Davis tax plan would boost state’s revenue – and taxes – in 2016, researchers say
08/22/2014 11:42 AM
08/22/2014 7:09 PM
Paul Davis’ plan to freeze income tax rates would increase tax revenue more than $20 million next fiscal year, according to an analysis by the state’s nonpartisan research department.
Davis, the Democratic nominee for governor, proposed keeping income tax rates at their 2015 level in June. He stopped short of calling for a reversal of tax cuts ushered in by Gov. Sam Brownback, but said tax rates should be frozen until the state’s base aid for schools is restored to its pre-recession level.
“Our first job is to stop the bleeding,” Davis said in June, referencing the governor’s comparison of the tax cuts to surgery.
The nonpartisan Kansas Legislative Research Department has projected a $238 million budget shortfall by June 2016, when the next fiscal year ends.
Davis’ freeze proposal would result in a $20.5 million net tax increase for fiscal year 2016 and $735 million cumulative net tax increase by the end of fiscal year 2019, according to Legislative Research, which analyzed the proposal at the request of Senate Majority Leader Terry Bruce, R-Hutchinson.
Under the Davis proposal, which Legislative Research economist Chris Courtwright noted had not been formally drafted as a bill, income tax rates would remain at 2015 levels: 4.6 percent for the top bracket and 2.7 percent for the lower bracket.
Under the Brownback tax cuts, the lower rate is set to drop to 2.4 percent in 2016 and the top rate to fall to 3.9 percent in 2018.
That means a married couple with one child, making $25,000 and taking the standard deduction, would face $32.25 more in income taxes in 2016 than they would under the scheduled cut. A couple making $40,000 would pay $77.25 more and a couple making $50,000 would pay $90 more in income taxes.
Single parents with one child, earning $30,000 a year, would owe $45 more in taxes.
A married couple with no children, making $30,000, would pay $54 more in taxes. A single person without children making the same amount would pay $45 more.
People would not pay more than they do now, but more than they would if the cut is allowed to take place.
When Brownback signed a law cutting the sales tax – but not as much as originally promised – the Davis campaign called that a tax increase of $777 million.
The Brownback campaign has returned the favor by calling Davis’ call to freeze rates an increase.
“It is appalling that the one and only economic vision that Paul Davis has articulated is a 17 percent tax increase on the poorest Kansans,” said John Milburn, spokesman for the Brownback campaign.
Single or married Kansans without children in the bottom bracket would see a 12.5 percent rate increase in 2016 and 17.4 percent rate increase in 2017 from what they would pay under the Brownback plan.
“The effect of this so-called economic plan would make it harder for struggling Kansans to make ends meet and provide for their families. Kansans should be outraged,” Milburn said.
Bruce criticized Davis in an e-mail.
“I am confident Kansans will see that a Davis Administration would seek to hinder their opportunity to succeed. A tax increase on low income workers does not reflect Kansas values,” Bruce said.
The Davis campaign sent out a release Friday afternoon emphasizing that tax rates would not increase from current levels.
Davis’ plan “would delay additional tax changes until public education funding is returned to pre-recession levels,” Chris Pumpelly, spokesman for Davis, said in an e-mail. “Unlike the Brownback experiment, the Davis proposal does not raise tax rates on a single Kansan.”
The Davis campaign accused Brownback and other Republicans of ignoring a looming fiscal crisis.
“If he doesn’t like the commonsense approach I offered to clean up his mess, I welcome him to take responsibility for his mistakes and offer a plan of his own that addresses the budget crisis,” Davis said in a statement.
Several economists and policy analysts have predicted that the state will be forced to make budget cuts or increase taxes.
Brownback has asserted that the state will see enough job growth to cover the shortfall, promising that the state can gain 25,000 jobs each year over the next four years.
Ken Kriz, an economist at Wichita State University, noted that the state’s annual job growth going back to 1980 is about 12,500 jobs a year and that growing at double that rate four years in a row is unlikely.
“We haven’t hit that kind of job growth in Kansas since the 1990s,” Kriz said. The state saw more than 26,000 new jobs in 2007, but that’s the only year in the past decade that jobs have grown at such a rate, he said.
“There’s no guarantee it’s going to happen, so budgeting on the basis of it is a bit like budgeting for striking gold. It’s not very responsible to be budgeting as if it’s going to happen,” Kriz said.
Milburn said the Brownback campaign remains confident that this growth is feasible and will cover the projected shortfalls.
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