Budget director Steve Anderson, staff, Department of Revenue officials, legislative researchers and economists from the Kansas’ three largest universities recently projected tax revenues to exceed expectations by $205 million for fiscal year 2012, with another $88 million over that to roughly $6.3 billion for fiscal year 2013 (beginning July 1, 2012).
The rosy report, however, comes days after the Department of Revenue reported collections $4 million under expectations in October, displaying the volatility that exists in the current economic climate.
Another potential issue to affect tax revenue numbers will be the success of proposals sure to be tabled in the upcoming legislative session to reduce or even eliminate income taxes in Kansas.
“The only way to spur economic growth is to eliminate the income tax,” said Ashley McMillan, president of Kansans for No Income Tax[,] in a recent LJ World story.
Reports have emerged suggesting that a Missouri billionaire and long-time conservative supporter, Rex Sinquefield, could be a large part of the effort. There are no details as to the value of his contributions to the group, simply that he has made one.
(For more information about Sinquefield, see his bios as co-founder of the Show-Me Institute, “Advancing liberty with responsibility by promoting market solutions for Missouri public policy,” co-founder of a money management firm, Dimensional Fund Advisors, where he made his fortune, and his charitable foundation. There is also a Wikipedia listing.)
The group started its tour in Topeka and planned stops in Leavenworth, Pittsburg and Wichita.
Outside the Statehouse, about 35 people gathered, mostly Republicans and Republican staff members.
State Reps. Richard Carlson, R-St. Marys, who is chairman of the House Tax Committee, and Joe Patton, R-Topeka, spoke [picture here], as did Dave Trabert, president of the Kansas Public Policy Institute, and representatives from FairTaxKC.
Gov. Sam Brownback, a Republican, did not appear at the event, but his chief of staff, David Kensinger did. Kensinger said he showed up because he was promised hot chocolate.
Brownback has said he wants to get rid of the state income tax and his administration is working behind closed doors to propose a major tax overhaul for the 2012 legislative session (link), which starts in January.
Counter Argument
There are any number of rebuttals to the claims made against income taxes, not the least of which is that relying on other tax sources, particularly sales taxes, is a regressive system – taxing the poorest as a percentage of their income and wealth more than the richest of society.
However, the editorial board of The McPherson Sentinel makes more direct claims against the group (Kansans for No Income Tax statistics are at the bottom of this post):
One of the main arguments of Kansans for No Income Tax is that states with no income tax are experiencing more rapid growth than those with such taxes. In particular, the group points to the fact that Kansas ranked 37th in relative economic growth by nominal Gross Domestic Product, behind Washington (27), Texas (9) and Florida (18). Those three states have no state income taxes.
However, of the nine states without individual state income taxes, six ranked in the bottom 40 percent in change of real GDP since the recession of 2008. The only two states which continued to see negative change through 2010, Nevada (0.2 percent decrease) and Wyoming (0.3 percent decrease), are both free of such taxes.
Only two states, Texas and Tennessee, ranked in the top 40 percent, with Tennessee tied for the sixth most successful recovery by real GDP.
Among the five states with no corporate income tax, Nevada, South Dakota, Texas, Washington and Wyoming, 40 percent saw negative economic recovery by real GDP through 2010. Only one state, Texas, ranked in the upper 40 percent of states for its 2.8 percent growth.
Kansas ranked in the middle of the pack. It saw 2.1 percent growth, only 0.5 percent behind tax-free Texas and beating out seven of the nine states without state individual income taxes.
McMillan told the AP that the group has not yet settled on a single plan, that Kansas for No Income Tax is simply trying to generate public debate.
Let it begin.
More reading
Debate on tax cuts, spending intensifying, Lawrence Journal-World, Scott Rothschild
Tax reform, Kansas Policy Institute (Note: article makes many claims that you cannot check yourself via a link or cited report.) Pictures of their main talking points brochure: