Do Kansas business tax exemptions benefit only business at great cost to the state? Member of the Kansas House of Representatives Dale Swenson thinks so, according to a recent letter written by him that appeared in the Wichita Eagle.
He cites a Kansas sales tax exemption on the purchase of hearing aids, something Swenson says helps “regular folks.” The way it helps folks — and only those folks with hearing problems, by the way — is by making these purchases less expensive.
But right after this Swenson complains about tax exemptions for business, that, he claims, benefit only business to the detriment of everyone else: “This means average citizens are paying more and more to fund public services, while business pays less and less.”
The problem with this argument is that taxes are a component of costs that business firms face. When costs are lowered, firms can reduce prices to their customers, just as hearing aids are less expensive when not taxed. Big-tax advocates often argue that business just pockets the tax savings as a way to increase profit. But when markets are competitive, that’s not easily done. Savings are passed along to consumers.
The people of Kansas who would like to have a job also benefit from lower taxes on business. The state and local governments like the City of Wichita continually grant targeted tax relief to businesses in order to induce them to locate in Kansas, or to stay here instead of leaving. Whether these targeted incentives work is a separate issue. I and others contend they don’t, and that a better policy is lower tax rates spread over a broad base. But it is evidence of belief that high taxes are bad for business, and low taxes are good for jobs — at least for private sector jobs.
The real problem the legislature faces is that spending in Kansas has risen rapidly in recent years, developing constituencies that are accustomed to or dependent on ever-rising government spending. When revenues fail to keep pace, there’s a big problem.
For good measure, Swenson throws in a few pokes at those who oppose his big-taxing and big-spending agenda: “Now we have self-proclaimed ‘think tanks’ that are well-financed (likely by some of those businesses that benefited from tax cuts and exemptions).”
He also writes: “During the next five months, when you read or hear self-proclaimed independent groups criticizing spending for our schools and programs, take a moment to wonder who would want to make these cuts.”
From these jabs, should we conclude that Swanson believes being well-financed is bad, and that being independent is good? I don’t know, but a quick look at Swenson’s campaign finance reports shows generous contributions from KNEA (the Kansas teachers union), Stuart Elliott (a Wichita labor organizer), Kansas Families for Education PAC (a school spending advocacy group) , Service Employees International Union, Kansas State Council of Machinists and Aerospace Workers, Kansas AFL-CIO COPE fund, and Wichita/Hutchinson Labor Federation.
From this writer’s viewpoint, it looks like Swenson is beholden to two special interests: unions and public school spending advocates.
By the way, the reports also show a contribution from Sedgwick County Republican Women. I wonder if this group would like their money back, since Swenson left the Republican Party and became a Democrat.