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SPOTLIGHT
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Figures say Kan. tax plan helps all

Published on -5/9/2012, 1:18 PM

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TOPEKA, Kan. (AP) -- A plan that Kansas legislators are considering to cut income and sales taxes would benefit all classes of taxpayers, according to figures released Wednesday by Gov. Sam Brownback's administration only hours before a crucial vote in the Senate.

The figures from the Department of Revenue contradict a national think tank's analysis that the plan would shift part of the state's tax burden from its wealthiest residents to its poorest. That report bolstered misgivings among Democrats and even some of Brownback's fellow Republicans.

The Associated Press obtained the figures before the department released them to the Legislature's staff. The figures show that some of the state's poorest taxpayers who now receive income tax refunds would receive smaller refunds under the plan. However, the department projects that such a change would be offset by a reduction in the sales tax.

"The take-away is that everybody gets lower tax rates," Revenue Secretary Nick Jordan said during an interview. "We think this benefits everybody."

Senators expected their vote Wednesday afternoon to be close. If senators pass the plan, the House would vote on it, possibly as early as Wednesday evening. House approval would send the measure to Brownback, who already has endorsed it.

Brownback has pushed the GOP-controlled Legislature to reduce income taxes to stimulate economic growth, while skeptics worry the cuts will create future budget problems.

The plan, drafted by negotiators for the two chambers, is expected to provide about $60 million in tax relief for the fiscal year beginning July 1, with the total eventually rising to about $600 million annually.

The plan reduces individual income tax rates; phases out income taxes for 191,000 partnerships, sole proprietorships and other businesses, and drops the state's sales tax to 5.7 percent in July 2013 from its current 6.3 percent. It also makes numerous other changes, eliminating or restricting some tax breaks, including several targeted to poor and working-class families.

The Washington-based Institute on Taxation and Economic Policy issued a report Tuesday saying the plan would result on average in a small tax increase for Kansans earning less than $20,000 a year, while Kansans earning more than $400,000 would receive the biggest tax cut.

The Department of Revenue's figures show that about 285,000 Kansans with adjusted gross incomes of $25,000 or less -- and who collectively owe taxes instead of receiving a refund -- would see their income taxes drop by about 10 percent. In contrast, the department said, taxpayers with incomes of more than $250,000 would see their income taxes decline a little less than 9 percent.

However, the department did a separate analysis for 279,000 taxpayers with incomes of $25,000 or less who, as a group, receive refunds. Their refunds would decline about 11 percent, but the average decline of $34 would be offset by an estimated $60 drop in their annual sales tax payments.

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