Poor will get little tax relief

Ed Olson

By A Contributor

Overlooked because of the attention to declining Kansas tax revenues is the elimination of Kansas tax refunds that have traditionally been available to low-income families. There are surprises in store for many Kansans who apply for tax relief this year.

Since 1978, Kansas has had a food sales tax refund for many low-income families (those over age 55 or with children under age 18 or a disability). No more. The governor and the 2012 Legislature eliminated this pro-gram. After a public outcry, legislators in 2013 amended the original action to allow a non-refundable credit against any income tax liability. But still, there is a 67 percent reduction in the program and absolutely no refunds. 

Elderly couples who depend mostly on Social Security and young families with meager incomes, both of whom might pay no income tax, will be disappointed this year. Had they lived in Colorado or Nebraska, they would have paid no sales tax on food. Missouri residents only pay 1.225 percent sales tax on food compared to 6.15 percent — plus local sales taxes — that Kansans pay.

Termination of refunds ex-tends to property tax relief as well. In 1970, the Kansas Legislature created property tax refunds (also called homestead refunds) for the same low-income folks. This property tax refund has now been eliminated for renters, who pay approximately 15 percent of their rent toward their landlords’ property tax bills. Homeowners still qualify, but renters will come up empty and be surprised by actions of the Kansas Legislature and the governor. 

At the same time that low-income families lost their refunds, our legislators provided property tax refunds for very wealthy Kansans who have busi-ness income. This occurred because business income is counted as zero income. As a result, Kansans with perhaps $200,000 in earnings can be included in a refund program intended for people with incomes below $18,600.

This insult to tax equity was recently noted by the Depart-ment of Revenue and may be erased retroactively for this tax season with special legislation.

Unless and until there is new legislation, tax preparation soft-ware and accountants will in-corporate these refunds.  If the Legislature continues to exclude business income in the calculations for property tax refunds, I will write about the details.

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