Dale Swenson on Kansas tax exemptions

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.

3 Comments

  • Government tax incentives sound good on the surface, but rarely are. Take “cash for clunkers” for instance. Let’s forget the fact that it cost like (don’t quote me) $24,000 for each car sold in addition to what would have sold without the program.
    It would have been cheeper to buy 3 times as many Kia Spectra’s and just give them away to poor people who didn’t have cars or needed to replace theirs. The other failure of the “cash for Clunkers” from the day it started till the day it ended dealers didn’t have to provide near the incentives that it would have taken to sell the cars without the program.
    My brother has envied our my van that we use when we travel for years. Compared to his suburban it is so much more handy. So he was going to buy a van and had been pricing them for some time. As soon as cash for Clunkers came along the dealership was no longer willing to bring the price down but instead offered Cash for Clunkers. So none of the benefit of Cash for Clunkers was transfered to the people it was intended for (the consumer) it was just another bailout for auto dealers.

  • Didn’t Rep. Swenson sign a pledge promising not to raise taxes when he was first elected back in the 1990’s? Didn’t he violate that pledge a few years later?

    Didn’t he then switch parties and become a Democrat?

  • Craig,

    Then your brother is not a very good negotiator – because there were/are dealers who will want your business – cash for clunkers only helped dealers IF THEY SOLD A CAR.
    If they did not … they still had an extra car on the lot.

    There may have been more customers so dealers may have been less “hungry” but that is the case all the time – new cars, new models, new features, ….. sometimes the customer “wins”, sometimes the dealer wins.

    Sounds like your brother waited too long …. you snooze you lose is what I think it is called. ( we got rid of our suburban 4 years ago …. bought a mini-station wagon. I think we calculated that our payment/fuel costs were less than the fuel costs on the `burb. And of course our resale … well, its kind of hard to sell a 8 year old 110K mile suburban regardless.

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