Kansas, Missouri pushing to eliminate state income tax?

[KCMax]

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?

You don't get it. When you eliminate the income tax, your government coffers overrun with revenues because more people and businesses will flock to your state and spend money, allowing you to reap in more sales tax revenue. Its called the Laffer Curve. Its the reason why low tax states like South Dakota and Alabama are economic powerhouses, while high tax states like Massachusetts and New York have choked any kind of business activity with their high taxes. What Kansas should be concerned with now is if they have room in their capitol to house all the tax revenues that will flow into Topeka now. &&&

[pash]

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[aknowledgeableperson]

One item in Kansas favor on this issue is energy. The domestic energy boom is expected to benefit KS quite a bit, at least according to some.
On a different matter, on channel 41 news at 6:00 yesterday they reported that the number of business licenses in Kansas was at it's highest level last year.

[KCMax]

One item in Kansas favor on this issue is energy. The domestic energy boom is expected to benefit KS quite a bit, at least according to some.
On a different matter, on channel 41 news at 6:00 yesterday they reported that the number of business licenses in Kansas was at it's highest level last year.

I listened to a presentation from someone in the Governor's office and he echoed this. They're expecting huge deposits of natural gas in western Kansas to pay off and I think there was a new oil field near Oklahoma maybe they expected to generate some revenue.

[AJoD]

http://www.omaha.com/article/20130115/N ... income-tax

[KCMax]

http://www.omaha.com/article/20130115/N ... income-tax

The Republican governors of Virginia and Louisiana have proposed doing this too.

[Zorobabel]

One item in Kansas favor on this issue is energy. The domestic energy boom is expected to benefit KS quite a bit, at least according to some.
On a different matter, on channel 41 news at 6:00 yesterday they reported that the number of business licenses in Kansas was at it's highest level last year.

I listened to a presentation from someone in the Governor's office and he echoed this. They're expecting huge deposits of natural gas in western Kansas to pay off and I think there was a new oil field near Oklahoma maybe they expected to generate some revenue.

I am pretty sure it's the Mississippi Lime formation they would have been talking about. The Mississippi Lime actually is a big deal and, because of it, Kansas probably will be able to get away with their lower taxes. Missouri, on the other hand, presently has oil production of less than a thousand barrels per day.

[Eon Blue]

Another big factor in Texas' success, along with every other Sun Belt state is it's weather. In "Triumph of the City," the author points to average January temperature as the number one indicator of a city's growth rate over the last 50 years.

Of course, pumping the Mississippi Lime formation dry and burning every bit of that may just bump Kansas' average January temperature into the desirable range...

[Highlander]

One item in Kansas favor on this issue is energy. The domestic energy boom is expected to benefit KS quite a bit, at least according to some.
On a different matter, on channel 41 news at 6:00 yesterday they reported that the number of business licenses in Kansas was at it's highest level last year.

I listened to a presentation from someone in the Governor's office and he echoed this. They're expecting huge deposits of natural gas in western Kansas to pay off and I think there was a new oil field near Oklahoma maybe they expected to generate some revenue.

I am pretty sure it's the Mississippi Lime formation they would have been talking about. The Mississippi Lime actually is a big deal and, because of it, Kansas probably will be able to get away with their lower taxes. Missouri, on the other hand, presently has oil production of less than a thousand barrels per day.

We'll see how well this play works out. I believe Kansas has a 7% severance tax on oil production. The Miss Lime wells come on at several hundred barrels per day but quickly decline to tens of barrels or less per day so the longer term production isn't going to be that phenomenal. It's shallow but the wells are costly due to drilling techniques and production requirements.

[Highlander]

Another big factor in Texas' success, along with every other Sun Belt state is it's weather. In "Triumph of the City," the author points to average January temperature as the number one indicator of a city's growth rate over the last 50 years.

Of course, pumping the Mississippi Lime formation dry and burning every bit of that may just bump Kansas' average January temperature into the desirable range...

Texas has 2-3 things going for it economically. 1) oil and gas severance tax augments state income and the relatively booming oil industry is centered in the state 2) plenty of extremely cheap labor from south of the border 3) out of control sprawl that makes suburban housing very inexpensive (coupled with cheap labor). On the other hand, property taxes are just wildly high (mine range from $9-12,000 per year on a $285,000 house), state services just suck - they are horrible to even non existent, hostile people - especially in Houston, and Texas (particularly Houston) may be the worst large city in which to live in the US. Those warm temps turn into something unbearable between April and October and most people spend most of their time indoors getting obese (which probably accounts for the all the pickup trucks and huge vehicles).

[KCMax]

Brownback budget proposes major tax change

Brownback's budget includes further reductions in income tax rates, purchased in part by extending a temporary sales tax increase and eliminating the home mortgage interest and real estate deductions.

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.

[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.

[pash]

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[KCMax]

How does sales tax not apply to food? I have not found this to be the case.

[pash]

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[aknowledgeableperson]

How does sales tax not apply to food? I have not found this to be the case.

The 'state' sales tax in MO (the 3% portion) does not apply to food purchases, ie can goods, meat and such in grocery stores. When food has been prepared, though, like in a restaurant the sales tax will apply. Local sales taxes are applied to food purchases unless exempted by local jurisdictions.

[KCMax]

How does sales tax not apply to food? I have not found this to be the case.

The 'state' sales tax in MO (the 3% portion) does not apply to food purchases, ie can goods, meat and such in grocery stores. When food has been prepared, though, like in a restaurant the sales tax will apply. Local sales taxes are applied to food purchases unless exempted by local jurisdictions.

Okay, but Kansas does not exempt food as far as I know. I think there is a refund lower income families can file for, but from what I understand, food is taxed at the same rate as everything else. Maybe they would exempt that in the Governor's proposal, I don't know.

[AJoD]

Thanks, pash, interesting description of progressive/regressive/proportional that I hadn't considered in that much detail.

Also, re: KS food sales tax:

http://www.kansas.com/2012/03/18/226102 ... -food.html

Didn't search to see what ultimately happened.

[KCMax]

Thanks, pash, interesting description of progressive/regressive/proportional that I hadn't considered in that much detail.

Also, re: KS food sales tax:

http://www.kansas.com/2012/03/18/226102 ... -food.html

Didn't search to see what ultimately happened.

http://www2.ljworld.com/news/2012/oct/2 ... touchable/

Kansans pay more sales tax on groceries than everyone in the country except residents of Mississippi.

Every year or so, there is a preliminary vote in the Legislature to repeal it, but the effort usually fizzles under the pressures of funding government, or in the case of the last legislative session, cutting other taxes.

During the 2012 session, the Kansas House approved massive tax cuts, which included an amendment by state Rep. Jana Goodman, R-Leavenworth, to remove the state sales tax from food.

But Republicans who supported Gov. Sam Brownback’s desire for individual income tax cuts and eliminating income taxes for owners of 191,000 sole proprietorships, Subchapter S corporations and limited liability companies, quickly jettisoned the proposal to remove the sales tax on food, saying it was too expensive — about $300 million — to be added to the other cuts.

[pash]

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