The income tax reduction plan is now modified, and there are now more details than when I wrote in last week?s column.
First, the tax rates: The reduction is the same as reported last week, but it will take until 2017 for the top tax rate to drop from 6.45 percent to 4.9 percent, thus delaying the cliff we will fall off, but the cliff will still be there. I now know that the low tax bracket will be lowered immediately from 3.5 percent to 3 percent.
Second, we also know that people who claim both the earned income credit and the food sales tax credit would have to choose which one they?ll take; they can?t get both if this bill passes.
We now know what constitutes ?business income? in this plan. It echoes Gov. Brownback?s plan: Business income would include all income on Schedule C (sole proprietors), on Schedule F (farmers), and nearly all on Schedule E.
The press reports suggested merely that Schedule E income from partnerships and sub-chapter S corporations would be included as business income, but we now know that all income (except for estates) on Schedule E is exempt?house and apartment rental income, farm rental income, oil and gas royalties and all.
At first, $100,000 of this ?business? income will be exempted, then $250,000 of it, and finally all of it will go away on a person?s personal income-tax return. At that time, only W-2 income, interest and dividends, capital gains, and depreciation recapture will be taxable.
If this is to be business friendly, I fail to grasp why recapture of depreciated business property is left out, yet rental/royalty income is touted to ?spur the economy and create jobs? for us.
I hope an ulterior reason for this tax plan isn?t so folks become so disgusted in a few years at the convoluted disparity in our income tax code that we?ll all demand it be repealed. Then we?d have to rely on property tax, sales tax and the lesser taxes and fees, which I still think is a bad idea.
There?s a line on partnership and sub-S corporation tax forms called ?ordinary business income,? and is really easy to spot on the forms. It would be easy to exempt that which the tax plan represents to be its purpose. Besides being true to the stated purpose of the tax plan, it would have the additional impact of helping us avoid falling off the cliff.
If you hope I?ll vote for the tax plan proposed by the tax conference committee?described here and in last week?s column?please let me know now. So far, no one has.
So far all of you have been clear: None of you like this income-tax plan. So far, you?ve pointed out it?s unfair, won?t deliver what it promises, risks pushing Kansas off a cliff financially and will hurt schools and the poor.
On another matter, we still have no redistricting maps passed, and there?s a lot of fighting over them.
We also have no budget yet, but there?s hope we?ll finish that up this week. I believe the Senate has already passed its budget, and we?re likely to talk ours over Monday and Tuesday.
To read more about the redistricting maps, I suggest you read the Salina Journal and the Topeka Capital Journal. If the Wichita Eagle would deliver to Marion and Chase counties, I?d suggest you read it, but….
These papers have extensive coverage of the redistricting troubles, including this last weekend, and they?re all available online.
You may e-mail me at: Brookens70@sbcglobal.net or write me at 201 Meadow Lane, Marion, KS 66861, or call me at 620-382-2133. We now have no office assistants in Topeka, so you?ll go potluck calling me in Topeka. My Marion office staff should be able to find me.