Tags: Sam Brownback | Trump | Tax Plan | Kansas

Kansas Gov. Sam Brownback Says Trump Should Use His State's Tax Plan

Image: Kansas Gov. Sam Brownback Says Trump Should Use His State's Tax Plan

(AP)

By    |   Friday, 23 Dec 2016 02:11 PM

Kansas Gov. Sam Brownback said President-elect Donald Trump should use his signature tax cut idea for the nation, which eliminates the 4.6 percent state individual income tax for partnerships, limited liability corporations, and similar businesses, and led to financial turmoil, The Wall Street Journal reports.

The plan led to a $350 million deficit in Kansas when the legislature reconvenes in January, as well as projections of a larger deficit for the next year, according to the Journal.

Brownback's plan benefits owners of firms that don't face corporate income tax, but get taxed on individual returns. Those owners still pay federal income tax, but they don't pay anything to the state of Kansas.

"My critics, which are many, they only want to look at the budget. They won't look with any depth or detail at the impact on small-business growth or private sector job growth. That's the target. That's what we're after," Brownback said.

Pass-through income includes car dealers and insurance brokers, but also private-equity firms, hedge funds, and global law firms. The top 1 percent of households earn about half of the U.S.' pass-through income, according to the Tax Policy Center, the Journal reports.

The governor's policy made Kansas attractive for new businesses, but gave existing businesses a tax break and created no jobs, the Journal notes.

Tax policy observers told the Journal that Trump's tax plan is similar to Brownback's, although under Trump's plan, tax on pass-through income would not be eliminated.

"There was just a windfall for law firm partners and others, who just happen to be organized as pass-throughs. They had many more owners of small businesses than they expected, because it doesn't take much to reorganize yourself," tax lawyer Steve Rosenthal told the Journal. 

The cuts resulted in flat growth and downgraded bond ratings. Michael Mazerov of the Center on Budget and Policy Priorities told the Journal, "The experiment clearly has failed if it was intended to show that cutting taxes would help the Kansas economy."

Duane Goossen, senior fellow at the Kansas Center for Economic Growth agreed, saying, "The broad effect of that tax action has been to dramatically destabilize the Kansas budget."

Brownback has the lowest approval rating of any U.S. governor, but he blamed that on his elimination of tenure for teachers. "Change is a difficult thing in the body politic," he said, according to the Journal.

On Thursday, KMUW radio in Wichita, Kansas reported that Brownback said he is willing to work on the budget with state lawmakers, although they have been at odds. "I'll work with the Legislature any way I can and will," he said.

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Kansas Gov. Sam Brownback said President-elect Donald Trump should use his signature tax cut idea for the nation, which eliminates the 4.6 percent state individual income tax for partnerships...
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Friday, 23 Dec 2016 02:11 PM
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