More States Propose Reverse-Robin-Hood Tax Policy

January 13, 2012 at 4:04 pm

Kansas Governor Sam Brownback and a legislatively appointed task force in Oklahoma have proposed raising taxes on working-poor families with children and impoverished seniors in order to help finance large tax cuts that mostly benefit the well-to-do.

The new proposals would eliminate each state’s Earned Income Tax Credit and grocery tax credit.  (Kansas and Oklahoma are among the few states that still tax grocery food; the grocery credits help blunt the impact of the tax on the poor.)  Low-income seniors, working parents, and others would end up paying more tax.  Other proposed changes would raise taxes on middle-income families, too.

Meanwhile, the plans would slash taxes for the highest-income households in those states.

For instance, the Oklahoma plan would cost a married couple with two children and a $25,000 income $647 a year in higher taxes and lost credits.  But it would give the top 1 percent of taxpayers, those with incomes over $357,400, an average benefit of $2,833.

As one Oklahoma task force member — a prominent Republican businessman — explained: “Basically, you’re taking money from the poor and giving it to the rich. . . .  I can’t support that.”  Unfortunately, most of his fellow task force members, including several leading lawmakers and top political appointees of Governor Mary Fallin, have endorsed the proposal.

The Kansas proposal would have a similar impact, taking hundreds of dollars from seniors and the working poor and giving thousands of dollars to the wealthy.

Remarkably, such proposals are not unique in recent years.  As we noted last year, Michigan, New Jersey, and Wisconsin have acted in the last two years to raise taxes on the poor to finance tax cuts for businesses and the wealthy.

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More About Nicholas Johnson

Nicholas Johnson

Johnson serves as Vice President for State Fiscal Policy. You can follow him on twitter @NickCBPP.

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