July 25, 2007

A New Border War is Starting

An article in today’s St. Joesph News-Press reports that Kansans are upset about Missouri eliminating a tax deduction that non-residents received in the past:

A highly publicized Social Security tax cut for Missourians that Gov. Matt Blunt recently signed into law also nixed a real-estate tax deduction for non-residents — essentially increasing Missouri taxes for people who work here but live out of state.

Because of this, Kansas lawmakers might launch a counterattack by passing a law that would restrict Kansas non-residents from the same benefit. Yet, all of this hullabaloo really results in not much of a tax increase at all for the average Kansans who works in Missouri:

[T]he more than 1,400 neighboring Kansas residents who commute to Buchanan County may pay more taxes to the state of Missouri next year, but they should break even after paying their Kansas taxes, explained Gerald Williams, a certified public accountant with Sumner, Carter, Hardy, Rich and Co. in St. Joseph.

Mr. Williams on Tuesday provided to the News-Press calculations from multiple mock filing scenarios for Kansas he figured under the new law.

"In most instances, it makes no difference," he said. "You may pay more to Missouri and less to Kansas, but when you add them together, it’s the same amount, out of pocket."

Kansas has a higher tax rate, but also provides a credit to Kansans for income taxes they pay out of state, which offsets the higher taxes in Missouri, he explained.

Kansas residents who don’t itemize their deductions will see no difference, while other filers can expect little or no change. In rare instances, he found filers could pay between $40 to $50 more than in prior years.

So Kansans will not really be affected by the ending of these tax breaks. The Kansas politicians who are making this an issue sound like the residents of Shelbyville, getting upset at Springfield for getting the upper hand, preventing them from having the lemon tree they desire.

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