TOPEKA, Kan. (AP) – Brian Jones has been an admirer of Republican Sam Brownback’s fiscal conservatism going back to Brownback’s days as an anti-tax congressman in the 1990s. But now the real estate company owner from southeast Kansas finds himself in the odd position of fighting hard against the governor’s plan for phasing out the state income tax.
Brownback has been lionized by the GOP right for trying to end the personal income tax, something not accomplished by any state in more than 30 years. In his two years in office, he has aimed to make Kansas a national testing ground for conservative theories about economic prosperity.
But the push, which he began with a 24 percent cut in the top rate, now depends on wiping out deductions claimed by more than 300,000 homeowners. He suddenly confronts the conundrum that just because taxpayers want to get rid of taxes doesn’t mean they’re ready to give up favorite tax breaks.
“All of a sudden, on this one, he just kind of went off the deep end,” Jones declared at a recent Statehouse rally against Brownback’s proposals. The Kansas Association of Realtors spent $195,000 in January alone on ads against the idea, which the group charges would slam the industry as well as people eager to own their own homes.
The governor insists that everyone will save in the long run. But his latest tax proposals are now stuck in the Republican-controlled Legislature, and some of his allies are worried they could be changed or, even worse, enacted in a way that would trigger drastic cuts to state programs, especially schools, potentially discrediting his vision.Â Â Â Â
“Going from a slow-growth to a pro-growth state involves tax policy, and it’s difficult,” Brownback said recently.
Anti-tax crusader Grover Norquist said conservatives nationwide are avidly watching Brownback’s effort. “This is a completely new world,” he said. “There’s no shame in being slow in moving from the thing you’ve been doing for 30 or 40 years.
Brownback spent 16 years in Congress, most as a senator whose aw-shucks Midwestern manner softened a strong zeal for the supply-side economics of Reagan administration guru Arthur Laffer. Upon becoming governor, he began engineering a hard shift to the right for a state that had been led only recently by Democrat Kathleen Sebelius, now President Obama’s Health and Human Services secretary.
Under Brownback’s tax plan, the lowest income tax bracket would gradually decline from 3.5 percent to 1.9 percent and the top rate from 6.45 percent to 3.5 percent. Rates would plummet further toward zero if the state economy grows as he expects. His administration projects at least several thousand new jobs a year and a boost in the state’s population by 35,000 by 2020.
But last year’s tax cut was so aggressive that big budget problems loom unless Kansas cushions the fiscal blow. In addition to rate reductions, it wiped out taxes on many small business owners entirely. Scrapping the two homeowner tax breaks, plus extending a sales tax that was scheduled to expire, would raise about $490 million of the $850 million in revenue subtracted.
The Legislature is feeling the backlash about the homeowner deductions. A Senate committee voted to preserve the deduction for home property taxes. The full Senate expects to consider more changes next week.
The 56-year-old Jones, president of a family real estate firm that started in 1905 in his hometown of Pittsburg, said the money shouldn’t come at the expense of helping people buy houses and helping brokers like him sell them.
“We’ve helped him all the way through, and it’s kind of like, why? Why have you done this now?” Jones said.
Another Republican, Martha Atlas, 63, says the two deductions save her at least $700 in taxes a year on her three-bedroom ranch house in the Kansas City suburb of Prairie Village. She said she came to Kansas more than a decade ago in a downsizing move but “I’d move back to Missouri tomorrow if this went away _ no question,” she said.
Lawmakers could consider putting other tax breaks in the crosshairs, such as those benefiting religious or charitable groups, but those would generate their own political fires.
“Mathematically, something is going to have to give,” said Republican Sen. Jim Denning.
The governor’s administration contends that many homeowners would actually gain hundreds of dollars a year when the rate cuts are fully phased in. And that the state’s surging economic activity will make up the revenue from the rate cuts long term.
Laffer, who has been a consultant for Brownback’s administration, says the bountiful economic results of Brownback’s plan, along with others favored by Republican Govs. Bobby Jindal in Louisiana, Mike Pence in Indiana and Pat McCrory in North Carolina, will be evident after the new system is in place and working.
“We have huge amounts of experimentation going on at the state level that will make a huge difference with the federal government,” said Laffer.
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(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
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