Kansas governor throws the brakes on tax-cutting

Gov. Sam Brownback (R-Kan.) threw the brakes on his tax-cutting agenda on Friday, rolling out a new budget proposal that would raise taxes to help close a budget hole.

{mosads}Brownback, whose zeal for tax-cutting prompted debates even in Washington, is now calling for higher taxes on cigarette and liquor sales.

The governor’s new budget proposal also calls for freezing income tax rates following next year, unless Kansas hits a certain revenue target.

Top conservatives like Grover Norquist, the well-known anti-tax activist, had cheered Brownback’s efforts to slash income tax rates by more than a quarter and to cut taxes to zero for certain businesses.

But after those policies went into place, Kansas faced a budget hole hundreds of millions of dollars deep and a credit downgrade after the tax cuts didn’t spur economic growth as quickly as Brownback had hoped.

The tax proposals also helped roil Kansas politics in recent years. Brownback only narrowly held off his Democratic challenger in his reliably Republican state for a second term last year, after the governor had also helped unseat more centrist GOP state lawmakers who questioned his economic plan.

Brownback’s move to slow down his tax cuts could also give new ammunition to Democrats in Washington, who have loudly complained about the House GOP’s efforts to install new scoring rules that project cutting taxes can raise economic growth.

Still, Brownback, who represented Kansas on Capitol Hill for more than 15 years, in both the House and the Senate, also made it clear this week that he wouldn’t back away for good from his plan to keep cutting taxes.

“We will continue our march to zero income taxes, because the states with no income tax consistently grow faster than those with high income taxes,” Brownback said Thursday in his State of the State address, a day before his new budget proposal dropped.

Kansans, Brownback added, “want government to focus on its core functions, to perform them well, to provide quality services, good schools, good roads and low taxes.”

Brownback’s budget proposal would hike the cigarette tax, last raised in 2003, from $0.79 a pack to $2.29. The liquor tax, last increased in 1983, would go from 8 percent to 12 percent. In all, the two taxes would raise about $212 million over the next two years.

Kansas just reduced its income tax rates to 4.6 percent and 2.7 percent at the first of the year, each falling more than a quarter since Brownback became governor. Under the budget proposal, the lower rate would tick down to 2.66 percent in 2016, instead of the 2.4 percent currently scheduled. Tax cuts could go back into effect under the budget if revenues beat the previous year, coming in at least 103 percent.

Brownback’s plan overlaps significantly with tax proposals that his Democratic opponent, Paul Davis, rolled out during last year’s campaign, according to Kansas.com. Brownback’s campaign panned the Davis plan at the time.