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Kansas: Shaking Up the Status Quo of Taxing and Spending
Amy K. Frantz
Our neighboring state,
Kansas, adopted tax-reduction legislation in 2012 and passed a reform
package again in 2013 to make improvements on the 2012 tax bill.
According to a media release from Governor Sam Brownback (R):
The  law
collapses the current three-bracket structure for individual state
income taxes (3.5, 6.25 and 6.45 percent respectively) into a
two-bracket system using rates of 3.0 and 4.9 percent. The business
income exemption eliminates certain non-wage business income for small
business owners (income reported by LLC’s, Subchapter-S Corporations,
and sole proprietorships on lines 12, 17, and 18 of federal form 1040).
The law also flattens
the tax structure and increases the standard deduction amount for single
head-of-household filers from $4,500 to $9,000; and for married
taxpayers filing jointly from $6,000 to $9,000.
to the income tax changes, Governor Brownback and the
Republican-controlled Kansas Legislature adopted economic development
incentives, including “letting businesses of any size deduct 100 percent
of the expense of new business equipment and machinery” and the creation
of Rural Opportunity Zones (ROZ) “to help recruit people to counties
with sharply declining populations.”
Fifty counties which have experienced
double-digit population loss over the past 10 years have been designated
ROZ counties. The majority are in far northwestern Kansas, but some,
such as Kingman in south-central Kansas, are near more urban areas
(Wichita)…Those who move to ROZ counties will have their state income
taxes waived from 2012 – 2016 if they lived outside the state for the
previous five years, or lived in Kansas but had an income of less than
In 2013, the Kansas
Legislature and Governor Brownback adopted additional income-tax reforms
- Lower income-tax
rates even further, ultimately to 2.3 percent on the first $30,000
of income and 3.9 percent on income above that.
- Set the sales-tax
rate at 6.15 percent beginning in July 2013. At first glance, this
seems like a tax cut, as the sales tax was 6.3 percent. However, the
tax had been scheduled to drop to 5.7 percent in July 2013.
- Reduce the value of
itemized deductions by 30 percent this year and by 5 percent per
year until 2017, when they will be reduced 50 percent permanently.
The charitable deduction is an exception to this treatment and will
remain fully deductible.
- Decrease the
standard deduction for married filers filing jointly ($7,500) and
heads of household ($5,500), down from $9,000. The amounts are still
higher than pre-2012 law ($6,000 and $4,500, respectively).
- Restore the
low-income, food-tax credit.
- End the itemized
deduction for gambling losses.
The Rural Opportunity Zone
program was also expanded from the original 50 counties to cover 73
counties in Kansas.
Joseph Henchman and Scott
Drenkard of Tax Foundation indicate that “while the  bill is a tax
increase, the combined effect of both years’ bills remains a net tax
They believe Governor Brownback’s tax reforms will contribute to
economic growth because “Kansas’ tax code is now based more on
consumption than it used to be… [and] good tax reform includes
broadening the tax base while lowering the rate, which appears to be
Governor Brownback’s intention.”
highlights his reasoning for pushing for income-tax reform for his
We [Brownback and Lt.
Gov. Jeff Colyer] did this because it was time to shake up the status
quo of taxing, spending, and declining. In our federalist system, state
governments are forced to compete against each other for capital, jobs,
and residents. Competition offers two options: you can either refuse to
adapt to changing conditions and fall behind those who do, or you can
lead the way to the future. Kansas had to change the way it competes
regionally and nationally for residents and jobs, and so far we have
made great progress.
Amy K. Frantz is Vice
President of Public Interest Institute.
The views expressed
herein are those of the author and not necessarily those of Public
Interest Institute or Tax Education Foundation. They are brought to you
in the interest of a better-informed citizenry.
 “Governor Brownback signs pro-growth tax
legislation,” Media Release, May 22, 2012, <http://governor.ks.gov/media-room/media-releases/2012/05/22/governor-brownback-signs-pro-growth-tax-legislation>
accessed October 17, 2013.
 Governor Sam Brownback, “Op-ed: ‘Why
Kansas Had to Cut Taxes’,” Media Release, July 27, 2012,
accessed October 17, 2013.
 Deborah D. Thornton, “No Place Like Home!”
Public Interest Institute INSTITUTE BRIEF, April 2013,
October 29, 2013.
 Joseph Henchman and Scott Drenkard,
“Kansas 2013 Tax Reform Improves on Last Year’s Efforts,” Tax
Foundation, Fiscal Fact, June 19, 2013, <http://taxfoundation.org/article/kansas-2013-tax-reform-improves-last-years-efforts>
accessed October 18, 2013.
 “Gov. Brownback signs Pro-Growth Tax
Reform,” Media Release, June 13, 2013, <http://governor.ks.gov/media-room/media-releases/2013/06/13/gov.-brownback-signs-pro-growth-tax-reform>
accessed October 17, 2013.
 Henchman and Drenkard.