Kelly’s tax rebate sets a worrying trend

Food sales tax relief plus a tax rebate would amount to almost $900 million. Echos of former Gov. Sam Brownback's fiscal policies are haunting.

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Editorials

December 27, 2021 - 12:37 PM

Gov. Laura Kelly was the bearer of good news Wednesday, July 13, 2022, when she announced Panasonic will create 4,000 jobs and invest $4 billion in a new plant in De Soto designed to create lithium-ion batteries.

Kansas Gov. Laura Kelly played not-so-Secret Santa Wednesday, offering a one-time plan to put $250 in the hands of virtually every state income tax payer next year.

“We can return money to taxpayers and give every Kansas resident who filed taxes in 2021 a $250 rebate,” she said in a statement. “These are significant savings for every family.”

It’s the second time in recent weeks the Democratic governor has suggested a big tax adjustment in Kansas. Earlier, she offered a plan to permanently eliminate the 6.5% state sales tax on food.

Is it rude of us to point out that these Kelly tax cuts and rebates just happen to take effect in a year when she is seeking reelection? It would be accurate. Nothing brings on tax cut fever like the prospect of a ballot box.

Like everyone else, we’d welcome a $250 check in 2022 ($500 for couples filing jointly.) And we certainly appreciate Kelly’s overall approach of cutting the tax burden for lower- and middle-income Kansans, not the wealthy who don’t need the help.

But Kansas must be very careful. Republican lawmakers will almost certainly want to put additional tax cuts and tax reform on the table next year, including property tax relief, permanent income tax cuts and new tax benefits for corporations.

Now we’re talking serious money — and the potential for serious harm for the state. Kansas has spent the last three years digging out of the disastrous Sam Brownback tax experiment, and it would be foolish in the extreme to repeat the mistake in 2022.

The tax rebate would cost the state $445 million next year, the governor says. Ending the state sales tax on food would cost around $450 million in lost revenue. That’s almost $900 million less to pay for education, mental health services, law enforcement and other needs in the state.

Kansas, like most states, can probably afford it — once. Low unemployment, a relatively strong economy and robust federal assistance have fattened the state’s bank accounts by more than $1 billion over earlier estimates.

And, generally speaking, states should never collect more money than they actually need to run their government. In most cases, giving surpluses back is a good idea.

But it’s hard to stop the momentum once slashing taxes is on the table. A major package of corporate tax cuts, and property tax relief, could add another $500 million or so to the cost of the plan. Make no mistake: the Republicans who control the Legislature will almost certainly bake all the tax goodies into one giant fruitcake for the governor to consider.

Serious caution is in order. Inflation will grow the cost of goods and services to everyone, including the state of Kansas. State workers will ask for raises. Keeping teachers is increasingly difficult.

COVID-19 remains a stubborn menace which could cause the economy to contract next year. And Kansas still faces problems with antiquated technology, underfunded schools and delayed capital improvements. Fixing those issues will take money.

For years we have argued for the elimination of the Kansas sales tax on food. A one-time tax rebate to working families also seems acceptable. If Kansas can simply enact those two ideas, and stop, the state will be better for it.

But memories of the Brownback disaster are growing dim. Do you remember? Late-night legislative sessions. A threat of closed schools. Slumping pensions and crumbling highways. It was a nightmare.

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