At the Rail: $135 Million Windfall? or Election Year Tax Breaks

By Martin Hawver

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Remember all that talk about the $135 million or so that new federal income tax cuts were going to dump into Kansas? The deal was with lower federal income taxes, more of Kansans’ money would be subject to Kansas income taxes.

Pay less there (to the federal government) and you pay more to Kansas because you have more money left over. Pretty simple, you pay it there or here and the Statehouse crowd would rather you pay it here because of the opportunities it offers them.

One opportunity is for lawmakers to take that extra money that state income taxes will now yield and think of cool things to do with the cash that they didn’t have to do anything unattractive to get…like raise your taxes.

Now, that’s one way to go. Maybe use that additional money for schools, roads, health care, law enforcement, welfare and everything else we expect the state to provide? Well, so far, the answer is either yes…or no.

Spending that money on things Kansas want is generally a politically popular thing to do. Sometimes.

But there’s another politically popular thing to do with money the state didn’t expect to get—give it back to voters in an election year by cutting their state income taxes. That probably has a nice ring to it in this year when the Kansas House stands for election, and even statewide candidates can portray themselves as liking the move.

The Senate, where just one (replacement) member stands for election to the remaining two years of his term, appears to like the idea of what can pass for smaller government--“give it back” is the slogan. Who doesn’t like lower taxes? Not many who vote.

So, the Senate GOP plan is shaping up as taking that extra money the state will receive because of the new federal tax law and using it to pay for Kansas income tax cuts. Imagine that, how it can be turned into tax cuts, economy in government, all those political slogans we’ve been hearing.

And while most folks want K-12 public education funded adequately and the poor and the ill cared for, well, there are few things as nice as a tax cut.

But how to do that tax cut in the most politically valuable manner is a question. There are tax cuts and there are politically profitable tax cuts, which is what the Senate Tax Committee proposed.

First, decouple from the federal tax form, so you can itemize deductions for Kansas income taxes even if you take the new, big federal standard deduction. And then take the Kansas deductions which were slashed last year—property taxes, mortgage interest, charitable contributions, medical expenditures—and restore them to full strength again. That’s what the committee did, oh, along with boosting Kansas’ own standard deductions for taxpayers by 50 percent.

Sounds good, doesn’t it? It clearly tilts the majority of that $135 million toward homeowners with sizable mortgage interest payments to write off, but who’s going to notice if more prosperous Kansans get the bulk of that savings?

Well, probably not many are going to notice, but the ones who do may be mostly Republicans. At least those Republicans—if the tax plan passes—will be reminded several times who voted for their tax break and who didn’t.

Oh, that court-ordered increase in school funding that the $135 million would help pay? Or raises for state employees who haven’t gotten raises in several years and are actually seeing their pay drop as inflation and health insurance premiums rise? Those probably also would be good uses for that money.

But what beats an election-year tax cut?

Syndicated by Hawver News Company LLC of Topeka; Martin Hawver is publisher of Hawver's Capitol Report—to learn more about this nonpartisan statewide political news service, visit the website at www.hawvernews.com