklehead]

The "booming" economy of Texas runs on hispanic population growth.

Doubt if Kansas can replicate that but western Kansas is trying hard.

The living conditions of low income people in the Rio Grande Valley are very bad. Almost third world.

Texas has very high high school drop out rates. They basically have a state wide drop out rate that is about the same as inner city rates in other states.

They just push the low income hispanics out of school. That raises test scores and lowers costs. Swell people.

[Highlander]

The "booming" economy of Texas runs on hispanic population growth.

That's what I meant by "cheap labor" although I would not overlook the fact that the oil industry is one of the few industries in the US that is currently booming. The crews that build houses in Houston are entirely Hispanic and I suspect that many, if not most, are in the country illegally. I was amazed while in KC that a comparable house in KC actually costs more despite Houston having tons of more buyers available.

Texas has a love-hate relationship with immigration law. The republican party which is far and above dominant in the state takes ostensibly a hard line on immigration knowing it will buy them votes but at the same time, they realize the economy is totally dependent on the labor provided by illegal immigrants.

[KCMax]

Kansas budget director apologizes for erroneous number in Brownback presentations

The director of the Kansas Budget Division issued a public apology Monday for an errant spending statistic that Gov. Sam Brownback has used for months to claim credit for state spending cuts that never happened.

The error was contained in a chart showing state all-funds spending 1965-2012, which Brownback has regularly used in a PowerPoint presentation at speaking engagements to opinion leaders across the state.

The chart showed state spending peaking at about $16 billion in 2010 — the final year of Gov. Mark Parkinson’s administration. The actual spending that year was $14.04 billion.

Only off by two billion. Not bad.

[Zorobabel]

Just the kind of 'error' that you'd expect from the ruling regime of Brownbackistan.

[FangKC]

Barbara Skelly opines in the Star about the illusions driving the Brownback Administration

So it goes in Kansas, where reality is what the governor and the conservative Republicans who control the Legislature want it to be.

If you look long enough across the horizon, you can see what might be the greatest mirage of all. It’s the illusion, spun so artfully by Brownback and others, that a state can be bled by deep income tax cuts and not be profoundly weakened.

http://www.kansascity.com/2013/02/21/40 ... solve.html

[KCMax]

Brownback to national viewers: 'We're seeking tax refugees'

We’re seeking tax refugees,” Brownback told Bloomberg TV in an interview Thursday morning. “So anybody watching this show, whether you’re in New York or anywhere, come to Kansas.”

Missouri Senate supports income tax cut

Missouri Senators endorsed a plan that would shave hundreds of millions of dollars off the income tax bills of businesses and residents, but there's a catch.
The plan also includes an increase in sales tax at stores and online. Missouri Republicans said the preliminary legislation could spur an economic revival or at least keep businesses and residents from being lured across the state's western border, the Kanas City Star reports. Missouri Democrats argue the legislation is "irresponsible," saying Kansas faces a budget gap as a result of large tax cuts that kicked in last year.

[KCMax]

Analysts, from left and right, call Kansas tax plan worst in nation

It was a rare point of agreement on tax policy between Joe Henchman of the conservative-leaning Tax Foundation and Nick Johnson of the left-leaning Center on Budget and Policy Priorities.

Henchman, a lawyer, and Johnson, an economist, both said the tax plan, passed last year by the Kansas Legislature at Gov. Sam Brownback’s urging, encourages tax avoidance and probably won’t do much for the economy....

“Vertically, it’s beneficial to high-income taxpayers and harmful to low,” Johnson was quoted as saying on the magazine’s website. “It doesn’t do much for the middle either. Horizontally, its exemption of pass-through entities creates inequities and tax avoidance, which of course then goes back to sustainability because it balloons cost.”

Neither of the analysts thought it would do much to meet its stated goals, to jump-start economic growth and job creation.