The Legislature passed Brownback’s revamp of Kansas income taxes in 2012 that virtually eliminated income taxes for approximately 333,000 businesses. They assumed the exemption would spur economic development and more jobs. Benefitting from the tax break were partnerships (including limited liability companies), Sub-Chapter S Corps., farmers and individual proprietors. The tax savings realized by these businesses were supposed to provide the funds to create new jobs.
The House Tax Committee recently was informed data since the tax cuts do not support the intended outcomes and won’t help the Kansas economy to grow.
Information from the Kansas Department of Revenue, which gives the breakdown of the effect of the tax breaks, reveals a significant reason the policy is failing: Only one category of tax filers receives enough tax savings to create one significant new job. The 2,274 businesses with incomes more than $500,000 each saves an average of $38,310. None of the rest of Kansas businesses saves enough to create even one new job. For each of 176,970 businesses with incomes less than $25,000, the average tax saving is only $158. The savings for all other business filers also fall far short of what it takes to create a new job. You can’t create a job for $158 a year.
The Kansas Department of Revenue figures support the conclusion the governor’s tax policy is failing to produce the results expected — and counted upon. Major corrections are due.