Property Tax Updates in Kansas

Tax Professionals' Resource
March 1, 2013 — 1,177 views  
Become a Bronze Member for monthly eNewsletter, articles, and white papers.

Kansas property tax is a much debated issue. More recently, the Property Tax Transparency Bill under HB 2047 forced local governments to lower their mill levy with rise in property value each time. In other words, the tax revenue remains unchanged. When assessing property tax, the notion of mill comes in handy with one mill being equivalent to one dollar for the value of every thousand assessment dollars. Ann Mah, former Southern Topeka Democrat and an opponent of the Transparency Bill, has reasons for her dissatisfaction including the lack of voting even as the property tax is already high.

No Reduction in Taxes for Homeowners

The new Kansas property tax plan is fraught with extreme hardship for nearly 372,000 Kansans. If Governor Sam Brownback’s tax plan is carried out, the income deduction for property taxes they pay against their homes would be eliminated. While the move is set to raise the government’s revenue collection and partly offset the lower income tax rate, the governor’s plan gets even harsher if his proposal to impose a 6/10th of a cent sales tax increase is adopted. The net effect of the proposal will very likely raise the overall tax burden rather than reduce the taxes for homeowners.

Governor Wants Cuts in Tax Deduction

What Gov. Brownback actually wants is to nullify another deduction. In other words, the Kansas homeowners won’t be able to get the advantage on income tax because of the Kansas property tax plan. The state income tax has been reducing, so the Governor’s plan is actually designed to balance a $14 billion budget along with reducing the income tax. Eventually Kansan homeowners will have greater overall tax burden even if the property tax doesn’t go up. Even after considering the real estate tax deduction, the state revenue earning goes up by $68 million, to which another $162 million accrues due to the elimination of the mortgage deduction.

The Chairman of the Senate Tax Committee is of the opinion that Kansans would benefit because of lowered income taxes and that dramatic lowering might leave a positive impact on a majority of the people. However, Brownback’s complicated property tax plan will likely result in increased tax burden.     

Fight for Property Tax Reductions Goes On

The Kansas property tax code appears highly contested as of now. A powerful lobby consisting of Kansas Realtors Association, Kansas Building Industry Association, and the Wichita Builders Association belong to the camp readying to testify against this proposal, while the goal of the proposal is to phase out the income tax altogether. Many Kansans could save several dollars last year primarily because of Brownback’s income tax cuts approval. So, the pro-proposal camp argues that lawmakers and lobbyists are obsessively focused on losing deductions instead of being able to see the complete picture. While on the one side, the lobbyists truly believe that it’s a tax increase, the Brownback administration is working full-time mulling over the stats to show that the advantages of income tax cuts far outweigh the property tax burden. Additionally, the administration contends that income tax cuts could bring growth, create jobs, and attract new residents. However, the battle is far from over.   

Tax Professionals' Resource