Kansas’ unexpectedly quick passage of major tax cuts this past month put the state ahead of many of its like-minded neighbors.
The findings are in a report by the Tax Foundation, a nonpartisan Washington D.C. research organization.
How long the state might stay ahead of those neighbors isn’t clear, though, said Mark Robyn, economist and state tax policy specialist for the foundation.
“I didn’t think Kansas would pass all the cuts it proposed this year, which may tell you something about my policy forecasting ability,” he said.
Even so, Kansas legislators passed, and Republican Gov. Sam Browback signed, legislation for big tax cuts. The legislation cuts the top rate Kansans pay on income taxes by almost 25 percent; ends as scheduled a temporary sales tax increase passed in 2010; and abolishes many business income taxes entirely for taxpayers who report that income on their personal income tax returns.
Backers say they intend to eliminate Kansas income taxes entirely.
But Kansas’ cuts are just one set among several tax-cut plans Midwestern states envision.
Oklahoma is considering some Kansas-like rate reductions, though Republican Gov. Mary Fallin said in an interview that work on the biggest cuts may be delayed until next year.
Missouri proposed a ballot initiative that would have eliminatined its state income tax and replaced it with higher sales taxes. That proposal was taken off the ballot after a state district judge ruled proposed descriptions of the rule were misleading.
Indiana is phasing out inheritance taxes, and plans to eliminate them entirely by 2021.
North Dakota voters are deciding today whether to amend the state constitution to abolish property taxes.
If all those proposals become reality, an income-tax-free zone could extend from Texas north through Oklahoma and Kansas and east into Missouri, the Foundation report said.
It also is hard to say just how deeply these plans will reduce taxpayers’ burdens, Robyn said.
“As those tax revenues disappear, the question is whether states will reduce spending or simply look for an alternative tax,” he said. “If the burden just shifts to other taxes, it really isn’t a cut at all.”
As a group, state legislators nationwide reduced more taxes than they raised in 2011, just before Kansas and the other Midwestern states began honing their tax knives, the National Conference of State Legislatures in Denver reported in its latest survey of state capitol trends. But most of those cuts were temporary increases that expired on schedule.
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