Brownback and Taxing Principles
Emeritus Professor of Economics
About 40 years ago, Sam Brownback, a student at Kansas State University, enrolled in my public finance class. So I know that he once was exposed to the principles of a well-functioning tax system. As governor of Kansas, he has certainly not acted on them. Let me review what he should study anew.
• FAIRNESS is a concern now of many moderate Republicans, Democrats, business owners and much of the Kansas public. One aspect of fairness is equal taxation of people and businesses with equal incomes. Brownback’s policy violates this principle when a select group of business people pay no income tax while others with the same income pay their fair share. Both receive the same benefits from government.
Another part of fairness compares people in different income categories. Most citizens believe that low-income people should not pay a larger percent of their income in taxes than middle- and high-income people. The actions of conservative Republicans have turned this principle on its head.
As a result of recent tax changes (especially sales taxes), low-income people are paying more while high income people pay a lower percentage of their income in state taxes. A reduction in the sale tax on food would be a step toward equity and fairness. At the very least, legislators could restore the food tax credits for low-income people, which have largely been eliminated
• ADEQUACY is another part of a good tax system. Are taxes adequate to pay for the needs of the public sector? Our current tax structure fails that test. Our governor should not need a class to figure that out.
• RESPONSIVENESS of revenues to economic growth is a characteristic of an effective tax structure. Sales taxes, because they do not apply to many services, grow more slowly than the economy does. Income taxes, however, keep pace with an expanding economy. The Brownback administration and those of like mind are reducing the responsiveness of the Kansas tax structure by reducing income taxes and resorting to sales taxes.
We can easily note the need for responsiveness in the past and future. As we obtained more and faster cars, we wanted better roads. The public generally wants its public buildings to keep pace with amenities; we expect air-conditioning in the courthouse during the summer and automated record-keeping. As technology places more demands on the skill level of citizens, schools have greater expenses for labs, computers and software.
•EFFICIENCY is important too. Tax collection should be accomplished as cheaply as possible, and Kansas government probably achieves that. Another aspect of efficiency is achieving policy objectives as effectively and cheaply as possible. If we want to use the tax system to encourage businesses to expand and hire more people, then give a tax break only to those who demonstrate expansion and new hires.
Removing the income tax from all businesses, as done by Brownback and the conservative wing of the Republican Party, is grossly inefficient and an unnecessary expense.
If a student proposed the tax initiatives of the conservative wing of the Republican Party as answer to the assignment, “Design a fair and effective tax structure for Kansas,” that student would flunk.