By Gene Meyer | Kansas Reporter

TOPEKA — Despite some cracks in the overall tax reduction plan presented by Kansas Gov. Sam Brownback last week, the proposal would still make the state's economy one of the strongest in the region, a former White House economic adviser told state legislators Thursday.

"If (the plan) continues in the direction that he’s going, I think you can really create a state of prosperity here in Kansas,” said Arthur Laffer, who served under President Ronald Reagan.

“I really believe that, based on my research, my work and my personal feelings," said Laffer, who heads Laffer and Associates, a Nashville, Tenn., consulting firm that got $75,000 in fees for work on the Brownback plan.

The plan, which Brownback outlined in his formal State of the State address to legislators last week, calls for cutting personal state income tax rates by as much as 24 percent and eliminating many small business income taxes entirely. The proposal would eliminate many state income tax deductions and credits, including deductions that homeowners can claim for mortgage interest and an earned income tax credit that low-income workers can claim to help offset Social Security and other payroll taxes.

Brownback said the plan, for the foreseeable future, would not change the state's projected tax revenue and it would be a fairer, a flatter and a simpler way to reduce taxes for Kansans.

But analysts at the Kansas Legislative Research Department, the state-level nonpartisan government accounting office that makes the calculations on which state budgets are based, found evidence to the contrary.

Legislative researchers concluded the plan would decrease Kansas' projected 2013 general fund tax revenue by almost $90 million because of a miscalculation by the state Department of Revenue. The researchers also concluded, based on other Department of Revenue documents, that state income taxes paid by Kansas families with incomes of less than $25,000 would increase by between $167 and $453, depending on their circumstances. Taxes would be reduced for households with higher incomes.

"That was a revelation," said state Rep. Richard Carlson, R-St. Marys, who chairs the House Taxation Committee, one of two legislative tax panels Laffer addressed Thursday.

Carlson likes the general approach Brownback's plan offers and said he and fellow committee members planned to offer a tax plan that would address the revenue and tax increase issues. 

"You can begin to see some of the problems that may make this (tax plan) may be a tough sell," said state Sen. Garrett Love, R-Montezuma, and a member of the Senate Assessment and Taxation Committee, which also met with Laffer.

"The difficulty is going to be convincing someone to give up maybe a $350 tax exemption now to get a $500 reduction in taxes,"  he said.

Love said he generally favors Brownback's approach. Kari Ann Rinker, of Wichita, a lobbyist for the Kansas National Organization of Women, doesn't.

"How will eliminating the earned income tax credit for a single mom making $20,000 a year result in getting a new job to raise her kids?" Rinker asked. "I think job creation in Kansas is an awfully big if."

Looking at who might pay more and who might not in any given year, "is not the right way to look at the plan," Laffer said in a brief meeting with reporters between appearances before the Senate Assessment and Taxation Committee and the House Taxation Committee.

"This is a dynamic system, where everyone will benefit by the creation of more jobs," Laffer said. He did not estimate how many new jobs the plan might create.

"And as the economy grows and more jobs are created, more low-income workers' incomes will rise, too," Laffer said. "If you don't bring more jobs into Kansas, these guys will never work."

Bud Hovind, of Lenexa, didn't attend either of the committee meetings where Laffer spoke. He volunteers Thursday at a food pantry in that Johnson County suburb.

"But so far, I like what I've heard of the plan," Hovind said. "Moving toward no individual or business income taxes would be good."

Hovind said he would like to know more about what the plan means for sales taxes, property taxes and others that weren't outlined in Brownback's speech.

"The sales tax is what worries me; it's always hardest on the poor," he said.

Brownback's plan doesn't call for a sales tax increase as such, but it makes permanent a temporary 1-cent sales tax increase passed by legislators in 2010, when other tax revenues were falling during the Great Recession.

Brad Harrelson is associate government affairs director for the Kansas Farm Bureau, the state's largest general farm organization. The major concern, Harrelson said, is property taxes, which are among farmers' and ranchers' biggest tax exposures. It is still unclear whether those taxes would increase if income taxes were cut.

"We're hopeful, but skeptical," Harrelson said.

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