Tax cut semantics is no game

By Rod Haxton, editor

You and your teenager had a recent discussion about raising their allowance and you agreed that it would happen in another month.

In the meantime, however, your car broke down and you need to pay the repair bill, so your teen’s allowance hike has been put on hold.

Here’s the question: Did you teenager just take a pay cut?

Most reasonable people would agree you can’t “cut” something which never occurred. In politics, however, reasonable thinking is on permanent vacation when it comes to taxes.

If, for example, the governor promises to cut the state sales tax, but doesn’t, is that a tax increase?.

What if you were promised an income tax reduction and that reduction didn’t happen? Is that a tax hike?

Two identical situations, so one should reach identical conclusions, right?

The answer to both questions is a likely indication of which side of the political fence you’re on.

We saw the first act in this political drama played out in 2012 when Gov. Sam Brownback signed into law several tax cut provisions that included reducing the state sales tax from 6.3% to 5.7%. The original plan was to reduce the sales tax to 5.3% (where it was prior to 2010) but some legislators wisely thought that might be a bigger financial hit than the state was prepared to take.

At the time, Rep. Paul Davis was critical of Brownback, claiming that by not reducing the sales tax as much as originally promised, the governor had increased taxes by $777 million.

Of course, it wasn’t a tax increase. But it made for good political theater.

We now enter act two of the tax cut drama.

Rep. Paul Davis - now gubernatorial candidate Paul Davis - is proposing a freeze on income tax cuts which have been approved by the governor and the legislature, and slated to go into effect in 2016 and 2018. Davis made the proposal in response to declining state revenue and projections that the state will be $238 million in the hole by June 2016.

It should come as no surprise that the Davis proposal has been characterized as a tax hike by the Brownback Administration. If Davis gets his wish, the Brownback team says it will mean “a 17 percent tax increase on the poorest Kansans,” according to John Milburn, a spokesman for the campaign.

Turnabout is fair play. We get it.

Both camps have had their opportunity to play politics with tax cuts and wag an accusatory finger at the other for doing . . . or wanting to do . . . the unthinkable.

Putting politics aside for a moment, the reality is that Kansas is in deep financial trouble. We got into this mess because Brownback and conservative lawmakers took extreme measures to cut tax revenue with the belief that it would provide an economic mecca in the Midwest where businesses and employees would flock and the influx of both would provide a huge financial boom for the state.

It’s been called Reaganomics. It’s been called, by Brownback, a “real live experiment.” Call it what you will, it hasn’t worked in the past and it isn’t working now. The only thing which has prevented the state from falling into deeper economic chaos has been a willingness by local units of government to compensate for state revenue cuts by increasing property and sales taxes at the local level.

 

Counties, cities and school districts have been able to soften the impact of the state’s poor policy decisions and maintain the services that people expect. They are doing their best to maintain infrastructure, keep schools open, pay teacher salaries and, in the case of Scott County, offer driver’s license exams in the wake of state budget cuts.

Brownback and fellow legislators want to pretend that everything’s still okay. School funding is better than ever, they like to claim. Business growth is off the charts. The great experiment is not only working, but will only get better so long as we keep cutting taxes.

Local units of government know better. They quit drinking the kool-aid long ago.

But there is only so much that can be done at the local level. They are limited in their ability to help those who are not just falling through the proverbial cracks, but are being pushed out the door by the state. The number of poor families receiving income support from the Temporary Assistance for Needy Families (TANF) program has declined 41 percent since 2012 - not because the need is less, but as a result of policy decisions that make it more difficult to qualify.

That assistance is now either filled locally or not at all.

State aid for schools is 17 percent below pre-recession levels. Local taxpayers are doing their best to fill this gap, but there is a limit to the amount of funding they can provide.

It’s only going to get worse.

Tax cuts this year are costing the state about eight percent of the revenue it would be using to fund education, health care and other public services. If those tax cuts are not reversed, state data shows the revenue loss will climb to 16 percent in five years.

That is not sustainable.

This reality affects the quality of life in Kansas, the quality of our schools and our ability to help others who are at risk because of a failed experiment.

Campaigns can play the game of “When is a tax cut really a cut and when is a tax hike really a hike?” but what’s happening to Kansans is no game. The consequences of the Brownback experiment are real.

If it takes a tax hike to fix what’s wrong . . . and it will . . . then let’s call it what it is and get it done. Most of us are adult enough to understand.

It’s not just the right thing to do, it’s the only thing.

Rod Haxton can be reached at editor@screcord.com

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