Who will pay and who will not
Published on -9/18/2012, 7:59 AM
Remember those days at high school, when you saw girls, hands guarding their mouths, whispering to other girls about whose boyfriend was seen holding hands with another girl? Yes, you do, even if you don't want to admit it now.
Well, at least at the Statehouse, that's starting to happen -- but the secret that you pass with whispers is about who is going to pay Kansas income tax next year and who isn't.
Yes, if you have a limited liability company, or a Subchapter S corporation or even a sole proprietorship, last session's massive tax bill rewrite means that you won't pay any Kansas income tax on non-wage income.
That means, essentially, that small business owners won't pay taxes on their income. And, if it's one of those typical small businesses where essentially "you eat what you kill" -- you live off the profits of the business -- you won't pay Kansas income taxes on the money you live on.
The concept, of course, is that many small businesses will use that tax break to hire more workers to produce more goods and services and create more jobs and those workers, of course, will pay Kansas income tax -- just not the people who hired them. New jobs, that's gotta be good.
In the small world of those who hang around the Statehouse who aren't on the state payroll, many won't be paying state income taxes next year. And, we're betting that this fall, as neighbors gather for the end-of-summer block parties before winter, there are going to be quiet little discussions going on about whether the guy down the street who has an LLC or who has his/her own little business -- or is a doctor of a lawyer or accountant -- is going to be paying Kansas income tax next year.
Nothing obnoxious, we hope, but look up and down your block and you'll see the homes of neighbors who work for themselves who won't pay income taxes, and the homes of neighbors who work for someone else ... who will pay taxes.
Now, the top rate is down to just 4.9 percent next year, but if your self-employed neighbor drives, say, a Buick or better, chances are good that the neighbor will save several thousand dollars a year on Kansas income taxes that you will pay while driving your Chevy.
The concept: That money that the self-employed small business owners won't pay in taxes, they'll expand their businesses or maybe just eat out more often, or buy bigger cars or start sending their shirts out to be laundered. Except for those who selfishly choose to save that tax money under their mattresses, that money they're not paying in Kansas income taxes will be spent creating sales tax revenues -- and jobs for waiters and car dealers and laundry workers.
Of course, Gov. Sam Brownback's concept is that in a few years there will be no state income taxes and that new businesses will spring up and everyone can spend the money they save on taxes on Kansas-made things that spur the economy and make Kansans prosperous. That might work.
But in the meantime, maybe we'll just suggest that, at next spring's neighborhood party, the self-employed folks will bring the burgers and maybe the beer.
Syndicated by Hawver News Co. of Topeka, Martin Hawver is publisher of Hawver's Capitol Report. To learn more about this nonpartisan political news service, visit www.hawvernews.com.