Republican Support For Brownback's Kansas Tax Plan Begins To Erode

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Republican Support For Brownback's Kansas Tax Plan Begins To Erode

By Tax Analysts CONTRIBUTOR GROUP - JUN 3, 2015 @ 9:12 AM

Kansas was supposed to be a Republican success story. It elected a conservative governor who happened to be a former U.S. senator, and he, unlike many of his colleagues, followed through on his promises to radically overhaul his state’s tax system, lowering rates and drastically reducing the burden on Kansas taxpayers. A legislature dominated by GOP lawmakers supported his plan, and the state doubled down on supply-side economics. But then everything started to go wrong.

Gov. Sam Brownback’s tax plan wasn’t all that well conceived to begin with, so some of the problems that have arisen were predictable. The signature part of Brownback’s plan was to exempt virtually all passthrough income from tax. The idea was that small businesses were mostly organized as passthroughs and that this exemption would encourage both job formation and relocation. That hasn’t really happened. Instead, the exemption is hard for many small business owners to understand and has probably overwhelmingly benefited wealthy taxpayers, who have primarily non-wage income. So the supply-side benefits haven’t yet materialized in Kansas.

But the revenue shortfalls have. Kansas faces a $400 million budget shortfall, which is significant for a state that spends only about $6.5 billion a year. (Some argue that the shortfall is even higher.) Republican lawmakers have done everything they can, short of tax increases, to close that gap. Brownback cut some expenditures by 4 percent and slowed contributions to the state pension system. Some in the state Senate want to go even further in cutting noneducation spending, but it’s hard to see how much revenue can truly be raised from simply dealing with the spending side.

The grim reality of the budget situation has caused some moderate Republicans (who traditionally dominated Kansas politics until the rise of the Tea Party and Brownback’s more conservative wing of the party) to join with Democrats to push for some tax increases. Sen. Les Donovan (R), the Kansas Senate’s chief taxwriter, has called for increasing the sales tax to 6.5 percent and replacing the non-wage exemption for small businesses with a 1 percent payroll credit....

Read more:
http://www.forbes.com/sites/taxanalysts/2015/06/03/republican-support-for-brownbacks-kansas-tax-plan-begins-to-erode/

[Human101948]

1. Will they finally diasvow the Laffer Curve?

Two things I did not know...Cheney was behind this insanity and it is a Muslim plot!

Although economist Arthur Laffer does not claim to have invented the Laffer curve concept,[3] it was popularized in the west with policymakers following an afternoon meeting with Ford Administration officials Dick Cheney and Donald Rumsfeld in 1974 in which he reportedly sketched the curve on a napkin to illustrate his argument.[4] The term "Laffer curve" was coined by Jude Wanniski, who was also present at the meeting. The basic concept was not new; Laffer himself notes antecedents in the writings of the 14th century Arab Muslim social philosopher Ibn Khaldun .[5]http://en.wikipedia.org/wiki/Laffer_curve