Kansas’ falling income tax revenues are lagging the rest of the country, a new study shows.
The Sunflower State saw the third biggest percentage decline for personal income taxes for January to April 2014 compared to the same time last year, according to a report by the Nelson A. Rockefeller Institute of Government.
Kansas saw a 24 percent drop in personal income taxes compared to Ohio at 31 percent and North Dakota at 28 percent. The study said income tax cuts in all three states at least partly contributed to the revenue declines.
By comparison, personal income tax collections nationally were down 7 percent for the first four months of this year compared to 2013, the study reported. Missouri personal income tax collections were down 3.2 percent.
So far, Kansas revenues for the fiscal year ending at the end of this month are $310 million below estimates. Legislative analysts forecast by the end of the next fiscal year, the state will have about $56 million left in the bank after burning through more than $650 million in reserves.
Gov. Sam Brownback’s administration attributes the plunging revenues to wealthy taxpayers cashing in investments in 2012 before capital gains taxes increased in 2013. The shift inflated tax revenues for 2013 but left less to be taxed in the future, causing a decline this year, state officials said.
The Rockefeller report acknowledges that the change in taxpayer behavior is being felt by states nationally. But it said the situation is complicated in places such as Kansas, North Dakota and Ohio that cut taxes.
The report said in states that cut income taxes it’s harder to discern the effect of the tax cuts from declines in underlying income.
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