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Low- and middle-income families in Kansas pay a much higher share of their income in state and local taxes
than do the richest Kansans, according to a new study by the Institute on Taxation & Economic Policy.
State and local governments are being called upon to take on more and more responsibilities, said Robert
S. McIntyre, ITEPs tax policy director and lead author of the study, titled Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. Unfortunately,when it comes to paying for services, Kansas has an unfair tax system.
Kansas Tax Code: Tax the Poor & Middle Class More Than the Wealthy
When all Kansas taxes are totaled up, the study found that:
- The state and local tax rate on the best off one percent of Kansas families
with average incomes of $781,000 is 8.0% before accounting for the tax savings from federal itemized deductions. After the federal offset, the
effective tax rate is only 5.7%.
- The average tax rate on families in the middle of the income distributionthose
earning between $27,000 and $44,000 is 10.4% before the federal offset and about the same after, nearly double the effective rate on the
best-off one percent.
- But the tax rate on the poorest Kansas familiesthose earning less than $14,000 is the highest of all. At 11.5% it is more than double the effective rate on the very wealthy.
Kansass income tax fails to offset the regressivity of its sales and excise taxes, giving the state a
regressive tax system, McIntyre said. Taxes ought to be based on peoples ability to pay them, which means that the share of income paid in taxes should rise as income grows, not fall as is the case in Kansas.
Who Pays? examines the tax systems of all 50 states and the District of Columbia, using the Institute on Taxation & Economic Policy Microsimulation Tax Model. The ITEP Model is similar in methodology and data sources to the elaborate computer models
used by the U.S. Treasury and the congressional Joint Committee on Taxation, except that the ITEP Model adds state-by-state estimating capabilities.
The findings published in the study detail state and local taxes paid by non-elderly couples and
individuals. The study includes all major state and local taxes: personal and corporate income taxes, property taxes, and sales and excise taxes.
Tax Regressivity Has Worsened Since 1989
The study also examined the impact of changes in the regressivity of Kansas taxes since1989, when the last cycle of state government shortfalls began. The studys findings include:
- Effective
tax burdens rose across the board, but they increased far more heavily on thelow- and middle-incomes than on those with the highest incomes.
- Substantial increases in the state and local sales taxes and rises in excise taxes drove up tax burdens on the poor and middle class.
- The elimination of the deduction for federal income tax paid and higher tax rates overall raised income tax burdens on higher-earning Kansans.
Low- and moderate-income Kansans were forced to take the money they saved from cuts in income taxes and
pay it right back in higher sales and excise taxes, said McIntyre. As lawmakers consider budget-balancing strategies in 2003, they should remember that their past actions have served to shift a greater share of the
tax burden onto low-income taxpayers.
The Institute on Taxation and Economic Policy is a nonpartisan Washington-based research group. The full Who Pays? report is available in PDF format at www.itepnet.org.
Printed copies can be ordered by calling ITEP at 202-737-4315.
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