Friday, November 28, 2014

HAWVER: Brownback, Davis: tax fight?

By MARTIN HAWVER, At the Rail | 8/25/2014

Some intensive shadowboxing may be about to break out in the so-far relatively bloodless fight between Republican Gov. Sam Brownback and Democrat Rep. Paul Davis, Lawrence, for governor.

The latest: Brownback asserts that Davis’ sketchy call for freezing the state’s multiyear income tax cut regimen—apparently to avoid budget deficits—is essentially raising taxes.

Some intensive shadowboxing may be about to break out in the so-far relatively bloodless fight between Republican Gov. Sam Brownback and Democrat Rep. Paul Davis, Lawrence, for governor.

The latest: Brownback asserts that Davis’ sketchy call for freezing the state’s multiyear income tax cut regimen—apparently to avoid budget deficits—is essentially raising taxes.

Earlier: It was Brownback who campaigned against letting the three-year penny sales tax increase expire on July 1, 2013, because he needed the money for education, and…to pay for an income tax cut bill that the Legislature wildly inflated above Brownback’s proposal.

So, who increased taxes and who proposes to increase…err…not continue cutting...taxes?

Both of them.

Is stopping a reduction in the state sales tax rate raising taxes? Is proposing to stop a future reduction in state income taxes raising taxes? You decide.

There is an interesting little twist with the income tax issue. In 2012, the Legislature did the massive income tax cuts that the state couldn’t afford. So, the next year, lawmakers who wouldn’t let the sales tax just fade away instituted a regimen of “haircuts” for income tax deductions.

Those deductions are available to Kansans who itemize their income taxes and those deductions were given a progressive “haircut.” So, the interest on your mortgage that used to be a dollar-for-dollar write-off against taxable income was reduced by 24 percent last year, and will be cut by 40 percent this tax year, and into the future, under the still murky “Davis freeze.”

The governor-led effort to keep the sales tax alive back in 2013 didn’t go entirely the governor’s way. Remember: The state sales tax in 2009 was 5.3 percent; it was raised by a penny to 6.3 percent for what was written into statute to be just three years. (Oh, a dab of that penny, 0.4 percent —that’s four cents for each taxable $10 in purchases—was earmarked for the highway department in perpetuity.)

The sales tax is now 6.15 percent, not the 6.3 percent Brownback wanted. Did Brownback raise sales taxes, or could we say he cut taxes by signing off on the sales tax continuation that was less than he wanted?

This little scrap over taxes, who raised them, and when does have an interesting little side issue that the Brownback campaign cleverly noted.

While the tax-cut freeze that Davis is proposing hits everyone, the “haircut” provisions of current tax law are also frozen. This means that higher-income taxpayers who itemize won’t see the value of their deductions shrink any further. Which means, ironically—but factually—that freezing tax cuts actually benefits the wealthier itemizers by not further reducing the value of those deductions.

Imagine that? Davis panders to the wealthy. Or, at least that’s how the Brownback campaign has characterized it.

This little tax fight probably isn’t the issue that will send most Kansans to the window ledge to agonize over whom to support for governor.

There are schools and social issues and economic development and probably even the proper deportment when you live in the same county as a Lesser Prairie Chicken to rend our garments over.

But, it’s a start, and does anyone else think this little campaign to see who sleeps at the governor’s mansion might turn out to be fun for those of us who sleep in our own beds?

Martin Hawver is publisher of Hawver’s Capitol Report. Visit his website at www.hawvernews.com

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