Tax Policy

Dear Friends and Neighbors,

Today's topic for review is:

TAX POLICY

This was maybe the high point of the legislative session and one that may have the biggest positive impacts on the economic future of Kansas.

A coalition of Democrats and moderate Republicans repealed the Brownback tax plan that has brought Kansas to the brink of economic disaster! The plan we passed had some very good aspects and some that will definitely need more work. The House and the Senate agreed on this tax plan and sent it to the Governor for his signature. The Governor, who remained adamant that his tax plan was working, promptly vetoed the bill. Following his veto the bill returned to the House and Senate where we promptly overrode his veto making the bill law. Upon our veto override Moody’s upgraded the Kansas credit rating from negative to stable. Here are the facts:

The GOOD News:

1. We did away with the LLC “loophole” which had taken 330, 000 businesses off the tax rolls. Brownback promised that by doing this it would stimulate the Kansas economy and create tens of thousands of jobs….it did neither. By putting these companies back on the tax rolls we have spread the tax burden across all sectors of the Kansas economy and helped return tax fairness to Kansas.

2. We eliminated the Governor’s “Glide Path to Zero Income Taxes”. This was another part of the Governor’s plan that was contributing to the economic downturn in Kansas. His plan to eliminate income taxes and rely solely on sales and property taxes put an unfair burden on the middle class and our low income Kansans. It was a major contributor to the massive debt the state now has to address.

3. We returned the tax code to a three bracket configuration which, again, spreads the tax burden more fairly across all sectors of the Kansas economy. The percentages in each of these three tax brackets are actually lower than they were in 2012. The three bracket system is good but the percentages in those brackets are insufficient and will have to be adjusted in the near future.

4. We restored the middle class tax deductions for mortgage interest, property taxes and medical expenses. These had been eliminated by Brownback and they will be phased in starting in 2018 and fully implemented no later than 2020.

5. We reinstated the Child Care Tax Credit which will be particularly beneficial to lower income Kansans and single working parents. This will allow more people to seek work or continue working.

These changes to the tax law should reverse the Brownback disaster and start the healing process for our state economy. Unfortunately, this won’t happen overnight as the Governor has had six years to wreck our economy and it will take an extended period of time to reverse the damage he has done.

The Not So Good News

The ultra-conservative Republicans were still not willing to vote for high enough percentages in the income tax brackets in order to run state government and to fully fund our public schools.

They continue to believe that stealing over three hundred million dollars from the KDOT funds is sound economic policy….it is NOT! Contrary to what the conservatives believe you cannot borrow your way out of debt. The KDOT funds provide good paying jobs and are used to repair our crumbling roads and bridges. Those funds provide a much needed economic stimulus for the Kansas economy. This robbing of KDOT funds needs to STOP!

The conservatives are also adamant about Kansas NOT paying its fair share to KPERS. Withholding these funds is financially irresponsible as it will cost tax payers more money down the line to make up for these current shortages. It is also morally reprehensible as the teachers and other public employee members of KPERS have faithfully held up there end of the bargain by paying their payments in full and on time. The conservatives are seemingly very comfortable with the state reneging on its responsibilities to our teachers and public employees by failing to pay the amount the state owes to these people. The conservatives seem to have little respect or sense of obligation to the people who teach our children, run our needed services and keep us safe and healthy.

SUMMARY

There were some very good things about the new tax bill and some other things that definitely need work.

The best part was that we ended the Brownback economic “experiment”, including the “glidepath to zero income taxes”, which has been a nationally recognized disaster. We restored a three bracket tax structure, restored property tax, mortgage interest and medical expense deductions, we restored the Child Care tax credit and we eliminated the LLC loophole. All of these things will help put the Kansas economy back on track, help with economic development and provide a base to fully fund our public schools.

The bad parts of the bill include the fact that this budget does not raise enough money to fully fund our schools and state services without the continued robbing of KDOT and our failure to fund and pay for our KPERS responsibilities. This simply kicks our financial responsibilities down the road where they will increase significantly and cause even more hardship on the citizens of Kansas. The conservatives still believe that you can borrow your way out of debt….you can’t! The inability of this tax plan to fully fund our public schools will probably be bringing us back into special session to deal with this issue. At least the new tax structure will give us a solid base to work from in solving our school funding situation.

Our economic problems, caused by the Brownback administration, are deep and will not be solved quickly. At least we now have the tax structure in place to start bringing Kansas back to financial stability. If we are ever going to get back to when Kansas was prosperous, funded great schools and had a growing economy then, in 2018, we must start to replace the “borrow and spend” conservatives who have blindly supported a failed economic plan, who have failed to support our public schools, who created an unfair tax system that favored certain sectors of the economy and destroyed the state’s ability to attract and retain companies that provide more jobs and more good paying jobs.

All in all, the tax plan is a positive improvement in that it creates a solid base from which we can start to truly address the financial needs of Kansas. I am very proud to have held out for the plan that “repealed Brownback” and started Kansas on the path to economic recovery. There is still much work to do but this is a great start.

Thank you again for your support,

Jerry