The nation’s finances and fiscal health may have captured the media’s attention but certain states have recently come under the microscope for their own spending and deficit-reduction proposals.
In Kansas, Republican Governor Sam Brownback wants to eliminate the mortgage interest and property tax deductions as part of his broader plan to overhaul the state’s tax system. His economic blueprint also includes making permanent a temporary state sales tax increase and lowering individual tax rates to 1.9% and 3.5% (from the current 3% and 4.9%).
Kansas has already enacted its largest tax cut in history, one that is estimated to cost the state $850 million in the coming fiscal year. In an interview with The Daily Ticker, Brownback says his proposals follow a “red state model” that emphasizes low taxes and a pro-business environment.
“We want Kansas to be the best place in the country to raise a family and grow a business,” he says. “I think we’ll have a better chance of growth than states that are raising taxes.”
Brownback is not the only governor pushing conservative tax and economic policies. Louisiana Governor Bobby Jindal supports ending his state income tax and making up the lost revenue by raising the state sales tax. Brownback disputes charges that he’s attempting to do the same in Kansas. But he does acknowledge that his tax proposals are controversial; some members of his own party disagree with his legislative vision.
“I’m getting hit a lot for [proposing to] take away the mortgage deduction,” Brownback concedes.
The governor’s proposals have also been criticized as benefitting high-income earners at the expense of low and middle income ones.
According to the Institute on Taxation and Economic Policy, Brownback’s tax plan would mean the “poorest 20% of Kansas taxpayers would have to pay an additional 0.2% more of their income in taxes each year, or an average increase of $22; the middle 20% of Kansas taxpayers would pay 0.2% less of their income in taxes each year, or an average cut of $104, and the richest 1% of Kansans, those with an average income of over $1 million, would save an average of $6,528 a year.”
Furthermore, if Brown had implemented his current tax wish list in 2012, that state would have lost nearly $340 million in revenue, based on the Institute’s analysis.
Brownback says his tax plan actually targets wealthy Kansans because only upper-income residents take advantage of the mortgage interest deduction. “Only a quarter of Kansas taxpayers itemize their tax returns,” he notes. Brownback believes reducing tax rates on small businesses not only leads to higher economic growth but it also provides job opportunities for struggling residents.
“It’s the best thing we can do for low income people,” he says. “Three-quarters of Kansas residents work for a small business.”
Brownback’s pursuit of small government encompasses more than just taxes. According to The New York Times, the governor has “already slashed the state’s welfare roll and its work force…merged government agencies and is proposing further consolidation…[Brownback] is pushing for pension changes, to change the way judges are selected and for altering education financing formulas.” In January the state relinquished its Medicaid duties to three private firms, causing some insiders to accuse Brownback of privatizing the program.
Brownback says his policies will prevent deficits, bring in new business and turn Kansas into “a low tax state from a high tax state” – policies he believes the federal government should pursue too.
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