Wagle: Smaller government also goal of tax cuts

6/29/2014

By JIM McLEAN

By JIM McLEAN

KHI News Service

TOPEKA — Conservatives had two reasons for advocating deep cuts in state income tax rates, according to one of the legislative leaders who championed them.

The first, and most often touted by Gov. Sam Brownback, was to lower taxes for business owners so that they could use the savings to create more jobs.

But a second and less talked about goal was to shrink state government by reducing tax collections and forcing legislators to cut spending, according to Senate President Susan Wagle.

"Government has less money to spend, but that's what the people are asking for, they want more money in their pockets," Wagle said late last week after the state finance council approved an intergovernmental loan of $675 million to help the state pay its bills.

As the leader of a conservative Republican majority in the Senate, Wagle said she is "excited" about "having a smaller government."

Asked after the meeting whether the tax cuts were in part designed to reduce revenues and force spending cuts, Wagle said: "I can tell you that's how I view it as a conservative Republican, yes. I think you do have to put restraints on government and on taxation and operate in the same manner as all the private businesses out there."

Brownback said while he favors "less taxes coming to the government," the tax cuts — which virtually eliminated income taxes for approximately 200,000 owners of large and small Kansas businesses — were intended to create jobs, not shrink state government.

"That's why we've been focusing on income taxes, particularly for small business, because that's your job-creating engine," Brownback said.

Democrats, who blame the tax cuts for a sharp downturn in state revenue collections, were quick to seize on Wagle's comments.

"Senator Wagle is probably as honest as anybody about this," said Senate Minority Leader Anthony Hensley, of Topeka.

Hensley said he believes that Wagle and "some of her constituents" want to use the tax cuts to force spending cuts and shrink government. But he said he doesn't believe most Kansans want to see reductions in funding for public schools, higher education, highways and social safety net programs.

"She (Wagle) may not be miscalculating what some of her constituents believe, but I think she is certainly miscalculating what the average Kansas family believes," Hensley said.

Over the past two months, tax collections have fallen $310 million short of projections even though the projections already had been adjusted in anticipation of lower income tax collections.

Brownback maintains that changes in federal tax rates on capital gains are responsible for most of the downturn. However, a recent report from the nonpartisan Rockefeller Institute of Government says that while the federal changes have negatively affected income-tax collections in most states, the reductions in Kansas and a handful of other states have been much steeper due to state legislated tax cuts.

"The largest declines were reported in Ohio, North Dakota and Kansas at 31.1, 28.1 and 24 percent, respectively," the report said. "In all three states the large declines are at least partially attributable to legislative tax changes, including income tax rate reductions."

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