Gov. Sam Brownback announced a plan to eliminate income taxes for 388,000 low-income Kansans on Saturday.
However, a large chunk of the people being counted by Brownback – 113,000 – already benefit from the Earned Income Tax Credit, meaning they do not pay any net income tax to the state and actually receive money back – about $45 million collectively for the most recent tax year.
Secretary of Revenue Nick Jordan said in an e-mail that people who receive the tax credit would still see an additional benefit from Brownback’s plan, because they would still receive the credit but wouldn’t face any income tax offsetting it, meaning their credit would be worth more.
Brownback’s plan means that 275,000 people currently paying a net tax on their income will have that tax eliminated, according to Steve Stotts, the Kansas Department of Revenue’s director of taxation. Eliminating their income taxes will cost the state about $19 million.
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Brownback’s proposal to eliminate taxes is a part of a larger tax package that would also increase sales taxes from 6.15 to 6.65 percent and eliminate most income tax deductions. It is meant to fill the state’s $400 million budget hole for fiscal 2016, which begins in July.
It also comes at a time when Brownback has been trying to defend a controversial tax break for the owners of limited liability corporations and other businesses, which took more than 330,000 business owners off the income tax rolls.