Tag Archives: Sales tax on food

We Must Make Taxes Equitable

In 2012, the Kansas Legislature eliminated Kansas individual income taxes on business income earned by pass-through entities such as sole proprietorships, partnerships, LLCs, and S-corps.  The rationale was that the businesses would use the money to create more jobs and stimulate the economy. It did create jobs for attorneys and accountants, as the 191,000 small businesses it was to help soon proliferated into 330,000 exemptions as businesses rushed to restructure so as to take advantage of the tax break.

The tax cuts did not stimulate the economy as hoped as many companies did not use the money from the pass-through tax cuts to create jobs. The tax cuts did cause a hole in the Kansas budget which grew by about $70 million each month as time went by, eventually reaching $7.1 billion.  Rather than rescind the tax cuts, the legislature  borrowed against KDOT funds, which  cost the state about 80,000 high-paying construction jobs. It also made cuts to programs which actually create jobs, such as in public service, education, and healthcare.

In 2015, the legislature tried to fill the budget hole by passing the largest tax increase in the state’s history. The increases fell mostly on low-income workers and their families, demanding more from those least able to shoulder a higher share of the cost of funding schools, roads, and hospitals.  The 2015 tax increase raised cigarette taxes and sales taxes, increased fees for many government services, and eliminated some tax deductions for property tax and mortgage interest payments. Governor Brownback’s budget director made the case for sales tax hikes by warning that refusal to do so would force another round of stiff cuts to schools funding, Medicaid reimbursements, and criminal justice. Kansas sales taxes are now the 8th highest in the nation and low income workers must pay a larger share of their income to buy necessities and food.

Together, the 2012 tax cuts and 2015 tax increases drove tax rates up for the poorest 20 percent of Kansans, slightly reduced the tax liabilities for middle-class earners, and gave about $20,000 a year back to the richest taxpayers. Does that sound equitable?

Finally, in August of  2017, the Kansas Legislature overrode a veto by Gov. Sam Brownback and did away with the LLC loophole. The Legislature also increased Kansas income taxes to form a more equitable tax structure and put the state on a firmer financial basis. However, no provisions were made to repay KDOT or the KPERS funds.

On a positive note, the 2019 budget had a small surplus though it did not pay back most of the money borrowed in the past. This summer, the Governor and the leaders of the House and Senate plan to meet and examine the entire tax structure. The Governor has now appointed  bipartisan leadership for the panel,

Cut the Sales Tax on Food

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The 2012 tax cuts left a $7.3 billion hole in the Kansas state budget. To make up for it, the legislature passed the largest tax increase in history and even that did not fill the budget hole, as it got deeper every month. The tax increases may have made the economy worse as it took money out of the hands of those who were most likely to spend it.

The worst tax increase was in sales taxes, particularly the increase in tax on food. That took money from the pockets of low income Kansans and those on fixed incomes . It was particularly unfair for senior citizens, as they have been paying income tax all their lives, and now they must pay more for food.

During the 2019 session, the Legislature passed  HB 2033 which would have reduced the sales tax on food about one cent. That proposal was bundled with a sales tax decrease on corporations, an Internet sales tax increase, and a proposal to allow Kansans to itemize deductions on their state form. The governor vetoed the bill and, though almost every legislator supported lowering the sales tax on food, there were not enough votes to override the veto as many people objected to other parts of the bill.

Though this year’s budget ended up with a small surplus, there was  not enough money to pay the debts we have accumulated, particularly in child and family services, prisons, pension funds, and infrastructure. Once those are paid, the Legislature should work on eliminating the sales tax on food.