Gov. Kelly says she wants her tax reform council to focus on reforms “designed with adequacy, equity, and stability in mind.” Adequacy and stability is code for higher taxes, and equity just means some people are going to get hit harder than others. Her press release says she wants to “keep the state tax burden as low as possible,” but she does not say she wants the tax burden reduced, and that’s a very important distinction.
Instead of looking for ways to reduce the overall tax burden on Kansans and spur economic growth, she wants more money to spend and that’s what she’ll get from the majority of her appointees. All but two of her recent appointees work for government or entities that profit from government spending; fiscally-conservative tax policy experts at universities aren’t invited.
Adding some clarity to Gov. Kelly’s intention does not make Kansas Policy Institute an “anti-tax” organization as alleged by the Topeka Capital-Journal. Some degree of taxation is necessary, but Kansans have endured three consecutive years of state income tax hikes that harmed everyone, and conscious decisions were made to make life worse for low-income earners. Governor Kelly voted for the 2017 and 2018 increases and she vetoed legislation this year that would have prevented another increase, so her desire for higher taxes is on the record.
The council’s report won’t be issued until January 2021 so she and legislators don’t have to talk about tax increases during the 2020 election cycle, but their recommendations are fairly predictable. Higher marginal rates will be suggested and maybe a fourth bracket for higher incomes. The council will note that rates are still below 2012 levels but will conveniently forget to mention that the overall tax burden is still higher. Last year’s record-setting tax collections of $7.5 billion; that’s already 10% more than if 2013 taxes had been increased for inflation.
Gov. Kelly wants another increase because spending is already exceeding record-setting tax levels and will be $1.7 billion above expected revenue over the next four years. Reserves from excess tax collections will get Kansas through this year and next and legislators know the state is then out of money, but you aren’t supposed to know that. The commission will issue its post-election report and Governor Kelly will suddenly ‘discover’ a huge deficit, saying taxes must unfortunately be raised again. And somehow, it will be Sam Brownback’s fault.
And don’t be fooled about Gov. Kelly’s call for “targeted property tax relief.” Anything ‘targeted’ to one group of taxpayers will merely increase the burden on everyone else. You can also expect a recommendation to resurrect local ad valorem property tax relief, with the state giving money to cities and counties hoping they’ll use the money to reduce property taxes. That scheme didn’t work in the past — tax increases were much higher in the years LAVTR was funded — but even if it performed as desired, that just creates a bigger state deficit requiring more sales tax and income tax.
This tax ‘reform’ council is reminiscent of Ronald Reagan’s quote about the most terrifying words in the English language: “I'm from the government and I'm here to help.”
Dave Trabert is the president of Kansas Policy Institute, a research and educational organization.