During the 2012 Legislative Session, Gov. Brownback signed a reckless and unsustainable tax plan into law. The new law cut the top tax rate for the wealthiest income taxpayers from 6.45% to 4.9%. It repealed income taxes altogether for 191,000 partnerships, sole proprietorships, and other businesses, or so said original estimates. Today, we know that more than 330,000 business owners are totally exempt from Kansas income tax.
Additionally, the plan eliminated the food sales tax rebate, the homestead property tax refund, and the child care tax credit. The thought was these would help pay for the tax breaks for the wealthy. In reality, it shifted the burden to thousands of low- or fixed-income Kansans.
In 2013, Gov. Brownback continued his “glide path to zero” by slashing income tax rates over the span of four years. This plan also increased sales tax from 5.7% to 6.3%, and included reductions to standard deduction levels and select itemized deductions as a means to pay for the cuts.
However, as revenue started coming in well below estimates in 2014, it became clear that there was nothing to offset the loss of revenue from the substantial cuts to the income tax rates. Even with the passage of the tax plan during the 2015 Legislative Session, revenue continues to come in short of the estimates. This is what is creating the continuous budget shortfalls.