Friday, June 12, 2015

Tax Analysis Part 3: House Tax Plan June 12th

This morning my Twitter/Facebook feeds were littered with friends very upset about the Kansas legislature.  Again.  Essentially the story goes like this:
  • The Kansas House passed what is described as the "largest tax increase" in Kansas history.
  • It was passed at 4am, after putting massive pressure on a few legislators to change their votes.
  • It is mainly a change to sales tax, which is described as making Kansas one of the most regressive States in the country.
  • It was passed after threats by the governor to massively cut university budgets, including university athletics.
That's the story people are telling at least.  But this isn't a political blog, this is a numbers blog.  What will the new tax plan do to average citizens?

METHODOLOGY

It's been a long week, and I'm tired, so not many words here.  If you want a methodological description look at this prior post.  If you want my disclaimers, and additional analysis of food sales taxes, look at this other prior post.

If you're not a tax nerd, skip to results.

Here are my general assumptions, given my reading of last night's bill:
  • Sales tax goes from 6.15% to 6.5% (slightly less of an increase than prior proposal)
  • No reduction of food sales tax (food taxed at 6.5%)
  • No significant change to most people's income tax rates.
These are my "new" general assumptions, and my prior posts contain other assumptions and disclaimers. Once again, let me know if you find any of these to be in error, or would like me to run the numbers under a different set of assumptions.

RESULTS

Once again, not a lot of words this morning, but of all the proposals, this is the most regressive option.  Major factors: food sales taxed at full rate and no change to highest bracket income taxes.

Here is an updated chart of the tax change.  The gray line indicates the shift in tax burden (measured by increased tax bill) by income level:



And my ever growing matrix:

CONCLUSION

Once again, the most regressive option was passed, especially with the removal of food sales tax. Whether this plan benefits you (err, is better than other options)  largely depends on your income level. And now we wait for the Kansas Senate.

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