Proposing something you know won’t be passed is a standard political ploy, which is exactly what Governor Kelly is doing with her tax proposal that offers minimal income tax relief and does nothing to make Kansas more competitive and encourage people and businesses to stay. But she can claim she tried and blame the Legislature for high taxes when her so-called Middle of the Road PAC, funded by far-left Gov. J.B. Pritzker and union money, attacks Republicans in the 2024 election cycle.
House and Senate leadership want to go to a flat tax that gives everyone income tax relief with a 5.15% tax rate on taxable income. Everyone would pay less under this plan as the first $6,150 (single) and $12,300 (married) of taxable income is exempt.
Governor Kelly calls the flat tax a “non-starter.” She wants to keep the three-tier system with a top rate of 5.7% on taxable income above $30,000 (single) and $60,000 (married) because she believes those who make more should pay a higher rate. That political philosophy is bad for the state’s economy and residents because Kansas is continually becoming less competitive.
Between 1998 and 2022, private-sector job growth was ranked #44, with Kansas growing at less than half the national average (18.7% vs. 38.8%).[1] Through November 2023 (the most current as this is written), private-sector employment in 2023 only grew by 0.6%, while the nation increased by 1.6%.[2]
This subpar performance will continue if Kansas keeps high marginal income tax rates. The highest rates in all neighboring states are (or soon will be) below 5%, so Kansas must reduce rates or fall farther behind.
Tax relief must do two things: reduce the burden on families and improve the state’s economic condition. Governor Kelly’s proposal has some good elements for individuals (eliminating income tax on Social Security income and increasing the standard deduction), but the savings are relatively small for most taxpayers.
For example, the income tax paid by a teacher married to a police officer would only drop by $114 (5.7% of the standard deduction change). $114 PER YEAR! That’s a good night out with the kids, but it doesn’t really make a big difference when looking to save money or pay for college.
However, Kelly wants to keep the high rates in place, which is terrible for the state’s economic future.
Call the tax relief bluff with rate cuts
Governor Kelly likes to portray herself as a middle-of-the-road compromiser, so the Legislature should give her the opportunity to prove her brand with a counter-proposal: her plan plus material reductions in the rates. The worst that could happen is that she agrees. Legislators would give much more relief to individuals and improve the economy without having to override a veto.
Most likely, however, the governor will reject the proposal because she wants to keep more money to spend. She will say the state can’t afford more than her proposal (remember the Brownback years!!), but the facts show otherwise. Data from Legislative Research shows Kansas would still have a $4.5 billion surplus after four years of the larger tax cut via the flat tax plan Kelly vetoed last year.
Kelly is counting on the Legislature to reject her proposal and stick to the flat tax. She wants to blame Republicans for not providing tax relief so she can attack them this year in the election and ultimately get her Lt. Governor David Toland crowned in 2026. This is just politics for her; it’s not about taxes.
Overriding a veto will be very difficult. The Senate couldn’t override last year because several Republicans played petty political games, and some of them are endorsing her proposal this year. The flat tax is better policy, but on the slight chance Kelly agrees to rate cuts, that would be better tax relief than nothing.
It would also create a better future for the next generation of taxpayers. The children of that teacher and police officer won’t have to move to Dallas or Denver to have a shot at their dream. Those dreams would be more attainable in Salina, Iola, Colby, or Bonner Springs.
Legislators can continue working toward meaningful tax relief with the flat tax if she rejects rate cuts without being accused of taking a ‘our way or the highway approach.’ And taxpayers can see that Kelly wants to keep high tax rates.
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[1] Bureau of Economic Analysis, total full-time and part-time employment
[2] Bureau of Labor Statistics, November 2023 compared to November 2022 seasonally adjusted
