In contrast to the major tax shift currently being contemplated in North Carolina (or the major tax hike currently being contemplated in South Carolina), leaders in Kansas are proposing something unheard of in modern day American politics: An honest to God tax cut.
Led by Gov. Sam Brownback, Kansas has already chopped its top marginal rate from 6.45 percent to 4.9 percent – and is weighing a further cut which would bring it down to 3.5 percent. Eventually Brownback wants to take the state’s income tax rate all the way to zero – joining nine other states which do not levy an individual income tax (a.k.a. the tax which is paid by most small business owners).
And while Brownback has been forced to adopt temporary sales tax increases (and the elimination of certain deductions) to plug “initial revenue holes” – according to The Financial Times – his long-term plan calls for the relief to be paid for with economic growth.
“This is not an experiment,” Brownback told FT. “I can take you to jurisdictions throughout America and around the world. Any time you have a lower tax entity around higher tax entities, over time people move to the lower tax place.”
That’s true … and there is no tax relief which drives economic growth quite like income tax relief.
Kansas has figured it out … when will the Carolinas?