Monday, May 6, 2013

Revenue secretary says tax cuts are working

By SCOTT ROTHSCHILD, The Lawrence Journal-World

Kansas Department of Revenue Secretary Nick Jordan says recent state tax collections show that Gov. Sam Brownback's tax cuts are working as economic stimulants.

The state collected $25 million in individual income tax receipts last month, or 5.7 percent more than in April 2012.

Jordan said Kansans are able to keep more in their pockets, contributing to economic growth that is offsetting the impact of lower tax rates.

“We’ve predicted that a fiscal environment where Kansans get to keep and invest more of their paycheck would bring economic growth to the state,” Jordan said.

But state Sen. Tom Holland, D-Baldwin City, a critic of the tax cuts that Brownback signed into law last year, said it is too early for the Brownback administration to claim success.

"Let's wait until next year," to analyze the impact of the cuts, said Holland, the ranking Democrat on the Senate tax committee.

Last year, Brownback signed into law cuts in state income tax rates and exemptions from income taxes for the owners of 191,000 partnerships, sole proprietorships, and other businesses.

The recent revenue estimate from state officials and economic experts showed that individual income tax revenue will decrease to $2.4 billion in the fiscal year starting July 1 from $2.85 billion in the current fiscal year. That's a drop of $450 million, or 15.8 percent.

And Holland said Jordan's claim that increased revenue is due to tax cuts undercuts Brownback's call to extend the 6.3 percent state sales tax rate.

The Legislature reconvenes the 2013 session on Wednesday to write a budget and work on tax policy.

In 2010, legislators approved a three-year increase in the state sales tax to 6.3 percent to avoid deep budget cuts as the state struggled during the Great Recession.

The sales tax is set to decrease to 5.7 percent on July 1. But Brownback wants to keep the rate at 6.3 percent, saying the higher rate is needed to balance the budget.

He faces opposition on the left and right.

Democrats say Brownback wants the higher rate in order to provide more income tax cuts for the wealthy while saddling the rest of Kansans with a higher sales tax. Conservative Republican legislators say they won't vote for the higher sales tax rate because they believe the budget can be cut further.