According to the AP on Tuesday, “Tax collections by the Kansas state government in September fell a sobering $21 million below projections to mark the fourth time in the past six months revenue failed to match targets, officials said Tuesday.
The state’s individual income tax receipts dropped $42.4 million beneath the estimate set earlier this year by a team of state economists and officials in the Gov. Sam Brownback administration. Oil and gas tax revenue also failed to keep pace with the tax blueprint.
The revenue crater would have been twice as deep had it not been for a $21.5 million, or 33 percent, surge in corporate income tax receipts. It’s unclear why that number moved so much to the positive side, but one possibility was that a one-time payment was made to the state.”
Kansas’ tax collections in July and August combined met expectations, but the collections in April, May and June fell a total of $334 million short of expectations.
Entities outside the state are also reporting on the revenue shortfalls in Kansas. “What’s The Matter With Kansas And Its Tax Cuts? It Can’t Do Math,” was the name of a Sept. 23 article in Forbes.
The Nelson A. Rockefeller Institute, which does nonpartisan public policy research for the State University of New York, reported that Kansas had the largest percentage of personal income tax collection decrease in April, May and June 2014 compared to the second quarter of 2013, and the largest in the nation. Kansas had a 42.9 percent decrease in revenue.
The Institute reported that the state with the closest percentage of revenue decline was North Dakota, at 32.8 percent. The U.S. had an overall average decline of 7.1 percent.
“The declines in Kansas are mostly attributable to legislated tax changes,” wrote the Institute.
In 2012, Gov. Sam Brownback and the state legislature eliminated state income taxes on 191,000 businesses, which can also include high income professionals. The elimination went to pass through corporations such as LLCs, Sub S Corps, and sole proprietorships. These types of businesses pass through tax liability to the owner who now have no tax liability to their home state.
The results have been devastating, and the “trickle-down” is not trickling down.
No business owner is going to hire employees they don’t need, and at the very least, these income tax cuts should have been tied to hiring employees. There may have been an increase of business filings with the state, but it was mostly a race to change the type of business to a pass through to limit taxes.
Everyone who uses roads, send kids to school, or young adults to college in Kansas needs to be paying something for the privilege.