TOPEKA, Kan. (KSNT) — The latest ‘flat tax’ proposal moving through the Kansas Legislature could save Kansans money, according to economic experts.
Senate Bill 169 (SB 169), which was requested to be introduced by Republican Senate Tax Chair Caryn Tyson, sets the state income tax to 4.75%. However, it also exempts the first few thousand dollars of income.
Washburn University Economics Professor Paul Byrne said the plan could lead to savings at every tax level, even if it’s just about $1.
“It seems to be as though it was designed with various cutoffs to make sure nobody’s tax bill goes up,” Byrne said.
Currently, Kansas has a graduated individual income tax. It ranges from 3.1% for people making less than $15,000 to about 5.7% for people making more than $30,000.
The proposal sets a rate of 4.75%, exempting the first $5,225 for single filers and the first $10,450 for people filing jointly.
“So, at about $15,000 per year, the amount you’re paying in taxes is pretty much the same as you were paying before. Anything below $15,000 a year, you’re paying less, and anything above $15,000 a year, you’re paying less as well,” Byrne explained.
Byrne crunched the numbers for Kansas Capitol Bureau last week. According to his calculations, higher income earners could see a higher dollar amount in savings; in the thousands of dollars. Low-income earners could also see savings, with the lowest amount coming to about $0.69 for people making about $15,000 in taxable income.
However, Byrne said the change could also lead to budget cuts elsewhere.
The state Department of Revenue estimates that the proposal could reduce state receipts by $170.4 million in FY 2024, $568.5 million in FY 2025, and $574.2 million in FY 2026.
“That’s the general balance to the economy. You can expand the private sector by lowering taxes, but the offset is the decline in government spending. We’re going to have less police officers or less money spent on schools, and there’s a trade-off,” Byrne explained.
SB 169 passed the Senate 22-17. It’s been referred to the House Taxation committee.