For the rest of this political season, the phrase “the rich should pay their fair share” will be often repeated as progressive lawmakers seek equity in economic opportunities, re-energized by the recent news that Elon Musk became the world’s first trillionaire.
But analysis by the Kansas Policy Institute (KPI), owners of the Sentinel, finds that goal has already been exceeded; the wealthy in Kansas and across the country pay more than their fair share.
KPI CEO Dave Trabert writes that even one of the progressive flagships, The Washington Post, admitted as much in an editorial appearing in a column in Unleash Prosperity:
IRS data show the rich already pay more than their fair share
Trabert references IRS data originally published by The Washington Post showing the same fair share effect as in Kansas:
Notice that beginning at $200,000 and above, the share of income tax exceeds the share of income.
Trabert writes that Kansas’ modest tax reduction in 2024 shows what’s possible, but more reforms are needed for the state to become competitive in its region:
“One big feature of the 2024 tax reform in Kansas – exempting some income from taxation with larger standard deductions – completely wiped out the income tax liability for those with incomes below $25,000. They paid $22 million in income tax in 2020, but that fell to an $11 million credit in 2024, reducing their effective tax rate (ETR) from 0.4% to negative 0.3%.
“The effective tax rate (tax liability divided by KAGI) dropped from 2.5% to 2.2% for those with incomes between $25,000 and $50,000. The next three brackets in the above table each enjoyed a decline of 0.1% in their effective tax rate. Those with incomes over $250,000 paid the highest ETR of 4.2%, which was the same as in 2020.
“The 2024 rate reductions helped, but Kansas income tax rates are still uncompetitive, which has a lot to do with Kansas losing population from domestic migration.
KPI Senior Fellow Vance Ginn, Ph.D., adds tax cuts alone are only part of the remedy for mediocre growth in the state:
“Tax relief must be paired with spending restraint. As I have argued in my work on responsible budgeting, Kansas should limit spending growth to no more than population growth plus inflation. Better yet, given past overspending, the state should aim lower until the budget is right-sized.
“The issue is not whether “the rich” should pay. The issue is whether Kansas wants more employers, more farms, more startups, more investment, and more families choosing to stay.
“Envy is not an economic development strategy. Punishing success does not create prosperity. If Kansas wants to grow, it should stop asking how much more it can take from productive people and start asking how much more freedom it can give them to build.
“Kansas does not need soak-the-rich politics. It needs lower taxes, less spending, and a stronger commitment to letting people prosper.”
