Kansas Income Taxes $232 Million Over May Estimates
In May 2022, the state of Kansas took in a total tax revenue of $910 million, which was 35.7% greater than the estimates for this month. These revenues include $305 million in sales taxes and $571 million in income taxes. The revenue collected for May of this year was 13.6% less than what it was in May of last year.
The main cause for May coming in $240 million over expectations was income taxes coming in 68.6% higher than expected with $232 million more. Specifically, just under $200 million more in individual income taxes were collected than expected, with another $33.4 million in unexpected corporation taxes collected. May 2022’s income tax collections are 22.7% below than what they were in May of last year.
In total, the tax revenues thus far in FY 2022 are approximately $8.8 billion – roughly 5.0% greater than estimates. The cumulative collections for FY 2022 ending in June are 9.7% greater than the actual collections for FY 2021 at the same time last year. Always important to keep in mind that Kansas’ fiscal years run from July 1st to the following June 30th. We’re less than one month from the end of FY 2022 and will start FY 2023 on July 1st of this calendar year.
Kansas’ increased revenue intake over the past year isn’t unique as almost every state across the country is seeing an influx of cash. Missouri currently holds more than $3 billion in its budget surplus. Nebraska too has a $1.6 billion surplus.
According to KPI’s recently released Green Book comparing taxing and spending across the country, Kansas had the 21st highest rate of state and local taxes collected per capita at $5,329. In particular, Kansas has some of the worst property taxes on rural properties. Comparing Iola, KS to similarly sized towns in other states, Kansas has the highest property taxes on commercial properties, the second-highest on industrial properties, and the fourth-highest on homesteads.
Though the current legislative session is over, legislators should start thinking about plans for long-term tax relief in the near future. An OECD study reports that after corporate income taxes, personal income taxes are the second most harmful tax to economic growth. Small rate reductions to personal income taxes in Kansas would make the state more attractive for domestic migration. Currently, Kansas has the highest effective tax rates on mature tech businesses: reducing these rates is much more fiscally responsible than multi-billion dollar subsidies that don’t provide growth.
Kansas needs to think more ambitiously about its tax system to remain a competitive state for business in the future. High tax revenues every month may look good, but it’s more a sign of over-taxation than it is of economic prosperity.