The bill, which the GOP-dominated legislature passed by overriding Brownback's veto on Tuesday night, will increase taxes for taxpayers of all income levels. It eliminates some of the benefits the rich enjoyed under Brownback's policies and raises their rates, while also raising taxes on the poor.
Had Brownback's policies not been enacted, poor Kansans could expect to pay the state about 9.8 percent of their income on average in taxes, while the very rich would be paying about 5.5 percent. Now — after this year's tax increase — the richest will pay 4.8 percent, while the poorest will owe 11.8 percent.
“When you look at that picture, the full picture of where we’re at now — where we would have been had policy never changed — you’re still going to see the top 1 percent actually come out looking better,” said Meg Wiehe, the institute's deputy director.
These figures refer to the share of income paid in taxes by different households, not the amount in dollars. Because wealthier taxpayers make so much more, the amounts they pay are much greater than what the poor pay in terms of dollars — even though they are paying less relative to their income.
The disparate tax burdens stem in part from the fact that Kansas relies on sales taxes for much of the state's revenue. Sales taxes are disproportionately paid by the poor, who spend more of their income on ordinary goods, which often are taxed. The rich, by contrast, can save more of their money or spend it on services, whether to hire lawyers or have their houses cleaned. Those expenses are rarely subject to sales tax.
Not all taxpayers will pay more under the new plan than they have been under Brownback. The bill restores some of the deductions and credits that Brownback had eliminated — such as a break for child-care expenses and a write-off for mortgage interest.
Brownback argued that cutting taxes for households and businesses would stimulate the state's economy, and because more Kansans would be working and investing, there would be more income for the state to tax. But economic growth in Kansas has lagged behind national rates, and when the promised boom didn't materialize, the state was short on cash. Looking to close some of the gap, Brownback and the state legislature increased the sales tax in 2015, adding to the burden on the poor.
Brownback reduced the number of brackets for the tax rate on marginal income from three to two — giving wealthy taxpayers a big break by allowing them to pay the same rate as people in the middle class. He also created a new break to foster small business, but analysts say rich residents of the state have been able to pretend to be small businesses to shelter their incomes from taxes, turning that break into a loophole.
The legislation enacted over his veto eliminates the break for small business and restores the third tax bracket. The maximum marginal rate, however, will still be well below what it was when Brownback took office.
The richest household in every 100 will pay about 1.7 percentage points more as a result of this week's vote — an average of $31,000 more a year. That is a major increase in taxes on the richest, but it amounts to only about two-thirds of Brownback's cuts for that group.
And the bill does not bring the sales tax down to pre-2015 levels. Instead, it includes other provisions that will modestly increase taxes on some households among the poor and the middle class.
The marginal rate on their incomes will be increased. Also, married couples earning less than $12,500 are generally exempt from paying taxes now, but that threshold will decline to $5,000.
In total, the new legislation will increase the share of their income the poorest household in every five pays in state taxes by 0.1 percentage points on average.
Among Kansas's middle class, the share the typical household pays in state taxes will increase by 0.3 percentage points, or an average of $160 more annually. Overall, the new law increases taxes for about three quarters of middle-class households in Kansas. Others will benefit when deductions and credits for child-care, mortgage payments and other expenses are restored.
Correction: An earlier version of the chart accompanying this post was inaccurately labeled. The bars represent the share of all state taxes paid in Kansas, not state income taxes only. This version has been corrected. Additionally, the corrected version reflects revised data from the Institute on Taxation and Economic Policy.