Print edition: 
Gov. Sam Brownback is saving the details of his tax reform plan for his State of the State address on Jan. 11. But the few hints he is dropping raise questions and concerns.
Brownback told The Eagle editorial board Tuesday that the state needs to lower income-tax rates to encourage more economic growth and reduce the number of people moving out of the state. The only explanation he offered as to how he would do that, while keeping overall tax collections the same, was that he wants to eliminate some exemptions, deductions and tax credits.
Brownback thinks it is bad policy to have “social engineering” in the tax code. But it’s unclear what he means by that.
When economists talk about social engineering, they usually mean the individual itemized deductions in the federal tax code, such as the mortgage interest deduction.
Does Brownback want to decouple the Kansas tax code from such deductions? Or is he focused on something like the earned income tax credit, which benefits low-income families?
Brownback considers some of the tax credits and deductions that businesses receive to be social engineering. When asked about tax credits for renovating historic buildings, for example, Brownback told The Eagle that he would rather the state provide grants for such projects, not tax credits.
Brownback said he won’t propose eliminating sales-tax exemptions. But he said his administration is examining the temporary sales-tax increase, though he wouldn’t say in what way.
Is he considering making the increase permanent and using the money to buy down income taxes, as the Kansas Chamber of Commerce has suggested? That would be quite a flip-flop for lawmakers who opposed the sales-tax increase in 2010 and said it would harm the economy. Also, sales taxes disproportionately affect low-income families, and reducing the income tax would mostly benefit wealthier families.
Some lawmakers are questioning the wisdom of phasing out the state income tax.
Rep. Don Hineman, R-Dighton, recently asked Kansas Revenue Secretary Nick Jordan, who is spearheading Brownback’s reform effort, whether the state’s taxation system would become less equitable and stable and too reliant on property taxes.
“Is it really the best tax and public policy to make the property tax the bedrock foundation of financing governmental operations?” Hineman asked. “Many Kansas residents would answer ‘no’ to that question.”
In fact, the majority of Kansans don’t think the state should cut taxes, according to a recent survey by the Docking Institute of Public Affairs at Fort Hays State University. And when the choice was between income, property and sales taxes, the public was least in favor of cutting income taxes.
The Kansas Farm Bureau and other agriculture groups also have expressed concern about shifting more funding burdens to property taxes.
Still, Brownback in convinced that lowering income taxes is the key to growth. He just won’t say yet how that would work.
For the editorial board, Phillip Brownlee
