Wednesday, July 28

Kansas leads in tax reform

From Kansas Policy Institute.

Kansas Leading the National Conversation on Tax Reform

By Patrick Parkes

Kansans’ bold tax reforms over the past two years — which have cut taxes by more than $3.5 billion and provided Kansans with some much needed income tax relief — continue to lead the charge nationally as objects of intense interest and discussion in the tax policy spotlight. Each year, the American Legislative Exchange Council (ALEC) releases its State Tax Cut Roundup. The report highlights progress made in state legislatures across the country toward enacting pro-growth, job-creating tax measures that embody the “Principles of Sound Taxation” it outlines. Kansas’ efforts earned the follow laudatory statement in its recent 2013 edition:

Last year Kansas made history with its tax cuts, especially for small businesses. This [2013] legislative session fine-tuned those previous changes to include a pathway to reduce the Kansas personal income tax rates even further. The legislature allowed a sales tax increase to partially expire, setting the overall rate at 6.15 percent, down from 6.3 percent. In addition, cuts to the personal income tax will phase in over several years to lower the rate to 2.3 percent on the first $30,000 of income and 3.9 percent on income over that. Overall, the extremely pro-growth reforms in Kansas will help the state become even more economically competitive.

With the above praise in mind, let’s remember that no tax reform package is inherently perfect. Furthermore, all such packages need a few years in most cases until their impacts can be fully realized and evaluated. Nevertheless, even in their infancy, Kansas’ tax cuts are already proving ALEC’s point about increased economic competitiveness by making their presence felt both within and beyond state borders. In this vein, Oklahoma Governor Mary Fallin has alluded to being all but forced to further tweak her state’s tax code in a pro-growth direction simply by virtue of being “sandwiched” between the reform-minded tax climates of Kansas and Texas respectively.

In short, this “sandwiched” phenomenon is proof that Kansas and other individual states can play crucial roles in sparking a broader national conversation about the power of tax reform in revving the engine of private sector economic growth. Yet, the conversation is just getting started. Now is the time for liberty-loving Kansas to build on the reforms we’ve already enacted — rather than resting on the laurels of past successes — to ensure that all Kansans are able to keep more of their hard-earned money in their own pockets!