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![handle is hein.taxfoundation/ffdhexz0001 and id is 1 raw text is: t UsNOAT, ON]F scal ]Fact
June 19, 2013
No. 374
Kansas 2013 Tax Reform Improves on Last
Year's Efforts
By
Joseph Henchman & Scott Drenkard
Kansas Governor Brownback has signed a H.B. 2059, modifying the tax reduction package passed last year.
Last year, the governor sought a comprehensive tax reform, lowering income tax rates while eliminating
deductions. The plan, while raising the standard deduction and restructuring the income tax into two tax
brackets (with rates of 3 percent on the first $30,000 of income and 4.9 percent above that), ultimately fell
far short for two reasons. First, the bill (H.B. 2117) included no base broadening, leaving a large revenue
hole of approximately $800 million per year with no spending cuts concurrently enacted to close this gap.
Second, the bill completely exempted income earned from pass-through entities, an unjustifiable carve out
which creates a significant likelihood of tax avoidance.
The plan enacted this year mostly addresses this gap. While the bill is a tax increase, the combined effect of
both years' bills remains a net tax cut. Elements of this year's bill include:
Lowering income tax rates even further (see Table 1), ultimately to 2.3 percent on the first $30,000
of income and 3.9 percent on income above that.
Sets the sales tax rate at 6.15 percent beginning in July 2013. At first glance, this seems like a tax
cut, as the sales tax was 6.3 percent. However, the tax had been scheduled to drop to 5.7 percent in
July 2013.
Reduces the value of itemized deductions by 30 percent this year and by 5 percent per year until
2017 when they will be reduced 50 percent permanently. The charitable deduction is an exception
to this treatment and will remain fully deductible.
* Decreases the standard deduction for married fliers filing jointly ($7,500) and heads of household
($5,500), down from $9,000. The amounts are still higher than pre-2012 law ($6,000 and $4,500,
respectively).
* Restores the low-income food tax credit.
* Ends the itemized deduction for gambling losses.](ViewImageLocal?handle=hein.taxfoundation/ffdhexz0001&div=1&collection=&method=preview&ext=.png&size=3)