Brownback moves forward to phase out income tax
After a year, the plan of Kansas Gov. Sam Brownback to eventually phase out his state’s income tax is proceeding on target and, the governor told Human Events, “has yielded a record number of new businesses for Kansas in the last year.”
Conservative Republican Brownback, who was in Washington this weekend for the annual meeting of the National Governors Association recalled how the controversial measures he proposed were enacted by the state legislature last year and take effect this month.
“We consolidated three income tax rates into two—4.9 percent and 3 percent,” said Brownback, “and we brought down to zero the taxes on nonwage profits for LLCs [limited liability companies] and Subchapater S corporations.” The state has approximately 191,000 such businesses.
The results, he added, are becoming clear. According to Brownback, 15,000 new small businesses in the form of LLCs and Subchapter S corporations were formed in the last year, “and that’s a record—overtaking the previous record of 13,000 [new small businesses] started in a year.”
Former Rep. and Sen. Brownback pointed out that his state now is “the 10th lowest in the nation in unemployment” and the unemployment rate would drop further as the lower tax rates took effect.
According to a study by the Kansas Policy Institute, private sector jobs have grown in the Sunflower State by only 1.6 percent over the past 14 years. Now, the state Department of Revenue estimates that the tax cuts will lead to 23,000 new jobs by 2020 and $2 billion of income for the state.
Brownback’s trumpeting of his “ax the tax” agenda at the NGA came shortly after he also called for ending two income tax deductions for homeowners and stopping a decrease in the state sales tax cuts. Democratic lawmakers as well as some moderate Republicans charge that the end of the deductions and stopping the sales tax decrease will actually lead to higher taxes for Kansans. But state Secretary of Revenue Nick Jordan told reporters that the lowering of taxes now taking effect will save taxpayers $2.7 billion over the next year and that will more than offset the loss of the deductions and not letting the sales tax drop from 6.3 percent to 5.7 percent.
For his part, Brownback insisted to us that he remained firm on his eventual goal: “It’s going to take a couple of years, but eventually, we will phase the income tax out.”