Tax Reform in Kansas for 2012 Steven J. Anderson, CPA, MBA Director of the Budget.

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Presentation transcript:

Tax Reform in Kansas for 2012 Steven J. Anderson, CPA, MBA Director of the Budget

Do Personal Income Tax Rates Matter?

Source: Kansas Department of Revenue

Source: Internal Revenue Service Kansas lost a net total of 9,490 residents to surrounding states Kansas Net Resident Migration Number of People

What is in HB Eliminate non-wage income for PIT 2.Reduce income on the first $30,000 for married & $15,000 for individuals from 3.5% to 3.0%. 3.Eliminate the 6.25% rate and reduce the 6.45% on income over $30,000 for married & $15,000 for individuals to 4.9% 4.Increase the standard deduction from $4500 to $9000 for single head of household filers and from $6000 to $9000 for married filing jointly 5.Eliminates the two year exemption on oil severance taxes for wells over 50 BBLs per day 6.Sale tax of.6 expires in July Keeps EITC & food sales tax credit but you must choose which one to retain 8.Keeps all Schedule A deductions

What actually happened to Total Receipts during tax cut years What should have happened to Total Receipts during the tax cuts using same KLRD estimation approach as applied to HB 2117 Actual Total Receipts Available for Appropriations Amount of Estimated Tax Cut per Year Actual Percent Change--Total Receipts Total Reciepts per year using KRLD 4% Growth assumption Less Estimated Tax Cut Per KRLD Approach KRLD Approach Estimate of Total Receipts Available for Appropriations Actual Total Receipts over what the KRLD model for estimating tax cuts would have predicted $ 3,218,807 $ 2,100 $ 3,218,807 $ 2,100 $ 3,216,707 $ 2,100 $ 3,448,272 $ 39, % $ 3,347,559 $ 39,000 $ 3,308,559 $ 139,713 $ 3,683,775 $ 69, % $ 3,481,462 $ 69,000 $ 3,412,462 $ 271,313 $ 4,023,683 $ 251, % $ 3,620,720 $ 251,300 $ 3,369,420 $ 654,263 $ 3,978,427 $ 634, % $ 3,765,549 $ 634,100 $ 3,131,449 $ 846,978 $ 4,203,075 $ 806, % $ 3,916,171 $ 806,300 $ 3,109,871 $ 1,093,204 $ 4,415,048 $ 898, % $ 4,072,818 $ 898,100 $ 3,174,718 $ 1,240,330 $ 26,971,087 $ 2,699,9005.5% $ 25,423,086 $ 2,699,900 $ 22,723,186 $ 4,247,901

Source: Kansas Department of Labor, Labor Market Information Services in conjunction with the Bureau of Labor Statistics 21% employees

Effect of the new tax bill 1.14 to 24 percent state income tax rate cut for all Kansans 2.Over two years (FY13-14), Kansans will keep $1.5 billion more in their pockets to save, spend, and invest ($1.1 billion in income tax; $385.5 million in sales tax) 3.Projected dynamic impact through FY 2020 o 22,900 new jobs on top of normal growth o $2 billion more disposable income on top of normal growth o 35,740 increase in population on top of normal growth