Kansas Gov. Sam Brownback took to public radio Wednesday to argue that increases in sales, cigarette and other taxes should not be considered tax hikes because they follow dramatic income tax reductions begun three years earlier.
The Republican chief executive defended the deal he struck with the Legislature to comply with the state’s constitutional demand for a balanced budget.
Brownback urged people to focus on “the net,” looking at the taxes raised in the context of those that were cut earlier. He said he signed past deals because they were the best he could get from the Legislature, even though the didn’t include the elimination of income tax deductions and the extension of an earlier sales tax increase he wanted to keep in place.
“It’s basically what I proposed three years ago,” the governor said. “I talked about going to a flat tax with a small business accelerator. We lowered the rate but we didn’t broaden the base.”
The latest tax plan begins to broaden that base and, relying on sales taxes, shifts revenue to consumption taxes. He contends lowering or wiping out the state income tax would eliminate economic “distortion” and spur more small business development, and jobs, in Kansas.
Appearing on Steve Kraske’s “Up to Date” show Wednesday morning — Kraske is a Star reporter and columnist — Brownback said the earlier income tax cuts would spur businesses to move to Kansas or prompt entrepreneurs to launch their own companies.
The Legislature last week approved various tax increases needed to fill a roughly $400 million spending deficit amid revenue shortfalls widely attributed to Brownback’s tax cuts.
The state’s sales tax will rise to 6.5 percent from 6.15 percent, and the cigarette tax will jump by 50 cents a pack, to $1.29. Both are now dramatically higher than comparable taxes in Missouri, feeding speculation that shoppers in the Kansas City area will take their business east.
“It’s something for us to watch,” Brownback said, arguing that income tax filers have been moving from Missouri to Kansas.
Brownback contends that all taxpayers have benefited from the cuts. Critics say that wealthier Kansans gained most directly. And an analysis Tuesday from Institute for Taxation and Economic Policy, a nonpartisan but left-leaning policy group, said the poorest 20 percent of the state will pay 1.5 percent more in taxes than they did in 2012, or an average of $197 a year. Meanwhile, the wealthiest 1 percent will pay 1.9 percent less, or an average of about $24,600, the group said.
Brownback and Kraske sparred over whether various analyses show Kansas leading or lagging the nation. And Brownback claimed that Kansas is drawing businesses and residents from Kansas City, Mo., because of the lowered income tax and tax-free status for broad classes of small businesses. Critics have challenged the notion of a migration and whether self-employed people are hiring others or simply using the Kansas law to avoid income taxes.
But Brownback said “we’re beating Kansas City, Mo., on private sector job growth most of the time. You’ve got to look at this in the long-term picture.”
The conservative governor also dismissed Democratic criticisms that his tax policies are regressive and place an outsized burden on poor and middle class families.
“I wish (the Democrats had) put forward proposals that they supported,” he said. “The only thing they wanted to see … was the total thing fail.”