Tag Archives: Taxation

Kansas Attorney General Has it Right

TOPEKA — Alan Cobb, director of the Kansas chapter of the Americans for Prosperity Foundation, today released the following statement in response to the briefs filed in the State vs. Montoy case currently before the Kansas Supreme Court:

“As questions and concerns swirl about whether or not the Kansas Supreme Court can order a statewide tax increase, we applaud Kansas Attorney General Phill Kline for putting this issue to rest.

In a brief filed yesterday with the court and in response to questions from reporters, AG Kline said clearly that the Kansas Supreme Court does not have the authority to impose taxes or raises the current level of taxation.

From the summary of the brief filed by the Attorney General:

“The Kansas Constitution Prohibits the Supreme Court from Raising Taxes and Prohibits any Expenditure from the State General Fund from Occurring Unless Authorized by Laws Passed by the Legislature.” (emphasis added)

The bottom line is that the Legislature has the responsibility to tax and to fund schools appropriately. They’ve met that burden.

The Kansas Legislature and the Attorney General understand that our state’s taxpayers suffer the 15th worst state and local tax burden in the nation as a percentage of income. That’s an even heavier tax burden than citizens in the notoriously high-tax states of California and Massachusetts must carry! Also, our ranking this year is twice as bad as it was 20 years ago, when we ranked a much better 31st.

“The short-term solution to over-taxation in Kansas is for the legislature to continue rejecting any and all proposed tax increases, and the long-term solution is the Taxpayer’s Bill of Rights. If Kansas had implemented a Taxpayer’s Bill of Rights in 1992, taxpayers would have received $1.1 billion in tax rebates and reductions and we would have squirreled away $1.4 billion in Rainy Day funds that would have offset the budget shortfalls that occurred during the recent economic downturn. And Kansas taxpayers would have a little more money in their pockets as they file their taxes this week.”

The Decline of Kansas Documented By Census

By Karl Peterjohn, Kansas Taxpayers Network

Kansas is in a decline. This state is shrinking relative to its peers in the other 49 states. However, some might say, and with some degree of accuracy, that this trend is nothing new. It is clear that the size and impact of this decline is likely to shape this state throughout the first part of the 21st century.

April 21 the U.S. Census Department issued projections for population growth showing that Kansas population will grow at less than 1/3 of the rate of the rest of the country over the next 25 years. This followed Census data showing that over 3/4 of the Kansas counties have lost population since the 2000 census.

The relative decline of Kansas is continuing and this is most vividly demonstrated in the declining numbers of Kansans serving in the U.S. House of Representatives. It is a little known fact that over a 40 year period ending after the 1930 census, there were eight members of the U.S. House of Representatives from Kansas. At one time, Kansans represented over two percent of the national population.

Recently, Kansas slid and became just under one percent of the national population and if the census population trends occur, Kansas will soon see that number drop by 1/4 in the next 25 years. As the population has declined with the rest of the country so has the congressional delegation.

Kansas lost members of congress following the 1930, 1940, 1960, and 1990 censuses and is shrinking like a Florida glacier. In mid-April an Associated Press report quoted Xan Wedel, a researcher at K.U.’s Policy Research Institute, saying the state was at risk of losing another member in the house in 2010. If you think the big first congressional district is large today when there are four members, let your imagination consider how large it will be if there are only three, or later in this century only two. If the census forecast is correct the decline in Kansas, as represented by our shrinking congressional delegation, is continuing.

Kansas would be on track for a decline that could shrink this state’s delegation down to the size of Idaho or Rhode Island during the next 50 or 60 years. At the same time Kansas’ population declines, the states in our region that have placed limits on state and local government taxes and spending growth are growing faster. Colorado, which once

lagged behind Kansas in congressional representation but now has seven, will grow more than 3.5 times faster than Kansas. Missouri and Oklahoma will grow 50 percent faster than Kansas while Arkansas will pass Kansas too. Arkansas is growing more than twice as fast as Kansas. Only higher tax Nebraska is projected to grow at a lower rate than Kansas among our four adjacent states at only 6.4 percent.

Nationally, states without state income taxes will be growing much faster than the states that penalize income earners. The nine states without personal income taxes are projected to grow at twice the rate of the rest of the country. There is a wide variance between these nine states’ projected growth rates but Texas and Florida are both projected to gain three additional members each to their congressional delegations following the 2010 census. Florida is also projected to overtake struggling New York to become the third largest state in population in 2010. Texas, which is the number one state that Kansans are moving to when they leave, is already the second largest nationally.

These census figures demonstrate that Kansans can and do vote with their feet. As business and industry move to more competitive parts of the country Kansas is being left behind and the political and judicial leadership in Kansas is busy trying to raise income, sales, and other Kansas taxes. The tax and spend formula for state government in Kansas is leading to an economic failure that will destroy our future.

Tax funds finance Kansas school finance lawsuit

Contributed by Kansas Taxpayers Network


By Karl Peterjohn

There might not be funds for public school classrooms but for 15 Kansas school districts there is money for financing lawsuits. Since the 1998-99 school year, $2,095,020 has been spent in public funds to pay for the school finance litigation and lawsuit.

This outrage is a classic case of the school districts biting the state’s hand that fed the 300 Kansas school districts with over $2.7 billion in state funds. Of course, the state does not have any money that it has not taken from taxpayers so you and I pay our taxes to the schools and to the state paying for both the plaintiffs and defendants in this legal battle.

A portion of that money is taken by these school districts and then used to sue for more spending that will require higher taxes. Sadly, Kansas already has the highest property taxes on business in our five state region as well as the second highest taxes on homeowners too so this litigation worsens our tax climate.

This is not a new event. The school finance lawsuits stretch back into the late 1980’s. The lead attorney on the most recent lawsuit, Alan Rupe, has been involved in all of these cases going back to the 1980’s. The 15 school districts misusing their tax funds to finance these lawsuits are led by the Salina and Dodge City public schools. The other school districts financing this litigation are: Arkansas City, Augusta, Derby, El Dorado, Emporia, Fort Scott, Great Bend, Hays, Independence, Leavenworth, Manhattan, Newton, and Winfield (For a listing of the tax dollars spent for these lawsuits between 1998-to-2005 see www.kansastaxpayers.com).

If the legislative conservatives were serious about addressing the litigation crisis in Kansas public schools these expenditures would be stopped. This misuse of tax funds for trial attorneys should stop immediately. Any school finance legislation passed by the Kansas legislature that does not address this abuse of taxpayer funds is a disgrace.

Last year the Topeka public schools faced a financial scandal when it was revealed that roughly $1/2 million had been paid to pay fraudulent checks in central Asia. The schools had such lax financial controls that numerous bogus checks got paid. The schools continued to operate despite this long distance financial flim-flam. Sadly, the mainstream Kansas press outside of Topeka has largely ignored this scandal and treated it as an isolated event.

This is another indication that there are plenty of funds available for financing Kansas public schools. The latest federal data indicate that Kansans, despite having lower than average incomes, are paying substantially more than the national average for our public schools. Kansans are paying more per pupil than for public schools in our neighboring states too. Higher expenditures mean higher taxes. Being a high tax state is one of the reasons that Kansas has suffered the largest reduction in private sector jobs during this century according to federal data.

If the school districts can continue to litigate their way to higher taxes and spending by misusing tax dollars, the future of this state will be grim. Lawsuits promoting higher government spending and higher taxes will drive jobs and businesses to taxpayer friendlier states.

TABOR Criticism Analysis

From the introduction to an analysis by the Tax Foundation:

The state of Colorado is under assault. Opponents of Colorado’s Taxpayer Bill of Rights (TABOR) are waging a well coordinated but misleading attack on Colorado’s reputation. This attack takes the form of a number of rankings and statistics that purport to show that the Taxpayer Bill of Rights has decimated Colorado. These rankings and statistics are based on the assumption that if Colorado ranks poorly on things like the adequacy of prenatal care and education spending, then Colorado is failing to adequately care for and educate its citizens, and that the Taxpayer Bill of Rights must be to blame. A closer look at the attacks shows that they fail to prove that the amount a state spends on health care and education determines quality, and they also fail to tell the whole truth about the rankings and statistics of the state of Colorado.

The full article is here: An Analysis of Misleading Attacks on Colorado’s Taxpayer Bill of Rights

Taxed Out of Business

From the Junction City Daily Union, March 24, 2005

By Kay Blanken
Special to The Daily Union

Friday evening, many of us in Junction City opened our newspaper to the headline, “Local Alco Closing Its Doors.” The Kansas City Star reported that 20 Alco stores across Kansas were closing their doors. This is a Kansas corporation that began in Abilene.

I, as a business person, am not surprised. Not just Alco is closing its doors; Kansas has lost many stores and companies in the past four years. Is it bad business practices? I don’t think so. Many of the companies and businesses have been successful for many years. What then is happening? Starting three years ago, the state began raising the fees to Kansas businesses and companies trying to make up for the budget shortfall that our Legislature created by overspending. This overspending came from both Republicans and Democrats. Because the Kansas Constitution forbids ending a year without a balanced budget, legislators had to find a way.

To balance the budget, the Legislature hit many businesses with fees that do not pertain to their type of business. You paid the fees or you risked forfeiting your business. Many of us have our life’s blood in these businesses. We paid the fees.

This year we again received a new shock. Businesses pay a franchise fee for the privilege of doing business in Kansas. On Feb. 7, Kansas businesses received notice that the franchise tax would max out at $5,008. This is based on the gross your business does before you pay any expenses. Two weeks later we received notice the maximum would be $20,000 — plus a $55 fee for the secretary of state. Here is the letter we received:

Dear Business Customer:

Last spring the Kansas Legislature passed SB 147, which requires businesses to pay a franchise tax (we have always paid a franchise tax) to the Kansas Department of Revenue and a separate franchise fee to the Secretary of State. Both are due the 15th day of the fourth month following the tax year end — e.g. April 15, 2005, for entities with a December 31, 2004, tax year end.

KANSAS DEPARTMENT OF REVENUE — franchise tax (maximum $20,000.00)

Business entities that have $100,000.00 net worth or more must pay to the Kansas Department of Revenue a franchise tax of 0.125% of the total net worth. Business entities required to pay the tax will file a return with the Department of Revenue, which must be accompanied by taxpayer’s balance sheet. (I can’t find anyone who does not have to pay.)

Do not send your franchise fee and annual report to the Department of Revenue. Your business will forfeit if the correct annual report and franchise fee are not received by the Secretary of State on or before your forfeiture.

The letter goes on to tell us how to file and report. What it does not say is how we are to get the money to pay the franchise fee. Many of us in business are just now coming out of a very long downturn. Many have had to borrow money to keep their doors open, and then many have not made it.

Now many of you reading this will say, “This don’t affect me.” Sorry, but it does. Do you work for a business or company? If you do, you may not have a job for much longer. Or you may find yourself moving to a state that cares about the business and economic climate. Some of you may be saying, “This is only one tax. What’s the beef?” Wrong.

Businesses pay corporate income tax, which is 4 percent of net income. In addition, net income in excess of $50,000 is subject to a 3.35 percent surtax. The tax law goes on to say “Kansas corporate income tax is calculated using the apportioned net income and the corporate income tax rate of 4 percent for the first $50,000 and 7.35 percent for excess above $50,000.” Then businesses face insurance tax, 2 percent; intangible property tax, counties can tax up to 2.25 percent on intangible property; personal property tax; inventory tax; state sales tax 5.3 percent; city 1 percent; county 1 percent (at this time); unemployment insurance tax from 0.08 percent to 7.4 percent depending on our rating (our rating is based on the willingness of an employee performing his/her job); worker’s compensation insurance (premiums are calculated per $100 of annual employees wages; wonder why that pay raise didn’t come through?), property tax, 25 percent; Social Security tax, 7.65 percent — and I could go on with other licenses/permits and fees, both local and state. So why did Alco call it quits?

There are a lot of reasons why businesses cannot make it in today’s climate. Buying power is one. A small business pays more for goods than a large conglomerate. But we all pay the same type of taxes and have the same routine costs.

With Alco closing, Junction City, Geary County and USD 475 will still receive property taxes, but they will not receive the sales tax revenue Alco generated. And our community will no longer receive Alco’s charitable donations, leaving a lot of good projects to suffer.

At a town hall meeting on Saturday, a candidate for the local school board asked about school finance. The response from state Rep. Barbara Craft was, “We know we need more funding for schools, and maybe we will have to go to the businesses. Oh, maybe I had better rephrase that.”

The state’s mission statement is, “Our state is constitutionally restrained from overspending, providing a foundation of fiscal integrity for our business climate.” So what happened to throw the state so far off of its budget? Why are so many businesses closing or going out of state to do business? The last count I had was more than 1,300 businesses over three years, and I have no idea of how many jobs were lost. Why are cities raising the fees for services?

What affects business also affects you. It’s time we all became concerned and start asking our elected representatives the “why” questions.

Kay Blanken is a Junction City commissioner and co-owner of B&K Enterprises.

Sedgwick County Arena Sales Tax Ready to Pass

Following is a message from Karl Peterjohn, Executive Director Kansas Taxpayers Network, regarding the debate over SB 58, allowing Sedgwick County to raise its sales tax to pay for the downtown Wichita arena. I listened to the (as Karl rightly characterises it) “debate.” Karl’s reporting of the legislative action and the effects the sales tax will have is accurate. (Someone called the sales tax the “Western Butler County Improvement Act.”)


After a relatively brief and lackluster debate, the 1 cent sales tax hike for the downtown arena in Wichita received preliminary approval in the Kansas house March 21 on a voice vote. SB 58 will be voted upon for final action tomorrow in the Kansas House of Representatives. This odious bill should have been amended but a bipartisan group of Wichita legislators worked hard and were successful in keeping it “clean” so there weren’t any amendments. An amendment would have required a conference committee and a delay in enacting this tax. SB 58 will be passed easily and signed by the governor within the next couple of weeks.

The closest amendment to getting added to this bill was a “prevailing wage,” amendment offered by Democrat Minority Leader McKinney that failed on a division vote (no roll call) with over 40 yes votes. Prevailing wage would require union wages for the construction of this project but even the Democrats did not press this very hard since they did not even bother forcing a roll call vote on this amendment.

After some desultory comments by proponents, Rep. Huebert offered an amendment to address the uniformity issue but then withdrew it following Rep. Wilk’s opposition and promise that the tax committee that Wilk chairs would take up this issue shortly.

Your tax dollars were hard at work lobbying. Two tax funded lobbyists from Sedgwick County along with Sen. Carolyn McGinn were there to follow the vote. Wichita had its contract lobbyist as well as city employee Jeanne Goodvin was there. Other tax funded organizations like Ed Wolverton from the Wichita Downtown Development Corporation, Bob Hanson from the Sports Commission, and another sports commission board member Joe Johnston had lobbied the house members as they entered the chamber. A number of other business and labor lobbyists supporting the arena were also monitoring the desultory debate.

Huebert was the only member to oppose the bill during this “debate.” Steve spoke about his district’s opposition (2-to-1) and how this vote, where the county segment was opposed while the Wichita area was supportive (both voted 54-46 on their respective sides last November) might relate to a consolidation of government bill in Shawnee County’s vote on their city-county consolidation issue. The retroactive tax authorization WAS NOT EVEN MENTIONED in the debate.

Steve Brunk, who serves on the tax committee, “carried” the bill on the floor. Mario Goico, Brenda Landwehr, Jo Ann Pottorff, and Nile Dillmore all praised this measure in a form of Sedgwick County bipartisanship. Goico liked the eco-devo aspect while Pottorff praised the downtown revitalization with the waterwalk boondoggle for economic growth.

I have been told privately that there has been commitments for vote trading on this issue and other issues coming before the house that are of concern to non-Sedgwick County legislators. While there will certainly be a number of no votes cast on final action tomorrow, the final outcome is now clear. July 1 the sales tax rate in Sedgwick County will rise to 7.3% with the exception of Derby where it will rise to 7.8%. In a couple of years there will be a brand new pigeon coop, that lacks an anchor tenant, in downtown Wichita to add to the succession of money losing boondoggles that already litter the area.

If the Senator Hensley’s of the world prevail (he is the senate minority leader who issued his statewide tax hike plan last week), the 2005 legislature will soon pass a statewide sales tax hike and he would add at least another .2% to the figures cited in the previous sentence. The governor favors a statewide tax hike and there is talk of “rounding up” to say, an even 6 percent statewide. If that happens, there are parts of this state that will have total (state and local)sales tax rates approaching 10 percent.

The new millionaires who will be created through the prices the county will pay for the land it wants downtown for this boondoggle project will provide an interesting (but expensive) source of amusement in the near future too. It will also be interesting to see what portion of the construction labor used is “union” versus non union. Dale Swenson praised prevailing wage and other mandatory union wage rates like the federal government’s Davis-Bacon Act during the debate on that amendment.

As a frame of reference, New York City has a 8.625% sales tax rate. New York City does NOT tax groceries. I’ll let you decide, regardless of whether Kansas raises state rates or not, how we compare with a sales tax rate of 7.3%-or as much as-8.0%. If one of the tax raising legislators had not taken ill in the senate, the odds of a statewide tax hike raising the sales tax to 6.0% is not out of the question. Sedgwick County will have a high sales tax rate.

The only suggestion for Sedgwick County taxpayers that I can think of is that most of the cities in Butler County only have a 1/2 cent local sales tax, so their total is 5.8%. If you live in eastern Sedgwick County and want to save on grocery purchases, there is a Dillons at Andover Road and Kellogg. You should be able to save $1.50 on the purchase of $100 worth of groceries after July 1 based upon the variable local sales tax rates between Sedgwick and Butler counties.

I look forward to fulfilling my promise and including the recorded vote on final passage of SB 58 into the 2005 Kansas Taxpayers Network’s vote rating. Every legislator who cast an affirmative vote for SB 58 will have to bear some responsiblity for this looming boondoggle. The next battle will be trying to get this odious sales tax removed because a fiscal “crisis” in government will certainly appear before this tax expires. Rep. Huy was absent.

HCR 5009: An attempt to drive down property taxes

From Representative Frank Miller


The Kansas Legislative Research Department provided information substantiating that property taxes increased by 126 percent since 1993, yet the inflation rate adjusted for population growth increased only 43 percent! I don’t see how the appraised value of residential property could have risen 2.75 times faster than inflation adjusted for population growth! I would suggest that appraisers are encouraged to over-appraise property in order to satisfy the need for increased property taxes without increasing the mill levy. I authored this bill in the hopes of restraining appraisers from adjusting the value of your property to a value that is higher than market value. Is not the selling price of your home the only true value for “MARKET VALUE”?

The key wording in the resolution would change the Constitution as follows: “The legislature shall provide that the appraised valuation of real property used for residential purposes which has been sold shall be adjusted to an amount equal to the average of the appraised valuation of such real property when sold determined pursuant to law and the sales price of such real property when sold.”

The clearest way to explain what this resolution would do is to offer an example. Assume that the latest appraised value of your home is $50,000, but during the year you put your home up for sale. Let’s further assume that your asking price was $55,000, but after much time the best price you could get was only $40,000. The county appraiser would be required by this change in the constitution to reduce the appraised value to half the difference or to $45,000. Is not the closest value to true market value the price a house is sold for on the market? This change reduces, or in like manner increases, the appraised value of residential property in a fair manner and in a manner that mirrors much closer the true market value of property.

There is nothing in the bill prohibiting appraisers from adjusting the appraised value of your home the following year. However, property owners will have a much stronger argument if the new appraised value represents an unreasonable increase, and this is at the heart of this resolution. The resolution will check the tendency to over evaluate the appraised value of residential property.

What kind of sales does this apply to? This bill would apply to arm’s-length sales. You could not sell your house to a relative (i.e. son, wife, etc) in order to manipulate artificially the appraised value of your property. I think this bill would be very beneficial to Kansans in trying to keep the escalation of property taxes in check. Unfortunately, the resolution at this moment is stuck in the House Taxation Committee and likely will not get out of committee this year. I will be pushing this resolution again next year. Let me know what you think.

To contact Rep. Frank Miller write, telephone, or email to P.O. Box 665, Independence, KS, 67301, Tel: (Home) 620-331-0281; Topeka office 785-296-7646, Email frank@frankmiller.org or miller@house.state.ks.us. Take a look at Frank’s updated webpage www.frankmiller.org.

Affording Tax Cuts, or Whose Money Is It, Anyway?

The logic of paygo for taxes is backward, in that it starts from the assumption that all tax revenue is Washington’s in the first place and thus any tax cuts must be “offset” so Congress can be made whole. But of course the money belongs to the taxpayers who earned it, and the burden ought to be on the politicians to spend less so Americans can keep more. Republicans claim to believe this. (“Budget Irresolution,” The Wall Street Journal, March 14, 2005)

“Paygo” refers to the “pay-as-you-go” budget rules, which require that any tax cuts be offset by other tax increases. Alternatively, we often hear politicians at all levels claim that we can’t afford tax cuts.

If we stop and think for a moment, we should easily be able to recognize the absurdity of politicians claiming we can’t afford tax cuts. The mindset behind this is that the tax money belongs to the government in the first place, and if we are lucky enough, the politicians might cut our taxes a little, if they decide they can afford it.

As the Wall Street Journal editorial rightly says, the money is ours to begin with! How have we descended to the level where politicians don’t understand this, that is the taxpayer that can’t afford to pay taxes, that taxes are a drain on the growth of our economy?

Part of the answer may be found in the small book “The Law” by Frederic Bastiat. A link to an online version of it may be found on the “Other websites, resources” section of this website.

Let free markets determine downtown Wichita’s viability

“Wichita’s been an east/west town for as long as I can remember. Obviously, we’re trying to change that,” says Tom Johnson, president of the upcoming downtown project, WaterWalk. (Wichita Business Journal, March 4, 2005)

A healthy community needs a healthy downtown. … In Downtown, public investment has a proven track record of generating new, private investment. Since 1990, the government’s investment of $165 million has stimulated $248 million in private investment. (Voteyea.com website.)

“Anything downtown seems to be off-limits for criticism or analysis. I don’t know why it is,” Lambke said. (Council member Phil Lambke, Wichita Eagle, November 14, 2004)

If you listen to local Wichita news media, our local politicians, and various community advocates, the desirability of downtown development over other development is accepted as a given. But what people actually do with their own money is different.

Free markets, since they represent people voluntarily entering into transactions that they believe will benefit them, lead to the most equitable and efficient allocation of scarce resources. When left to their own free will, most people and businesses in Wichita have decided to purchase property somewhere other than downtown. I don’t know why people have made this choice, and that’s really not important to me. What is important to me is that people and businesses make the choice of where to invest voluntarily. By investing in parts of town other than downtown, they are assigning a higher value to non-downtown property. As far as I know, no one is forcing this decision. People and businesses make it of their own free will.

As it happens, some people don’t agree with the choices that most people and businesses have made. They believe that people and businesses should have purchased property downtown. They are, in effect, telling us that we have made a poor decision. They propose, and are in the process of doing just this, to trump the decisions of individuals and businesses with their own. They do this through the political process and the tax system. They take tax money and give it to businesses to induce them to locate downtown.

Why don’t businesses voluntarily locate downtown, using their own money? There can only be one answer to this question: When spending their own money, most businesses have decided that the most productive use of it is to invest it somewhere other than downtown Wichita.

It is adding insult to injury when we realize that the tax money given away comes largely from people who have voted — with their own dollars — not to do what these tax dollars are used to promote. It is a further blow when we realize that the money given to downtown businesses in the form of incentives makes our town poorer as a whole. Why is that? It’s because that most people and businesses, when exercising their own best judgment, have decided that investing in downtown Wichita is not the most productive use of their resources. When the government, using its power to tax, makes a different decision for us, resources are not allocated as efficiently and productively. Therefore, we are poorer.

The result of all this is that we have the spectacle of the people of Wichita, voting with their own dollars, making one choice. Then the politicians and various quasi-public organizations say, “No, citizens of Wichita, you are wrong,” and impose their will on the people of Wichita through their power to tax. How arrogant is that?

Rep. Loganbill Advocates More Tax Brackets

On Saturday February 12, 2005, I attended a meeting of the South-Central Kansas Legislative Delegation. State Representative Judith Loganbill made remarks that included the fact that the maximum Kansas individual income tax rate becomes effective at taxable incomes of $30,000 for singles and $60,000 for married couples. A member of the audience spoke and expressed astonishment to learn this. I didn’t think about it at the time, but I now realize that Rep. Loganbill was advocating more tax brackets with higher rates.

TABOR: not fair?

Mr. Gary Brunk, executive director of Kansas Action for Children, wrote a letter published in The Wichita Eagle on February 23, 2005, opposing a taxpayer bill of rights, or TABOR, in Kansas. As evidence of TABOR’s failure in Colorado, he cites the low rate of childhood immunization in that state.

It is unfortunate that so many Colorado children don’t receive immunizations. Mr. Brunk, however, presents no evidence that Colorado’s TABOR is the cause. It is tempting to conclude that when both x and y are present that x must be the cause of y, but this is not evidence of actual causation. It is possible that other factors are responsible.

Besides, we might ask this question: Why should the taxpayers of Colorado pay to immunize others’ children? I think the answer many might give is that if the state supplies relatively inexpensive immunizations, the state can avoid paying the substantial healthcare costs for children who become ill with diseases the immunizations prevent.

This is undeniably true, and leads to the even-larger question: Why have states become responsible for providing healthcare (and other services) for so many? Mr. Brunk makes a case for what he terms a “fair” tax system. I submit that a tax system that takes money from one group of people and gives it to another group to whom it does not belong, no matter how noble the intent, is not in any sense fair. That is, if by fair Mr. Brunk means moral.

The economist Walter E. Williams makes the case succinctly: “Can a moral case be made for taking the rightful property of one American and giving it to another to whom it does not belong? I think not. That’s why socialism is evil. It uses evil means (coercion) to achieve what are seen as good ends (helping people). We might also note that an act that is inherently evil does not become moral simply because there’s a majority consensus.”

It is the runaway growth in taxes and spending — the taking of one person’s property and giving it to another — that a TABOR seeks to stem. A TABOR does not tell legislators how they must allocate state funds; it merely places a limit on how much they can spend. Legislators can still make judgments each year as to which programs are most important. Spending will most likely keep growing, but slower than it has.

The forces that want to increase taxes and spending by increasing amounts are always working and must be restrained. For example, Mr. Brunk, in his letter, advocates legislation that will require “a biannual report on the proportion of their income that people in different income levels pay in taxes.” Reading this, I get the strong impression that Mr. Brunk believes we do not pay enough tax. But for those who believe that state government is already large enough, a TABOR is the best way to manage its growth.

Latest Federal School Finance Spending Revealed

Here is an article from the Kansas Taxpayers Network that reports on school spending: http://www.kansastaxpayers.com/editorial_fedschool.html.

On Saturday February 12, 2005 I attended a meeting of the South Central Kansas Legislative Delegation. Lynn Rogers, USD 259 School Board President, and Connie Dietz, Vice-President of the same body, attended. There has been a proposal to spend an additional $415 million over the next three years on schools. Asked if this would be enough to meet their needs, the Wichita school board members replied, “No.”

Increase our awareness of taxes

As the annual tax season is upon us, we should take a moment to examine our level of awareness of the taxes we pay.

First, very many families don’t pay any federal income tax. According to a study by the Tax Foundation (link: http://www.taxfoundation.org/ff/zerotaxfilers.html) 58 million households, representing some 122 million people or 44 percent of the U.S. population, pay no federal income tax.

For those who do pay taxes, they often aren’t aware, on a continual basis, of just how much tax they pay. That’s because our taxes are conveniently withheld for us on our paychecks. Many people, I suspect, look at the bottom line — the amount they receive as a check or automatic bank deposit — and don’t really take notice of the taxes that were withheld. This makes paying taxes almost painless.

An alternative would be to eliminate the withholding of taxes from paychecks, and from monthly mortgage payments, too. Instead, each month or year the various taxing governments would send a bill to each taxpayer, and they would pay it just like the rest of their periodic bills. In this way, we would all be acutely aware of just how much tax we pay. I’m aware there is an obvious collection problem.

A further perversion is that many people are happy during tax season, because they get a refund. And they’re delighted to get that refund, so much so that many will pay high interest rates on a refund anticipation loan just to get the money a little earlier. The irony is that by adjusting their withholding, they could take possession of much of that money during the year as they earn it.

The other people happy during tax season are tax preparers. As a country we spend an enormous effort on tax recordkeeping and compliance. Another study by the Tax Foundation estimates that in 2002 we spent, as a nation, 5.8 billion hours and $194 billion complying with the federal tax code. (5.8 billion hours is equivalent to about 2,800,000 people working 40 hours per week, 52 weeks per year.) By simplifying our tax code, we could eliminate much of this effort, and return that effort to productive use.

Since tax withholding from paychecks and mortgages reduces our awareness of just how much tax we pay, it’s unlikely that governments will stop withholding and submit a bill to taxpayers. It’s left to ourselves to remain aware of how much we are paying.

Abuse Of Tax Funds Must Stop

The following is from the Kansas Taxpayers Network. It shows how government-funded organizations participated in the campaign to increase Sedgwick County taxes.

Taxpayers’ funds are being used to promote higher taxes in Kansas. Tax funds are also being used to lobby for higher taxes (see VI. and 1. above). This is an egregious mess that the legislature should stop. Tax funds are also used for “informational” campaigns by taxpayer funded groups. This includes a variety of local units like school boards but is not limited to any local units.

How bad is this problem? Public campaign donation and expense records show that $45,907.85 was contributed to the “Vote Yea” committee from organizations that are partially or fully funded by tax funds. Here’s how the money is broken down in this advisory election:

1) Greater Wichita Convention and Visitors Bureau contributed $10,000. The Greater Wichita Convention and Visitors Bureau is almost entirely funded by the City of Wichita through its hotel/motel bed tax. In 2004 budgeted expenditures were $1,122,510.

2) Greater Wichita Sport Commission contributed $25,000. The Sports Commission operates out of the Convention and Visitors Bureau offices. City, county, and state tax funds in the form of $5,000 a year memberships finance this office. The state funds pay for Wichita State University’s membership.

3) Wichita Downtown Development Corporation contributed $2,324. This city sponsored organization for helping downtown is primarily funded with a four mill city property tax within its downtown area boundaries.

4) Kansas Turnpike Authority contributed $3,583.85. This contribution by a state organization listed an “Inkind” contribution of a “loaned executive,” for the “vote yea” campaign.

5) The Hyatt Regency Wichita contributed $5,000. The Hyatt Regency operates this city owned and money losing hotel adjacent to the Wichita Century II complex. Since this corporation has a contract to operate this hotel this is another city related and funded contribution, albeit through this back door donation.

These five contributions were more than twice the entire amount of the vote no campaign that spent just over $21,000 in their unsuccessful effort to defeat this advisory proposal. This spending does not include $5,000 more in 5016 funds for the tax hike campaign. Similar charitable donations in tax elections have also been reported in northeast Kansas. All these tax and 5016 expenditures should cease. However, these contributions and expenditures were probably a good deal less than the money spent by tax funded organizations to lobby the legislature. Some of these local units register as lobbyists (see lobbyist list for cities, counties, schools, and other entities) and some do not, like lobbyists for Regents Institutions.

Tax funds are being misused to litigate for higher taxes. School districts that spend tax funds to sue the state over school finance are biting the hand that feeds them and already provides the bulk of their entire budgets. The state school finance formula should have an adjustment to penalize school districts that are suing the state over school finance. The perpetual school litigation machinery needs to be turned off at the statehouse.

Letter to Kansas Legislators regarding Sedgwick County arena tax

January 25, 2005

Dear Senator or Representative:

I am writing to express my opposition to the legislature granting Sedgwick County the authority to raise its county-wide sales tax in order to fund the proposed downtown Wichita arena.

I realize that the voters in Sedgwick County voted for the tax. Still, I believe there is ample reason why you should vote against the tax.

The primary reason is that the idea of the arena came about so fast in the summer that there was little thought given to the underlying issues. The Center for Economic Development and Business Research at Wichita State University produced a study showing a large positive economic impact for a downtown arena. I found much academic research that showed otherwise, that taxpayer-funded facilities such as the proposed downtown Wichita arena rarely live up to their expectations, and instead become a burden on the taxpayers. I also uncovered the fact that the WSU study was flawed in that it omitted important factors such as depreciation, the accounting for which is now required by Government Accounting Standards Board Statement 34. Incredibly, the CEDBR at WSU was not aware of this requirement when they prepared the study that was used to promote the economic benefit of the proposed arena. They admitted this when I called it to their attention.

Thus, what is presented as an economic boon for all the people instead becomes the county as a whole subsidizing the interests of a few.

I presented my findings to many news outlets in Wichita, but there was little interest. Because I experienced such resistance to my message I started a website, the “Voice for Liberty in Wichita.” It is located at wichitaliberty.org. Much of the research I uncovered is posted there. As an example I am enclosing an article that I recently wrote. It is based on what was found to happen in Pulaski County, Arkansas (Little Rock), when they built an arena funded in part by taxpayers.

I would be happy to provide you with any additional information that I can.

Thanking you in advance for your time,

Bob Weeks

A Taxpayer Bill of Rights for Kansas, Please

Taxes in Kansas are high, and may increase this year. The recent school finance ruling by the Kansas Supreme Court and the passage of the downtown arena sales tax referendum in Sedgwick County are just two reasons why.

We should act now to restrain the growth of state government spending. The Taxpayer Bill of Rights, or TABOR, has shown to be effective in Colorado. We in Kansas could have this, too.

The law is quite simple: state spending and debt could not grow faster than the rate of annual population growth plus inflation. It doesn’t prescribe how the state should raise or spend money, just that real (inflation-adjusted) spending can’t grow faster than the state’s population grows.

On the Americans for Prosperity web site there is an excellent analysis of what could happen in Kansas if we adopt such a law. You may read about it at this link: A Taxpayer’s Bill of Rights for Kansas.

Other helpful information is at the Cato Institute: Fiscal Trail Blazer: Colorado’s Taxpayer Bill of Rights is leading the way, Reforming TABOR in Colorado, and States Face Fiscal Crunch after 1990s Spending Surge.

As our state legislature prepares to start the 2005 session, I urge you to contact your representatives and make them aware of your support for this important law.

Prepare for sales tax-induced job effects now

Collecting the sales tax to pay for the downtown Wichita arena may produce unintended consequences.

A paper titled “An Assessment of the Economic Impact of a Multipurpose Arena” by Ronald John Hy and R. Lawson Veasey, both of the University of Central Arkansas, (Public Administration & Management: An Interactive Journal 5, 2, 2000, pp. 86-98) looked at the effect of jobs and economic activity during the construction of the Alltel Arena in Pulaski County, Arkansas. This arena cost $50 million. It was funded in part by a one percent increase in the county sales tax for one year (1998). The sales tax generated $20 million.

In the net, considering both jobs lost and jobs gained due to sales tax and construction effects, workers in the wholesale and retail trades lost 60 jobs, and service workers lost 52 jobs. There was a net increase of 198 jobs in construction.

The fact that jobs were lost in retail should not be a surprise. When a sales tax makes nearly everything sold at retail more expensive, the supply curve shifts to the left, and less is demanded. It may be difficult to estimate the magnitude of the change in demand, but it is certain that it does change.

Workers in these sectors, should the sales tax increase take effect, may want to reconsider their career plans. How many retail and service workers can make the transition to construction work is unknown. It is certain, however, that when workers lose their jobs it imposes benefits costs on the government — and the taxpayers.

The population of Pulaski County in 2000 was 361,474, while Sedgwick County’s population at the same time was 452,869, so Sedgwick County is a somewhat larger. Our sales tax will last 2.5 times as long, and our proposed arena is about three times as expensive. How these factors will impact the number of jobs is unknown, but I feel that the number of jobs lost in Sedgwick County in retail and services will be larger that what Pulaski County experienced.

It is interesting to note that the authors of this study, while measuring a positive net economic impact for the Alltel Arena, make this conclusion:

“The primary reason for this positive economic impact is that the state of Arkansas contributed $20 million to the construction of the arena. As a result, the economic impact of building the arena in Pulaski County is greater than it would be if the county had funded the arena by itself. A vast majority of the jobs that will be created will be in the service sector that frequently offers lower wages than jobs in other sectors of the economy.”

The proposed downtown Wichita arena does not have the advantage of having 40% of its cost paid for by outsiders. It may be that we feel even more strongly the negative impacts of the sales tax.