Even after the state’s historic $1.1 billion income-tax break, a new Kansas Chamber of Commerce poll of CEOs found strong demand for more tax cuts. If that priority prevails at the Statehouse, then the public schools, universities, social services and other budget areas hoping for restored funding could be out of luck.
You would expect more evidence of gratitude by now for the 2012 tax cuts, which ended state income taxes for nearly 200,000 companies as of last year and lowered personal income-tax rates on what Gov. Sam Brownback vowed would be a “glide path to zero.” The governor and Legislature intended the reform as a fast-acting way to help businesses and to bolster economic and population growth.
And after all, as Wichita certified public accountant Gary Allerheiligen noted at a small-business forum this week in Kansas City, Kan., “Many small businesses in Kansas can now say, ‘I am no longer a Kansas taxpayer.’”
But in the poll of 300 executives and owners of mostly small businesses, conducted in November and December, 57 percent said they paid too much in state and local taxes (up from 50 percent for 2012 and 55 percent for 2011 and 2010) and 64 percent said they thought it would help the economy to lower taxes. Asked for the top two issues affecting their profitability, 40 percent of those polled said lower business taxes – 10 percent more than last year.
Maybe executives have just been too busy running their businesses to notice the state tax cuts yet, or too distracted with anger over their higher federal tax bill.
Maybe the Topeka action on income and sales taxes the past two legislative sessions heightened business owners’ awareness of their tax burden – and the troubling reality that the governor and lawmakers, fighting to cover spending obligations, dropped the statewide sales tax only to 6.15 percent last year, rather than to the scheduled rate of 5.7 percent.
Or maybe the benefits of the income-tax cuts for business are being blunted by local property-tax hikes that have occurred – not coincidentally – across much of Kansas in response to state funding cuts to local governments. In the poll, questions about “possible revenue sources for the state” found the greatest opposition to increasing property taxes (91 percent), followed by income taxes (87 percent) and the statewide sales tax (75 percent, up from 64 percent opposition in 2012).
Whatever is behind the surge in interest in tax cuts, chamber president Mike O’Neal sees it as a signal to keep pushing for lower taxes while ensuring the recent cuts aren’t rolled back. “We aren’t done. We’re on a track to continue to reduce,” O’Neal said in a conference call with state media. “Not only should we play defense and make sure that’s not undone, we need to keep plowing ahead.”
And what the Kansas Chamber wants from the Legislature, it tends to get.