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Morning Sun
  • Bill seeks to cut EITC percentage

  • A bill spearheaded by a Kansas House committee has been proposed to decrease Kansas’ Earned Income Tax Credit (EITC) from its current 18 percent to 5 percent over the next four years.

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  • A bill spearheaded by a Kansas House committee has been proposed to decrease Kansas’ Earned Income Tax Credit (EITC) from its current 18 percent to 5 percent over the next four years.
    State Rep. Terry Calloway, a Pittsburg Republican, introduced the measure to the House Taxation Committee and it has already drawn sharp attacks from Democrats and other opponents who call the measure “counter-productive.”
    The bill will generate an additional $56.3 million to the state’s General Fund initially in fiscal year 2012 and increase to $64.5 million by fiscal year 2016.
    It will reduce the amount of the tax credit — which is meant to benefit low-income individuals and families and also takes out a provision making the tax credit refundable. That means, if a family’s tax credit was higher than their tax  liability, they would have the liability paid off, but would not get a check for the difference.
    Calloway said that, because of the “antiquated” tax system in Kansas, people can earn the income tax credit without earning any income.
    “All I’m saying is that we need to look at everything,” said Calloway. “We can’t just go to schools and transportation to get money.”
    But, opponents of the measure say that the bill will only hurt the lower-income Kansans who benefit from the tax credit.
    “If you look at the effective tax burden, what is found is that the higher your income, the lower your tax burden and vice-versa,” said Gary Brunk, of the Kansas Action for Children. “The EITC is a way of easing the regression by giving some of the money they pay in taxes or a refundable credit to mitigate.”
    The EITC is only eligible for those that earn a certain income depending on the size of their household. For every dollar earned, the amount of the credit rises.
    “The average refund in Kansas is about $360 dollars,” said Brunk. “That is how much the families would be getting back and that offsets the fact that they pay more in proportion to their income for sales and property taxes.”
    Of the initial savings, the bill provides for $29 million to go back into the state’s Social and Rehabilitation Services to keep the state’s funding at a certain level for federal Temporary Assistance for Needy Families (TANF) block grant dollars.
    “It’s not like the money is going to go away,” said Calloway. “I see it as moving into SRS and not having welfare into the tax system.”
    Others, including former state Secretary of Revenue Joan Wagnon, called the measure “mean-spirited” and “counter-productive.”
    “There are millions of dollars worth of frivolous tax credits, cuts and exemptions that could be eliminated or updated to save Kansas money, but he wants to start with the working people who need it the most,” said Wagnon, current chair of the Kansas Democratic Party. “He should be ashamed.”
    Page 2 of 2 - The bill proposed does not affect the federal portion of the EITC. Calloway said that the cuts — which are scaled over the next three years — would bring the state in line with surrounding states who offer the state version of the credit. He said, presently, Colorado and Missouri do not pay into a state EITC.
    “We can do a lot better and still provide EITC for our citizens and be equitable,” said Calloway. “I think I was sent up here to look at numbers and find ways to reduce costs to the state.”
    Other lawmakers have said that it would be better for the families to get the money directly as opposed to making them “dependent on the state.”
    “I think I’m going to see what I can do to keep it at its present level,” said state Rep. Caryn Tyson, a Parker Republican. “It would be a tax increase if not.”
    Taxation Committee Chairman Rep. Richard Carlson, a St. Marys Republican, has not indicated when the bill would be worked in committee.
    Matthew Clark can be reached at matthew.clark@morningsun.net or at 620-231-2600, Ext. 140
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