Thursday, June 11, 2015

It's the Economics, Stupid

When a crowd was assembling with torches and pitchforks before a board meeting, Paul McKnabb, a professor at Emporia State University and former Emporia Board Member, used to tell me “Democracy is a messy system and it attracts people with plenty of time on their hands.”  Paul is no doubt watching what is happening in Topeka right now and repeating some variation of that wisdom.  This mess may make more sense than it appears if we look at some data.

The Docking Institute at Fort Hays State University released its “Kansas Speaks” survey in Spring 2015.  The poll shows that the legislature is doing exactly what Kansans want.   How can that be?

When Kansans spoke, they were very clear on the subject of taxes.  The graph clearly says that Kansans prefer to increase sales tax the most and income taxes the least.  A large bloc of Kansas Legislators and the Governor are adamant that this is the best solution.  The will of the people is being done. But as Lee Corso likes to say, “NOT SO FAST!”

Kansans were equally clear on the subject of who should be taxed.  There is strong support to tax large corporations and top income earners.  Less than 10% support increasing taxes on the middle class and small business.  A large bloc of Kansas Legislators are adamant that taxes on corporations and the wealthy should be increased.  The will of the people is being done.

My colleagues at KASB make fun of me because I sometimes claim to be a trained economist.  (I taught 10th grade economics for three semesters.) They call me Economics Professor Emeritus from Lawrence High School.  But one doesn’t need my high level of economic expertise to see the paradox of the “Kansas Speaks” survey. 

Sales taxes, especially as they are structured in Kansas, put more burden on the poor and middle class and less on “Top Income Earners” and “Large Corporations.” Income taxes are the fairest way to tax those two groups.  Property taxes take a larger percentage from middle class farmers and homeowners. 

I speculate that if you asked most Kansans to define small business, 500 employees would not be their threshold.  In most Kansas communities, 500 employees would constitute one of the biggest businesses in town.  The Small Business Administration defines a small business as 500 employees, but in Kansas 53% of all businesses have fewer than 500 employees, and 36% have fewer than 100.

So it is no wonder the Kansas Legislature in messy right now.  We Kansans are sending them a mixed message.  Do we want higher sales taxes or do we want to tax top income earners and large corporations?  Do we want to tax mom and pop businesses or corporations?  It has never been a more important time to consider what you think and to let legislators know. 

I’m pretty sure that all 50 or so of my former students understand this paradox.  Maybe some of them could head up to Topeka and help us out of this mess.

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