Kansas has a giveaway problem, and a solution might be harder than you think.
Our state is losing $6 billion per year through tax credits and sales-tax exemptions. That number drops to about $1.2 billion once mandatory giveaways from the federal government or double taxation is included.
But the amount still starts with a B.
Just think what $1.2 billion could do for a state budget – or every Kansan’s checkbook if taxes were reduced for all of us rather than select groups.
If only it were that simple – kill the giveaways and use the added revenue for fixes or to cut taxes for everyone.
But then you would be paying sales tax on your utility bill. And when buy a home. And at the gas pump.
Many sales-tax exemptions and tax credits are necessary to ease the burden on Kansas residents, as well as businesses that use the incentives to compete with businesses in neighboring states.
So let’s fix what can be fixed.
Rep. Kathy Wolfe Moore, D-Kansas City, told The Eagle’s Jonathan Shorman, “I think it would be an accomplishment if we just didn’t add any more.”
That’s a good start. Lawmakers should strive to keep new credits and exemptions off the books. They should realize that sales-tax exemptions – which tripled in the last 31 years – have increased in recent years and need to be reined in.
The next step is better oversight of what’s already at work. A report last year by Pew Charitable Trusts, plus a state audit, found that Kansas lags behind many states in ensuring tax incentives are being used well.
Kansas doesn’t routinely produce evaluations of tax incentives, so there’s little way of telling if they’re effective or if they’re giving consumers an extra break on a purchase they would’ve made without the incentive.
It’s up to the Legislature to prioritize the importance of being accountable and fair with tax credits and exemptions. Previous attempts at curtailing the number of exemptions have failed, and a legislative committee studying incentives has proposed creating a bill calling for regular evaluation of incentives. No bill has been submitted.
At the very least, there should be bipartisan support for creating a better oversight system of giveaways. State auditors should be able to look at the exemption process and determine which incentives are working and which are fair. Any trimming of giveaways that could help the state’s financial picture or leave more money in the pockets of all Kansans is worth a look.