Report on Governor's Council on Tax Reform

Posted Date: 03/29/2022

By John Forrer, KASB Advocacy Intern 

On March 7th, Donna K. Ginther, PhD, and the Kansas University Institute for Policy and Social Research released the Report of the Governor’s Council on Tax Reform. The report compared Kansas income, sales, excise, and property taxes to those of other states. Additionally, the report also provided a hypothetical taxpayer analysis of proposed legislation impacting income, property, and sales taxes.  

Kansas Income Tax 

According to the report, married Kansas tax filers with two dependents earning $45,000 a year would pay $419 in Kansas income tax but would receive $6,907 in federal tax credits. The report states that this is because Kansas has eliminated low-income tax credits and has reduced the progressivity of its income tax.  

Last year, Kansas legislators passed SB 50 which included an individual itemization provision for the state income tax. Ginther estimates that the hypothetical Kansas family of four will likely save between $170 and $230 on Kansas income taxes and about 18,000 taxpayers would benefit. 

Property Tax 

The report states that per capita property taxes range from $1,021 in Geary County to $6,169 in Coffey County. On average, Ginther found that Kansans earning $50,000 a year pay around 3.7 percent of their income in property taxes. This number decreases to 2.4 percent for those earning $150,000 per year.  

The report recommended various bill proposals, including the expansion of the $20,000 homestead exemption from the statewide mill levy and the expansion of the property tax circuit-breaker, to help alleviate rising property taxes.  

Sales Tax 

The report found that the average combined state and local sales tax rate in the United States ranged from 1.76 percent in Alaska to 9.55 percent in Louisiana; Kansas’s statewide average is relatively high at 8.7 percent. This equates to a per capita sales tax of $1,527 which is higher than all comparison states considered in the report. Furthermore, Kansas is one of only 13 states that taxes food products. Of the 13 other states that do tax food products, Kansas has the second highest tax rate.  

According to the analysis, HB 2720 (also referred to as Axe the Food Tax), which eliminates the state sales tax on food products, could save the average Kansas family of four about $500 per year.  

Alternatively, HB 2711, which reduces the food sales tax to 3.5 percent for the first year with a potential 1.2% decrease in subsequent years, could also provide tax relief. In addition to the lower tax rate, the report found that low-income households (<$30,615) with two dependents could have $232 added in refundable tax credit. However, low-income households without dependents would not receive this tax credit.  

The tables below show Ginther’s estimated sales tax savings for two hypothetical taxpayers, one filing jointly with two dependents and one filing single with no dependents. 

Conclusion 

Among many other findings, the report found that for single and married Kansans without dependents, state and local taxes are regressive. Conversely, state taxes are flat for married Kansans with dependents.  

At the end of the report, The Council provided a list of conclusions and recommendations: 

• Given the sharp increase in housing prices, property taxes may become a pressing issue 

• Both HB 2711 and HB 2720 reduce the food sales tax, but HB 2711 would provide more relief 

• The Council strongly opposes any new constitutional restrictions on state or local taxation or spending authority 

To read the full report, click here.