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A modest tax proposal.
May 27, 2012 7:19 PM   Subscribe

Kansas passes Tax Act meaning that business owners are not taxed at all on income derived from business profits. "Who will still be paying Kansas income tax? Only three groups: 1) employees, 2) some retirees and 3) individuals whose investments are so modest that they cannot afford to create a trust or partnership to shelter their investment income." The $3.7bn pa cost of the tax cuts is said to create the risk of a $2.5bn pa deficit by 2018.
posted by jaduncan (114 comments total) 16 users marked this as a favorite

 
Marx really should have given more consideration to the possibility that we'd just go back to feudalism.
posted by gerryblog at 7:22 PM on May 27, 2012 [65 favorites]


I eagerly await Thomas Frank's sequel, What the EVERLOVING FUCK'S the Matter with Kansas?
posted by tzikeh at 7:24 PM on May 27, 2012 [45 favorites]


Sounds like Thomas Frank can come out with a sequel to What's the Matter with Kansas.
posted by birdherder at 7:24 PM on May 27, 2012 [2 favorites]


To be fair, the creationist science books are probably a lot cheaper than the ones that teach evolution, so there's a savings to be had there.
posted by Golfhaus at 7:24 PM on May 27, 2012 [7 favorites]


DAMMIT! I take a second to find a link and come in second with the What's the Matter w/Kansas joke.
posted by birdherder at 7:25 PM on May 27, 2012 [6 favorites]


Oddly, the calculations do not appear to consider that every single person who isn't an employee of the state will become business owners who sell themselves as consultant to the companies they previously worked for.

I personally was shocked that a consideration of people changing tax avoidance plans wasn't in the figures; it seems obvious people who don't want to pay taxes are going to have 20 companies a day cold-calling them to tell them how to stop and offering to do all the paperwork for less than the savings the callee will make in a month.
posted by jaduncan at 7:26 PM on May 27, 2012 [17 favorites]


You know the difference is between Greece and the US?

Greece just has people avoiding paying the taxes they owe. The US has the people who owe big taxes rewriting laws so they no longer legally owe taxes at all.
posted by hippybear at 7:27 PM on May 27, 2012 [55 favorites]


I like how Kansas has, over the years, become a sort of microlab for every far-right fantasy. I think the Washington neo-cons ship their more far-fetched ideas out there for test runs, like that gorilla who jumps on luggage at airports. Soon Kansas will pass a law letting you create armed fiefdoms, citing the Posse Comitatus Act or something, and the Tea Party bankrollers will sit back, making bets on how that'll play out, chortling over their martinis.
posted by Marisa Stole the Precious Thing at 7:29 PM on May 27, 2012 [3 favorites]


Live in Kansas, Incorporate in Delaware?
posted by TwelveTwo at 7:31 PM on May 27, 2012 [7 favorites]


I just remembered that my crazy, right-wing uncle lives in Kansas. I understand him so much better now.
posted by themanwho at 7:40 PM on May 27, 2012 [1 favorite]


Foot, meet own bullet.
posted by Salvor Hardin at 7:47 PM on May 27, 2012


More background. Ridiculous. They ought to be ashamed of themselves.
posted by gjc at 7:51 PM on May 27, 2012 [1 favorite]


what is this I don't even WHAT

...

Excuse me, I need to go let my brain congeal as it has gotten all explodey.
posted by meese at 7:54 PM on May 27, 2012 [1 favorite]


The $3.7bn pa cost of the tax cuts is said to create the risk of a $2.5bn pa deficit by 2018.

If my math is right, this means that right now, Kansas has a surplus of about $20 billion. Or about $6,600 per person. So clearly, the only sensible thing to do would be to burn off that cumbersome surplus by dismissing taxes for the highest income bracket. I mean haven't you guys seen Brewster's Millions? That was a pretty funny movie.
posted by Marisa Stole the Precious Thing at 7:55 PM on May 27, 2012 [4 favorites]


Next up, Gov Brownback plans to sign legislations changing the Kansas State motto from "Ad Astra per Aspera" to "Fuck you, I got mine."
posted by Frayed Knot at 7:55 PM on May 27, 2012 [11 favorites]


It amazes me how American conservatives (And I say that only because the article is about Kansas. It's depressingly possible that conservatives in my own country feel the same way.) have gone from "we believe in things like national parks and social security but don't want to contribute quite so much to them" to "government is a horrific parasite that saps vitality from the economy and must be destroyed." They're full-on religious fanatics now.
posted by Kevin Street at 7:57 PM on May 27, 2012 [18 favorites]


So really... Is thwre ajything in the law preventing everyone from becoming independent contractors?
posted by drezdn at 7:57 PM on May 27, 2012 [1 favorite]


How does one write "Fuck you, I got mine." in Latin?
posted by jeffburdges at 7:57 PM on May 27, 2012 [4 favorites]


How does one write "Fuck you, I got mine." in Latin?

Irrumabo, te possedi mea. According to Google Translate. I only took one semester of Latin (thanks to a psychotic teacher having a breakdown), so I really don't know.
posted by hippybear at 8:06 PM on May 27, 2012


So if you don't pay taxes on your expenses, and you don't pay taxes on your profits.... you pay zero taxes for being a 'business owner'?
posted by bradbane at 8:09 PM on May 27, 2012


I don't want to move to Kansas. I do want to move to the state with the airport gorillas.
posted by dirigibleman at 8:12 PM on May 27, 2012 [5 favorites]


YAWN. WAKE ME WHEN KANSAS SWITCHES TO BITCOIN
posted by Sticherbeast at 8:13 PM on May 27, 2012 [6 favorites]


I would love to see this result in absolutely cratered tax revenue for Kansas, were it not for the huge toll of human suffering that this will unleash.
posted by leotrotsky at 8:13 PM on May 27, 2012 [1 favorite]


I got "Irrumabo te Habeo mea" for "Fuck you! I have got mine". Decent motto really.
posted by Grimgrin at 8:15 PM on May 27, 2012 [4 favorites]


I'd say, if business owners don't pay taxes, they shouldn't get free use of roads, and should have to pay non-subsidized rates for any other public services. Also, no police or fire support if they should desire it.

It's only fair.
posted by hippybear at 8:15 PM on May 27, 2012 [53 favorites]


Irrumabo, te possedi mea.

I'll throw non curo tu propter habeo mea in the ring.
posted by michaelh at 8:16 PM on May 27, 2012 [1 favorite]


But hippybear: they do generate tax revenue, by employing people who pay taxes! You see? They've already done their bit.
posted by Marisa Stole the Precious Thing at 8:17 PM on May 27, 2012 [3 favorites]


If, through some bizarre economic miracle, cutting taxes to zero on the wealthy actually improved the standard of living for the rest of us, I would be all in favor of it.

Of course, I strongly doubt that's the case, but, if that's what they want to do as a state, I'm all in favor of Kansans giving it a shot, and letting the rest of us know how well it works out for them.
posted by xigxag at 8:17 PM on May 27, 2012 [2 favorites]


Can someone help out a furriner? Roughly what services (or proportion of services for those that are split) are the responsibility of the State, as opposed to the Federal Government or the county?

Primary and secondary education, it seems (100%? What about NCLB?). What else?
posted by wilful at 8:18 PM on May 27, 2012


A thought occurred to me. What's to stop an employee from asking their boss to fire them and rehire them as an independent contractor? Cha ching.
posted by xigxag at 8:23 PM on May 27, 2012 [3 favorites]


wilful, a vast majority of roads, policing and fire departments, zoning and building regulations, regulation of professional practice, the vast majority of the court system (both criminal and civil), most human services are provided locally or at a state level.

Federal services are primarily social security, military, homeland security, etc. A lot of federal money gets collected and sent back to the states who then spend it, but the administration still happens at the state level.
posted by meinvt at 8:23 PM on May 27, 2012 [1 favorite]


Yeah, this is a great opportunity for businesses to pay lower salaries AND the new contractor to have a higher take-home pay. Everybody will be doing it.
posted by leotrotsky at 8:26 PM on May 27, 2012 [3 favorites]


Can someone help out a furriner? Roughly what services (or proportion of services for those that are split) are the responsibility of the State, as opposed to the Federal Government or the county?

You'd need an accountant to sort through it to get more than a pure-bullshit answer. Some stuff might be paid for by a local government of some sort, but almost all the money the locality is paying comes from a grant or other aid from the state.

More broadly, it doesn't make a lot of sense to draw hard lines between states and localities. States create localities for their own purposes, and local governments of all sorts are entirely the creatures of their state legislatures. The state can and occasionally does abolish, create, merge, or alter them. So in some cases localities might have something like a genuine responsibility to deal with something, but another state that superficially seems similar really has a state program that happens to be administered by counties.
posted by ROU_Xenophobe at 8:27 PM on May 27, 2012 [2 favorites]


To be fair, the creationist science books are probably a lot cheaper than the ones that teach evolution, so there's a savings to be had there.

The irony is that this is evolutionism in action. May the fittest survive!
posted by No Robots at 8:28 PM on May 27, 2012 [1 favorite]


To those predicting doom and gloom: that's exactly the point. You completely hose the tax system so that in a couple years you can come back and say, "we have a $XXX deficit and we have to cut services."
posted by Dr.Enormous at 8:29 PM on May 27, 2012 [22 favorites]


Being an independent contractor means you pay your own health insurance, folks. Not a very cost effective tax avoidance strategy.
posted by ook at 8:31 PM on May 27, 2012 [7 favorites]


The Governor has advanced some interesting initiatives regarding the Kansas Arts Commission.
posted by taro sato at 8:32 PM on May 27, 2012 [1 favorite]


When I was looking around for somewhere to live before moving out of the city, one of the constraints on my search was that wherever I moved should have hills, because it seemed to me that living in flat places drives people insane.
posted by flabdablet at 8:32 PM on May 27, 2012 [24 favorites]


Man, and I thought "have crazy angry anti-immigration laws enacted just before harvest season in Georgia" was a bad idea full of unintended consequences. Which, I mean, it was. But this ... this is going to have all manner of unintended consequences for sure. I think we're beyond plain old 'get the popcorn' levels of train-wreck, here. And blue states will continue to - on average - bail out the red states
posted by rmd1023 at 8:39 PM on May 27, 2012


Come on guys, we should be happy for them! Obviously Kansas has overcome the state budget shortfall problem so many other states have been suffering from or they wouldn't be able to make such an extravagant gesture. They have to be doing better financially now, because if they weren't then this would be them digging themselves an extremely deep hole, wouldn't it? And they can't possibly be that stupid, right?
posted by JHarris at 8:40 PM on May 27, 2012 [2 favorites]


Can anyone find the bill online? I give up.
posted by michaelh at 8:43 PM on May 27, 2012


I'm not sure that this is so unprecedented or catastrophic as people think. The following states have no state income tax at all:
Alaska
New Hampshire
Tennessee
Florida
South Dakota
Washington
Nevada
Texas
Wyoming
posted by shivohum at 8:44 PM on May 27, 2012 [3 favorites]


Which means precisely nil, since we are talking about a sudden and dramatically regressive change in tax base.This would be equivalent to Alaska just losing its oil revenue, or NH abolishing property taxes for everyone but renters.
posted by hincandenza at 8:57 PM on May 27, 2012 [11 favorites]


In New Hampshire's case at least there is definitely a Business Profits Tax, just not a personal income tax.
posted by XMLicious at 8:59 PM on May 27, 2012 [1 favorite]


"Can someone help out a furriner? Roughly what services (or proportion of services for those that are split) are the responsibility of the State, as opposed to the Federal Government or the county?"

It's more useful to think of there being three levels of taxing bodies in the U.S. -- Federal, State, and Local. The feds basically use income tax; the states use income and sales taxes; local bodies mostly use sales and property taxes. (In some states cities can levy income taxes; some states don't levy income taxes at all.)

Local government pays for police, jails, fire, schools, local parks, local roads, sidewalks, streetlights, sewers, etc. State government pays for state police, prisons, state parks, state roads, airports, locks & dams, universities, etc. The federal government pays for the FBI, the army, federal prisons, national parks, interstate highways, air traffic controllers, social security, etc. (Something like 60% of the federal budget is social security, Medicare/Medicaid, and defense spending.) A state's biggest line item is usually education. (A municipality's biggest line item is usually education, too.)

But a lot of federal money passes through to states and local bodies, and a lot of state money passes through to locals. For example, at my (fairly impoverished) school district (in Illinois), about 1/3 of our budget comes from local property taxes (which is how schools are most generally funded). About 1/3 comes from the state, to make up some of the difference in property taxes (wealthier districts get far less), and about 1/3 comes from the federal government, mostly through anti-poverty funding.

Federal taxes are hugely, hugely higher (for most people) than state taxes or local taxes. If you earned $100,000 in taxable income, you'd owe about $21,000 in federal income taxes and, if you lived in a highish-tax state like Massachusetts (which I picked because it has a flat income tax of 5.3%), you'd owe $5300 in state income taxes. (Of course all kinds of other things go into it ...)

When I start to try to explain this it seems more complicated to explain than I thought, but I live in a state with 7,000 taxing bodies, so I guess I'm kind-of used to it being a gigantic, complicated system.
posted by Eyebrows McGee at 9:00 PM on May 27, 2012 [5 favorites]


I'm not sure that this is so unprecedented or catastrophic as people think. The following states have no state income tax at all:
Alaska
New Hampshire
Tennessee
Florida
South Dakota
Washington
Nevada
Texas
Wyoming


This is incorrect.

Two states have no state income tax. Two, as in 2, as in deux, as in dos. Those two states are Nevada (home of gambling) and Wyoming (federal lands a-plenty). Those other states on your list may not have individual income tax, but they have other forms of income tax.

The Wikipedia entry is helpful.
posted by Sticherbeast at 9:00 PM on May 27, 2012 [7 favorites]


Two states have no state income tax. Two, as in 2, as in deux, as in dos. Those two states are Nevada (home of gambling) and Wyoming (federal lands a-plenty). Those other states on your list may not have individual income tax, but they have other forms of income tax.

A fair distinction, but individual income tax is what the Kansas Tax Act affects. From the first link: "The act provides that all income of business owners is tax-free (except in the unusual case where a regular corporation is used)."

The point is that the states I mentioned all already don't tax the income of business owners (and of all other individuals).
posted by shivohum at 9:15 PM on May 27, 2012 [2 favorites]


When I was looking around for somewhere to live before moving out of the city, one of the constraints on my search was that wherever I moved should have hills, because it seemed to me that living in flat places drives people insane.

I drove through Kansas once and definitely got The Fear. I'm from the coast and that much plain flatness rolling on and on definitely got to me.

Kansas is also the place where the interstate we were on was a toll road. Wife asked how they were going to enforce a toll on the interstate. I said, "It's Kansas, there are only going to be like five exits!" then laughed. I was depressingly correct.

We also met a Buffalo Bill (the cowboy, not the murderer, although...) re-enactor in our hotel that morning who sat down with us as we ate breakfast and gave us a whole monologue about being Buffalo Bill. Importantly, at no point did we speak to him or say "Why, Mr. Buffalo, do go on?" Instead, we just stared, the way you might stare at someone dressed as Buffalo Bill who sat down at your breakfast table uninvited and began monologuing about the history of Hays Kansas for a good 20 minutes.

What I'm saying is Kansas is weird as shit, yo.
posted by Ghostride The Whip at 9:16 PM on May 27, 2012 [16 favorites]


I do hope you told him to stay the hell out of Deadwood.
posted by Marisa Stole the Precious Thing at 9:34 PM on May 27, 2012 [5 favorites]


The act provides that all income of business owners is tax-free (except in the unusual case where a regular corporation is used).

Can someone explain this, so i know the right way to incorporate if i move to kansas?
posted by jacalata at 9:37 PM on May 27, 2012


That guy should do a sequel to What's the Matt— oh? Oh.

Well, I bet this is gonna wind up meaning a lot of people just quit and get re-hired as inde— oh come on, guys.
posted by DoctorFedora at 9:38 PM on May 27, 2012 [10 favorites]


How does one write "Fuck you, I got mine." in Latin?

We're not in toto, Kansas.
posted by twoleftfeet at 9:41 PM on May 27, 2012 [18 favorites]


Two states have no state income tax. Two, as in 2, as in deux, as in dos. Those two states are Nevada (home of gambling) and Wyoming (federal lands a-plenty). Those other states on your list may not have individual income tax, but they have other forms of income tax.

I'm in Nevada and just paid $750 to register my new car (Chevy Volt! Yeah electric!). We may not have an income tax, but we pay for it in other ways. There is (in this case, literally) no free ride.

And no, public transport is a joke so that's not an option, and walking or riding a bike is a good way to get run over by a drunk or someone texting.
posted by SirOmega at 9:53 PM on May 27, 2012


As someone who grew up in Kansas, before it was crazy-ville, I'm glad for every day I wake up as far away from there as I am...
posted by Windopaene at 9:54 PM on May 27, 2012


SirOmega: "I'm in Nevada and just paid $750 to register my new car (Chevy Volt! Yeah electric!). We may not have an income tax, but we pay for it in other ways. There is (in this case, literally) no free ride.

And no, public transport is a joke so that's not an option, and walking or riding a bike is a good way to get run over by a drunk or someone texting.
"

This is pretty similar in both examples to Colorado, plus we have state income tax, so you still do kinda come out ahead.
posted by boo_radley at 9:58 PM on May 27, 2012 [1 favorite]


Kansas didn't eliminate their income tax. They made it regressive.
posted by dirigibleman at 10:02 PM on May 27, 2012 [2 favorites]


Could a business in Kansas make it mandatory that all employees are fired and, if they want to keep working there, brought back on as contractors/consultants?

Because, if so, doesn't that leave a huge, glaring loophole for every company to appear on the books as a small business, since they can run a skeleton crew of actual employees and have their contractors/consultants do the bulk of the work?

Also, I'd imagine it might be a good way for a company to completely avoid hiring discrimination policies, because suddenly they aren't hiring someone, they're purchasing that person's services.

Also also, I'm pretty sure we could power the world on the force of the collective boner of Kansas business owners, Tea Partiers and libertarians right now.
posted by jason_steakums at 10:02 PM on May 27, 2012 [1 favorite]


Kansas has a Republican governor, a Republican majority in their Senate, and a Republican majority in their House. It could happen to you.
posted by twoleftfeet at 10:03 PM on May 27, 2012 [3 favorites]


I'm in Nevada and just paid $750 to register my new car

I'm in California and just paid $257 to renew the registration on my 1988 (that's right, 24 year old) chevy pickup for one more year. I pay that every year and it never goes down. Does go up occasionally.

And I pay property tax, sales tax, income tax and all the rest. Plus, I pay more for my gasoline than people in most other states.
posted by buggzzee23 at 10:03 PM on May 27, 2012 [1 favorite]


Changing the tax law so only the employees pay an income tax seems awful prickish. It would at least appear fair if they had abolished the tax altogether.
posted by buggzzee23 at 10:07 PM on May 27, 2012


A fair distinction, but individual income tax is what the Kansas Tax Act affects. From the first link: "The act provides that all income of business owners is tax-free (except in the unusual case where a regular corporation is used)."

Yes, I read the article. I was complaining about your inaccuracy, not that of the article. If you had wanted to say that those states don't have individual income tax, then that's what you should have said.

The point is that the states I mentioned all already don't tax the income of business owners (and of all other individuals).

Better, but still not a hundred percent. New Hampshire has taxes on interests and dividends, and Tennessee has taxes on stocks and bonds.
posted by Sticherbeast at 10:32 PM on May 27, 2012 [1 favorite]


How many jobs are created by installing a car elevator? Perhaps the hard-nosed numbers-man candidate Romney might care to tote that up.
posted by Camofrog at 10:52 PM on May 27, 2012


I was complaining about your inaccuracy, not that of the article. If you had wanted to say that those states don't have individual income tax, then that's what you should have said.

And I wasn't complaining about your impeccable Wikipedia research, but pointing out that context tends to inform the way people use words. When in ordinary usage people in non-legal forums talk about "income taxes," they mean individual, general income taxes, not corporate income taxes or taxes on narrow, specialized sources of income; doubly so when people comment about "income taxes" in the context of an article about a bill that abolishes individual income taxes.
posted by shivohum at 11:08 PM on May 27, 2012 [3 favorites]


Hey now, as a proud Kansan I will stand up for my state. Hills do not produce sanity. Just look at Arkansas - tons of hills and those people are weird.

My point is that Brownback's radical economic agenda is NOT supported by the majority of Kansans. Lately he has been polling lower than President Obama in our heavily republican state - which is saying A LOT. His brand of conservative freakshow holds a comfortable margin of support in the Kansas House, but not in the Senate, where this bill was rammed through with significant shenanigans and abusive of the legislative process.

Yes, I agree this tax legislation is financial armageddon. Yes, I believe that our schools, highways and social services will be devastated. But don't think this was done with our support.
posted by jlowen at 11:15 PM on May 27, 2012 [9 favorites]


Apparently, the entire justification for the cuts is Brownback is using Texas as his model. Which is baffling, considering the level of resources available to Texas, as opposed to Kansas. Even the Wichita Eagle, which is decidedly conservative, called the cuts "inappropriate and destructive."
posted by Marisa Stole the Precious Thing at 11:15 PM on May 27, 2012


I like how Kansas has, over the years, become a sort of microlab for every far-right fantasy.

We here in Arizona would like a word with you.
posted by azpenguin at 11:35 PM on May 27, 2012 [5 favorites]


Metafilter: tons of hills and those people are weird.
posted by palomar at 11:37 PM on May 27, 2012


If Kansas goes bankrupt, can we just get rid of it? Because honestly, it's done fuck all for me and to be frank I'm kinda sick of it.
posted by Afroblanco at 11:49 PM on May 27, 2012


Can an entire state file under Chapter 9? By 2016-18ish we should find out.
posted by T.D. Strange at 11:51 PM on May 27, 2012 [1 favorite]


hippybear: "Greece just has people avoiding paying the taxes they owe. The US has the people who owe big taxes rewriting laws so they no longer legally owe taxes at all."

No, the people who pay to get the tax laws rewritten also just out and out evade them. A former President once misclassified some $80 million in income as a capital gain rather than earned income as it should have been, thus evading around $8 million in tax. If only that were the only incident.


buggzzee23: "Changing the tax law so only the employees pay an income tax seems awful prickish. "

They have to keep taxing wage income. They're obligated to deals like this.
posted by wierdo at 11:52 PM on May 27, 2012


Wheeeeee!

I don't know what else to say.

I think Portal 2's Cave Johnson character is a great caricature of the contemporary far-right archetype, which seems to have a cartoonish lunacy combined with an aggressive, anti-intellectual, and jocular overconfidence as an essential part of its DNA. "I'll be honest, we're throwing science at the wall here, to see what sticks."
posted by treepour at 11:52 PM on May 27, 2012 [1 favorite]


I'm in California and just paid $257 to renew the registration on my 1988 (that's right, 24 year old) chevy pickup for one more year. I pay that every year and it never goes down.

Weird, my car is like 10 years younger than yours and my California registration is less than $100.
posted by salvia at 12:06 AM on May 28, 2012


Anyone notice what's been happening in Wisconsin, Michigan, Minnesota, Florida, ah, Kansas? What do people expect the Republicans to do?

Wait till November when the Republicans take Washington.

As Hunter Thompson said on the observance of Nixon's death:

"And he cried mightily with a strong voice, saying, Babylon the great is fallen, is fallen, and is become the habitation of devils, and the hold of every foul spirit and a cage of every unclean and hateful bird." Revelation 18:2"

Babylon? It's coming down. Who needs Iran, al Qaeda, Russia, China, North Korea, ah, Goldman Sachs, JP Morgan when you have this brand of Republicanism?

Sheesh, Nixon? The good old days...
posted by WinstonJulia at 12:17 AM on May 28, 2012 [3 favorites]


You know what the really sad thing is? If this all blows up, I'd still be willing to go to the barricades for these people. Even when they bring it all on themselves, they're still people and they're still going to be pretty hosed in a year or three.

They can vote against their own self interest for decades and I'd still feel obligated to go to bat for them if things went waaaaaay south.
posted by Slackermagee at 12:20 AM on May 28, 2012 [6 favorites]


They can vote against their own self interest for decades and I'd still feel obligated to go to bat for them if things went waaaaaay south.

I thought this was how the US tax system was supposed to work? Republican states pay nothing in taxes, and get huge economic subsidies from those Democrat states where the people are too nice to tell them to go fuck themselves and stand on their own two feet?
posted by PeterMcDermott at 12:40 AM on May 28, 2012 [16 favorites]


Company: Companies are people, just like you!
Prisoner: People like me?
Company: Er...no.
Taxpayer: People like me?
Company: Get back to work.
Voter: People like me?
Company: Sooner than you think!
posted by obiwanwasabi at 1:23 AM on May 28, 2012 [15 favorites]


I noticed a couple of people point out the way this encourages people to become independent contractors. I humbly submit that this bill has very, very little to do with taxation and a great deal more to do with labor rights and unionization.

First, as at least one reader pointed out, there are states that do not have a state income tax. Some have other forms of payroll-linked taxes, but there are quite a few that do not have an individual income tax. If Kansas wanted to actually repeal the income tax, I'm sure they would have, in fact, repealed the income tax. In fact, that would have been an easier bill to pass, because it would read in its entirety, "Sections X, Y and Z of the Kansas Whatever Revenue Code are repealed, and all law incorporating those sections by reference are hereby rendered null and void." This is one of those any-idiot laws, as in, any idiot could figure out what that meant and either be for or against it. But they didn't do that.

Second, it looks like simple corporate forms like LPs, LLPs and perhaps LLCs are shielded from income tax. I didn't dig into the language of the law, but I assume that practically any corporate form in which the equity owners are reducible to a list of human beings is shielded from income tax. That would be almost everything except C-corps and S-corps. So basically, if you get a business license, you're now not paying income tax on income paid to that entity. It would be interesting if they went all the way down to allowing that for FBNs (what you see on forms as dba).

Third, there's some funkiness with being alone in a business (a sole-proprietorship or a general partnership) where you end up paying the self-employment rate. So there's a really strong incentive to actually have a FEIN and form a simple corporate form like an LLP or even an LLC.

Fourth, the complexity floor for doing all that is near-zero. Any decently smart engineer could write an application that entirely sets all that up for almost nothing for any small group of people. There are already sites that do most of it in one shot, but if you had a whole state going that way, surely five or ten companies will pop up that help people construct state tax haven companies for themselves.

So here's what I think the message is: "Hey, employed person... you don't receive benefits, because even though your employer has a group plan, their contribution to the plan is $0, and you don't get paid enough to pay for the benefits. That's not a reason to stay on as an employee. And you're white / male / straight / ordinary so the legal protections that employment activates aren't really something you need. And you're healthy - you don't need FMLA or ERISA. You're not even saving for retirement. Get together with a group of like-minded people in your company, form one of these employee-leasing groups, and stop paying state tax. Anybody can do it."

Folks will contract themselves back to their current employer and, by and large, the contract will be terminable for any or no reason, and they'll lose all their protections. No unions, no minimum wage (because you're paying yourself - should have figured that out before signing the company-to-company contract). No benefits. Hardly any civil rights protections. Most contracts will probably have onerous arbitration agreements. Many will likely have liability insurance requirements, and the "employee" will have to insure themselves against, say, on-the-job accidents. Sole remedy for almost everything can be termination of the contract and payment of monies owed.

Yeah, I don't think this has to do with taxes.
posted by kochbeck at 1:29 AM on May 28, 2012 [41 favorites]


hey, it worked for california, amirite?
posted by quonsar II: smock fishpants and the temple of foon at 1:42 AM on May 28, 2012


Get together with a group of like-minded people in your company, form one of these employee-leasing groups

So this might be pro-union after all.
posted by o0o0o at 1:49 AM on May 28, 2012


Whenever stories like this come up, I'm reminded that there is a theory that holds that a section of American society basically works by stealing the labour of others. First they did it by actual, explicit slavery (so the theory goes) and then, when that was no longer acceptable, they did it by other means - by giving businesses and companies so much power that they could mistreat workers with impunity, or by imprisoning so many people that a slave system is effective recreated by putting to work people guilty of a completely arbitrary offence like smoking marijuana. It's a pretty extreme theory that maybe blurs the distinction between slaveholding and capitalism a little too much for my tastes, but I submit it for consideration. Sometimes it seems eerily accurate.

The only reason why living in America provided anything like a reasonable standard of living for the majority of the population was because a broad coalition of ordinary people got together and demanded it. And then Roosevelt went to the super-rich and presented them with a bargain - pay a lot, to improve the living standards of ordinary Americans, and you avoid revolution.

That only came about because of at least forty years of struggle - a fascinating story of good versus evil and oppression versus freedom. You can hear quite a bit of that story, presented through the medium of popular culture, here.

The last two links go to lectures, which are quite long, but they are very, very good and I strongly recommend that you listen to them. The first one appeared on the Blue quite recently. The UC Berkeley youtube channel is absolutely amazing and doesn't seem to be the focus of an FPP yet.
posted by lucien_reeve at 1:49 AM on May 28, 2012 [17 favorites]


Kansas is the New Greece
posted by nickrussell at 2:26 AM on May 28, 2012


They have to be doing better financially now, because if they weren't then this would be them digging themselves an extremely deep hole

When you're that starved for vertical relief, you chase it in any form you can.
posted by flabdablet at 2:43 AM on May 28, 2012


there is a theory that holds that a section of American society basically works by stealing the labour of others.

That "theory" is the basis for the Bain Capital business model. Americans will have the opportunity to vote that model into the White House in November.
posted by Kirth Gerson at 2:52 AM on May 28, 2012


I'm not sure that this is so unprecedented or catastrophic as people think. The following states have no state income tax at all:


As dirigibleman pointed out, this is different. A pure elimination of the tax would be more equitable. It would eliminate the tax for rich or poor. Kansas just eliminated it for the rich, leaving the working schmoes to pay for everything. Eliminating the state income tax can be pretty regressive too as states with no or very low income taxes often raise revenue through high user fees such as car registration etc. which fall disproportionately heavily upon those of lesser income.
posted by caddis at 3:30 AM on May 28, 2012


Rich people send their kids to private and parochial charter schools; poor people use public schools. Rich people have internet at home; poor people use the resources at the library.

Kansans are generally very community oriented. There are few large cities, and many, many small ones. The residents of large cities will suffer from the lack of a tax revenue system. The residents of small towns will do what they have always done, and band together to provide what the community needs.

What I predict is an upswing in the number of small towns that learn all of the vagaries of the Federal money system to bypass the state level and get the funding paid directly to the communities. I hope they will focus on education, libraries and necessary public services. Some will.

The rest of the state will probably become Namibia, and return to the dust bowl days.
posted by halfbuckaroo at 3:51 AM on May 28, 2012


Greece just has people avoiding paying the taxes they owe. The US has the people who owe big taxes rewriting laws so they no longer legally owe taxes at all.
In the US, the people who pay the taxes write the laws, while in Greece, the foreign creditors too whom the taxes are owed write the laws. Who's economy is doing better?

It doesn't mean this Kansas law is a good idea. Like Greece but unlike the US federal government, they can't just print money to cover their debts, so they'll have to raise other taxes or cut spending.
posted by delmoi at 3:51 AM on May 28, 2012


I do hope you told him to stay the hell out of Deadwood.

You've confused Buffalo Bill with Wild Bill.
posted by Bookhouse at 3:53 AM on May 28, 2012 [1 favorite]


What I predict is an upswing in the number of small towns that learn all of the vagaries of the Federal money system to bypass the state level and get the funding paid directly to the communities. I hope they will focus on education, libraries and necessary public services. Some will.

The rest of the state will probably become Namibia, and return to the dust bowl days.
Huh? You realize that farm subsidies and the like are all handled by the federal government, right? Bad state laws aren't going to cause another dust bowl.
posted by delmoi at 3:58 AM on May 28, 2012


The $3.7bn pa cost of the tax cuts is said to create the risk of a $2.5bn pa deficit by 2018.

Which will be blamed on the poor and liberals and, then, used as a reason to simply merge the state government with ADM or Dow Chemical.
posted by Thorzdad at 4:21 AM on May 28, 2012 [2 favorites]


But hippybear: they do generate tax revenue, by employing people who pay taxes! You see? They've already done their bit.
Not if they only employ self-employed contractors!

That said, in Texas you don't have to pay taxes on income at all. They make up for it with high property taxes and high sales tax.
I'm not sure that this is so unprecedented or catastrophic as people think. The following states have no state income tax at all:
Alaska...
In fact in Alaska, they pay everyone a couple thousand dollars a year just to live there!
Being an independent contractor means you pay your own health insurance, folks. Not a very cost effective tax avoidance strategy.
Which won't be a problem once Obamacare kicks in! But really, we would actually probably be better of to discard the employer based healthcare. It's kind of a ridiculous situation, which leads to people with serious illnesses needed to hold down a job just to get healthcare, even if they wouldn't need the money otherwise.
Folks will contract themselves back to their current employer and, by and large, the contract will be terminable for any or no reason, and they'll lose all their protections.
My guess is that there aren't a lot of union jobs in Kansas. It's definitely a "Right to Work" state, which means employment is already terminable for any reason. In fact, a contract could in theory provide extra protection in the contract itself.
I drove through Kansas once and definitely got The Fear. I'm from the coast and that much plain flatness rolling on and on definitely got to me.

Kansas is also the place where the interstate we were on was a toll road. Wife asked how they were going to enforce a toll on the interstate. I said, "It's Kansas, there are only going to be like five exits!" then laughed. I was depressingly correct.
Eh, I've driven up and down I-35 several times and the Kansas turnpike is actually by far the one of the nicest sections. Rather then a hodgepodge of random cities, exits, random crappy gas stations it's almost like driving through a brand new superhighway through outer Mongolia or something. Smooth sloping grass covered hills as far as the eye can see, with the occasional groups of cows grazing on it.

There are three gas stations, each run by the turnpike and in the center of the road, rather then on the side.

The road itself is completely smooth, gently curving and free of distraction. I've also only rarely seen any speed enforcement (I once saw what looked like a motorcycle cop parked in the median area)

Seriously people: Just because you don't agree with a tax law in the state doesn't mean you have to attack the scenery It had nothing to do with the law.

(Also, are you unfamiliar of the concept of a turnpike? Of course there are only a few exits, that's the whole point. They have them all over the country. They obviously have a lot of people just driving through their state, and they found a way to make money off of them. And you get what you pay for, the road surface itself is really, really nice.)
I'm in California and just paid $257 to renew the registration on my 1988 (that's right, 24 year old) chevy pickup for one more year. I pay that every year and it never goes down.

Weird, my car is like 10 years younger than yours and my California registration is less than $100.
I thought it might have something to do with emissions, but according to, this it looks like it's based on the initial purchase price, and renewal depreciates for the first eleven years. So that 1988 truck would have stopped depreciating, for the purposes of the renewal fee, in 1999.
posted by delmoi at 4:29 AM on May 28, 2012 [4 favorites]


You've confused Buffalo Bill with Wild Bill.

I always get those two mixed up.
posted by Marisa Stole the Precious Thing at 4:33 AM on May 28, 2012


Huh? You realize that farm subsidies and the like are all handled by the federal government, right? Bad state laws aren't going to cause another dust bowl.

"Dust bowl days" as in, if you are not Archer Daniels Midland or Monsanto, you pack up the truck and get the hell out of there. Subsidized wheat farming is not for gentlemen farmers. It takes a lot of production to pay for a $350,000.00 combine-harvester, and subsidies really don't even come close.
posted by halfbuckaroo at 4:42 AM on May 28, 2012 [1 favorite]


What I predict is an upswing in the number of small towns that learn all of the vagaries of the Federal money system to bypass the state level and get the funding paid directly to the communities. I hope they will focus on education, libraries and necessary public services. Some will.

Kansas already gets more money out of the federal system than it puts in. As a resident of one of the states that puts more in than it gets out, I think it's time we consider cutting them off until they start acting like adults.

(US fiscal transfers)
posted by sriracha at 5:29 AM on May 28, 2012


Part of me would be really curious over what the Tea Party would think of a rule that meant states cannot gain more in subsidies from the federal government than they contribute.

I mean, it's obviously a terrible idea. But it would very much check if they actually care about government welfare or not.
posted by jaduncan at 5:36 AM on May 28, 2012 [2 favorites]


Kansas already gets more money out of the federal system than it puts in. As a resident of one of the states that puts more in than it gets out, I think it's time we consider cutting them off until they start acting like adults.

That's not a metric I'd want applied to individual people, so it's not one I'd support for the different states, either.
posted by Marisa Stole the Precious Thing at 5:37 AM on May 28, 2012 [8 favorites]


Second, it looks like simple corporate forms like LPs, LLPs and perhaps LLCs are shielded from income tax. I didn't dig into the language of the law, but I assume that practically any corporate form in which the equity owners are reducible to a list of human beings is shielded from income tax. That would be almost everything except C-corps and S-corps. So basically, if you get a business license, you're now not paying income tax on income paid to that entity. It would be interesting if they went all the way down to allowing that for FBNs (what you see on forms as dba).

Does this mean that the income basically passes through the corporation and gets taxed when it is received by the individual owners? If that's the case, then maybe the law isn't so bad.
posted by gjc at 5:44 AM on May 28, 2012


Anyone notice what's been happening in Wisconsin, Michigan, Minnesota, Florida, ah, Kansas? What do people expect the Republicans to do?

In New Hampshire, after a disappointing Republican ascendancy in 2010 just after we'd started making promising gains like legalizing same-sex marriage, the Republican Majority Leader of the House of Representatives just resigned in disgrace over the fact that he falsified internship records to get his law degree.

Hopefully this is a sign that the Democrats will make gains this fall and we'll get some respite from this Fischer Price legislature who all swore, swore when they were getting elected that they were uninterested in social issues and were going to have a laser-like focus on the economy.
posted by XMLicious at 6:23 AM on May 28, 2012


Does this mean that the income basically passes through the corporation and gets taxed when it is received by the individual owners?

No. Seriously, it's zero rated right up until one goes out shopping and sales tax kicks in.
posted by jaduncan at 6:40 AM on May 28, 2012


Wait, they have to pay SALES TAX on things they buy with income derived from business profits? That is tyranny.
posted by thelonius at 7:30 AM on May 28, 2012 [1 favorite]


Wonderful! Now all job creators will surely turn their businesses into co-ops, so everyone can share in the profits!
posted by Gable Oak at 8:01 AM on May 28, 2012


"Dust bowl days" as in, if you are not Archer Daniels Midland or Monsanto, you pack up the truck and get the hell out of there. Subsidized wheat farming is not for gentlemen farmers. It takes a lot of production to pay for a $350,000.00 combine-harvester, and subsidies really don't even come close.
I'm not really sure what a "gentleman farmer" is, but US farm subsidies are a hell of a lot of money. About $20 billion a year. Looking at the stats, in 2007 there were 1,906,335 individual/family owned farms, accounting for 86.5 of the total, and partnerships were 7.9%. non-family corporations only owned about 0.5% of all farms. It only comes out to about $10k/farm in total, but looking at this it looks like a combine only costs about $150k or so. So, while the subsidies wouldn't pay for a combine in one year, the government also has farm loan programs that could potentially help farmers buy one. (and, of course they should actually be making money on their crops in addition to subsidies)

And by the way, ADM and Monsanto do not own farms, other then maybe for testing or product development, ADM buys raw material from farmers, and Monsanto sells them seeds.

Anyway, it isn't even clear how this proposal would affect farmers in Kansas at all, other then perhaps to lower their taxes. It's people in cities who have to rely on government spending, farmers have everything they need on their farms, schools might suffer, but so long as the kids learn to farm it should be OK, I guess. (plus schools are typically paid for with property taxes anyway)

Also, looking at this there are only 3,140 people employed in "Farming, Fishing, and Forestry Occupations" (along with 30 "Farmers, Ranchers, and Other Agricultural Managers" in the 'management' category.) for a total of 3,170 people.

That's out of a population of 2.8 million, and a total of 1,308,070 jobs. So why do we care exactly? It's 0.24% of the jobs.
posted by delmoi at 9:06 AM on May 28, 2012


So why do we care exactly? It's 0.24% of the jobs.

Because it's also 95% of the food.
posted by mightygodking at 9:34 AM on May 28, 2012 [3 favorites]


Folks will contract themselves back to their current employer and, by and large, the contract will be terminable for any or no reason, and they'll lose all their protections. No unions, no minimum wage (because you're paying yourself - should have figured that out before signing the company-to-company contract). No benefits. Hardly any civil rights protections. Most contracts will probably have onerous arbitration agreements. Many will likely have liability insurance requirements, and the "employee" will have to insure themselves against, say, on-the-job accidents. Sole remedy for almost everything can be termination of the contract and payment of monies owed.

The libertarian paradise in other words.

I'ma start marketing Kansas as a cure for the sex drought, 'cause Kansas is looking like a good place to get screwed.
posted by octobersurprise at 10:08 AM on May 28, 2012


Kansas passes Tax Act meaning that business owners are not taxed at all on income derived from business profits.

Not true. These people will still be paying federal income tax on this income, and the business will also pay federal corporation tax on this income.
The article is full of the same kind of overstatement, saying "tax-free" when it's just "state tax-free". Foreigners note, state income tax rates vary state by state, and can be zero, e.g. in Nevada, and when it's not zero the state income tax rate is generally a fraction of the main federal income tax rate.

This article (which is rather more in favor of the tax cut) gives a lot more detail of who this tax cut applies to, i.e. "owners in limited liability companies, or LLCs, subchapter S corporations and sole proprietorships".
Note that it extends only as far as S corporations (personal micro corporations, directly tied to the finances of the owners, only suitable for a small business). Real corporations are C corporations.

Personally I think this tax cut is pretty inequitable and if they were going going to modify the state tax rate, they should do it for everybody.
posted by w0mbat at 10:27 AM on May 28, 2012 [1 favorite]


I'm not sure that this is so unprecedented or catastrophic as people think. The following states have no state income tax at all:

I know you aren't a fool, so I have to assume you're being ridiculous on purpose. Those other states (like my state of Florida) have alternative tax bases, like property or sales tax. In this case, they aren't replacing the lost income based tax revenue with other sources, so yes, obviously, they're putting themselves in a gigantic fiscal hole on purpose. But you know that, as do the supporters of the legislation. They are just cynical assholes without any of the natural loyalty to their own community that Adam Smith characterized as the invisible hand that would guide the markets. They're just economic and political saboteurs.
posted by saulgoodman at 11:53 AM on May 28, 2012 [1 favorite]


W0mbat--I think most of us understand this just applies to the state's taxes; the states don't have nullification powers yet, thank god. Problem is, this is likely to bankrupt the state government in short order.
posted by saulgoodman at 11:56 AM on May 28, 2012


Also, looking at this there are only 3,140 people employed in "Farming, Fishing, and Forestry Occupations" . . . 2.8 million, and a total of 1,308,070 jobs . . . 0.24% of the jobs.

Well, those are employment figures and it turns out that most farm workers aren't employees but owners, sole proprieters, partners, owners of a family-owned corporation, etc. of small, typically family-owned farms.

This page has a pretty good summary for 2004 (which is fairly representative of the past decade or so), showing why Kansas farmers are still pretty important to the state as a whole:

- $9 billion in farm commodity sales
- 47 million acres in farmland
- 64,500 individual farms with average size of 732 acres

This page has some more detailed stats.

Average household size in Kansas is 2.5 and if you're on a farm and old enough to walk, you're working on it. So you're looking at:

- ~60,000 family farms = about 5.5% of Kansas households
- ~165,000 farm household members/workers = about 6% of Kansas population
- $9 billion = about 7% of the state's gross domestic product
- 90% of the land in the state

More to the point of the topic at hand, almost all of those farms and farm owners are going to be paying zero state income tax now--only the hired employee farm hands (which, you have discovered, is a very small minority of farmers) and the approximately 0.3% of farms that are C corporations.

That's why this is seen as a big win for farms and rural interests in the state.

And, if you haven't figured it out yet, in the U.S. we give a surprising amount of electoral weight to land area, by virtue of the way the state legislatures, voting districts, and the like are set up.

So that 6% of Kansas population that owns 90% of the land gets an outsized say in state politics--just as large-land-area but low-population-density states get an outsized voice in both Congress and the electoral college at the national level.
posted by flug at 12:40 PM on May 28, 2012 [2 favorites]


So the farmers get subsidies out the wazoo to make cheap wheat and more corn syrup (meaning they are quite possibly running a profit on federal corporation tax) *and* don't pay taxes to their own state...which itself will now presumably ask for yet more federal subsidy as they become poorer due to defects?

Mmm. I guess at least if it is down to the farmers at least I know where the welfare queens actually are.
posted by jaduncan at 12:52 PM on May 28, 2012 [2 favorites]


> I drove through Kansas once and definitely got The Fear. I'm from the coast and that much plain flatness rolling
> on and on definitely got to me.

It's flat because you're driving across the bottom of the North American Inland Sea. The air above you is full of mosasaurs, for them as has eyes to see 'em.
posted by jfuller at 1:55 PM on May 28, 2012 [4 favorites]


halfbuckaroo: "Rich people send their kids to private and parochial charter schools; poor people use public schools. Rich people have internet at home; poor people use the resources at the library."

Sorry, but that's horseshit.

I guarandamntee you I am NOT rich by any means, and I scrimp and save a good bit to have a net connection at home, which is powered by some cleverly jerry-rigged obsolete equipment. I currently have no clue how I am to make my finances work and keep anything for the future right now.

Of course, I must be rich since I live in public housing, right?
posted by Samizdata at 6:35 PM on May 28, 2012


Sorry, but that's a pointless anecdote.

Americans live in America, but I'm Australian and I live in America therefore you can't make any generalisations about the nationality of most people living in America? The point was clearly that rich people don't use public services, poor people do. If you believe that this is not overwhelmingly true, bring something a little more compelling than 'oh but I know an exception!'.
posted by jacalata at 11:27 PM on May 28, 2012


got "Irrumabo te Habeo mea" for "Fuck you! I have got mine". Decent motto really.

Except doesn't that actually mean "blow me, I've got mine?"
posted by Maias at 7:08 PM on May 29, 2012


jacalata: "The point was clearly that rich people don't use public services, poor people do."

If you redefine "public services" to mean "only those public services that poor people use," that is a true statement.
posted by wierdo at 7:23 PM on May 29, 2012 [1 favorite]


This completes the triumvirate of Recent Wingnut Ideas That Should Be Allowed to Happen Just So People Can See For Themselves What These People Will Do Given the Chance (the other two components of the triumvirate being allowing collections agents in hospital waiting rooms (previously) and Keeping Obama off the November ballot in Arizona because he might not be a US citizen (previously).
posted by Rykey at 11:58 AM on May 30, 2012 [1 favorite]


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