Tax exemptions eat far too much of state’s income

Legislators hungry for new money to ease the state’s budget problems should repeal some of the exemptions on the state sales tax.
State Revenue Secretary Joan Wagnon told an AP reporter that some of the exemptions now in place make no sense and others are shielding important sources of revenue to the state, the counties and the cities.
An obvious (but insignificant) target she cited was an exemption granted to a Kansas City, Mo., animal shelter when it does business in Kansas. Much larger exemptions are those on Kansas Lottery tickets, the exemptions held by charitable, religious and benevolent organizations, exemptions on business equipment, farm implements and health care.
The state and other units of government also give income and property tax advantages to various industries and to startups in the name of economic development.
Sec. Wagnon is chairman of the Kansas Advisory Commission on Intergovernmental Relations which is conducting a comprehensive study of things that are reducing tax revenues of all kinds and making it more difficult for government to finance itself.
Some lawmakers, such as House Majority Leader Ray Merrick, a Stilwell Republican, see a repeal of tax exemptions as a tax increase. That would be “out of the question,” he told the AP.
But repealing some of the exemptions and scaling back the tax breaks granted for economic development would broaden the state’s tax base and should be done for that reason. Anytime a tax exemption is granted, the burden on the remainder of the state’s taxpayers increases.
Why should churches and other well-meaning organizations be exempted from the sales tax or the property tax? Perhaps there was a time in the distant past when they could claim that treating them like other organizations would force them to close. That is no longer the case. Iola’s churches are among its most imposing buildings and the salaries and benefits paid to their employees put them in the community’s higher ranks.
Churches depend as much on all of the city, county and state services as do other enterprises. There is no reason they should not pay their share of the cost of maintaining those services, other than “that’s the way it’s always been.”
Much the same argument can be made against continuing the other exemptions granted, with the obvious exception of governmental agencies. Government taxing government is a zero-sum game.

REPEALING exemptions would, indeed, be a targeted tax increase, as Rep. Merrick observes. But with the state facing another huge gap between income and expenditures in the upcoming fiscal year, lawmakers must choose between raising revenue or slashing state spending on education still deeper.
Spending on education — preparing the state’s youth for successful adulthood — consumes about 65 percent of the general fund each year. The state budget cannot be reduced by any substantial amount without cutting spending on the public schools and higher education — that’s where the money is.
Because the people of Kansas understand how important it is to keep education strong, a reduction in state spending will mean an increase in local spending and spending by individuals and families on higher education. The result will be poorer schools in poorer districts and fewer opportunities for higher education for youngsters in low-income families.
Kansas took the high road in public school funding a couple of decades ago to level the playing field among all of the state’s school districts, rich and poor, when it elected to move from local to state funding. It is now in the process of reversing that decision by electing to cut education funding rather than raise state income to continue full funding.
That is a destructive decision and the youth of Kansas will suffer from it.
Eliminating some of the tax preferences identified by Sec. Wagnon would be a small step toward raising the money the state needs to meet its obligations to its citizens. To go the rest of the way will require higher income and sales taxes. Those increases should be imposed on those individuals and businesses best able to afford them. The sooner this logical and necessary step is taken, the better it will be for tomorrow’s Kansas.

— Emerson Lynn, jr.