Hopeful governor announces plan to eliminate tax on retirement benefits


TOPEKA, Kan. (WIBW) – Kansas Attorney General and Republican Gov. hopeful Derek Schmidt hopes to keep retirees in the state with a new plan to completely eliminate state tax on retirement benefits.

Schmidt released details of its new “Retire Tax Free” plan on Wednesday, June 22.

“The Schmidt-Sawyer administration is going to be focused on growing Kansas every day, and if we’re going to do that, we can’t continue to lose retirees at such a high rate to other more pro-government states. tax,” Schmidt said. . “To any retirees who are considering leaving Kansas after a lifetime of working and living here, we want you to stay. To all out-of-state retirees looking to relocate, come to Kansas. We’re going to give you another reason to stay or return to Kansas by helping you retire tax-free.

Schmidt said Kansas currently has one of the highest rates of residents leaving the state in America. He cited surveys collected by moving companies and US Census Bureau data that show Kansas ranks 10th in 2020 and 11th in 2021 for outbound migration.

In 2021, Schmidt noted that Kansas had lost about 5,200 residents. He also said that one of the main causes of this emigration is the departure of pensioners.

Nationally, Schmidt said retirement is the third most common reason for leaving a state — and that trend has accelerated. He said Kansans are more likely to leave the state after retirement and will take a lifetime of accumulated talent and wealth with them.

According to an annual report on migration, Schmidt said Kansans said the main reason they chose to leave the Sunflower State was retirement and the state’s high tax burden on retirees.

Another independent study says Kansas ranks as the third-worst state in the nation for tax burden on retirees and is the least tax-friendly due to the combined burden of high-income, sales, and property taxes. .

Schmidt said Kansas is one of 13 states that does not completely exempt Social Security retirement benefits from state income tax.

The AG noted that its plan would provide relief to retirees living on fixed incomes who are struggling with both rising inflation costs and shrinking retirement investments due to market losses. He said it would also encourage more retirees of all income levels to stay in the state — or move to Kansas — rather than move to another state.

Schmidt said “Retire Tax Free” is an important first step toward an urgent need to grow the state’s population. He said Kansas ended the previous decade with its slowest population growth since the 1930s.

Schmidt said Kansas is also slow to recover jobs destroyed by the COVID-19 pandemic and its required lockdowns. He said 76.6% of businesses have recovered in Kansas, compared to 96.3% nationally.

Amid these broader economic issues, Schmidt said the state’s poor standing in taxing retirees persists.

“To have a better future, Kansas must grow. The ability to retire tax-free in Kansas will grow Kansas and add to the civic capital of our communities,” Schmidt said. “Our state’s heavy tax burden is one of the biggest impediments to population growth and a significant reason why so many Kansas retirees leave, taking with them their lifetime of talent, civic engagement and savings.”

Schmidt said Kansas currently taxes all private retirement benefits and federal income tax-reduced retirement savings distributions. He also said Kansas taxes Social Security benefits for taxpayers who earn $75,000 or more.

However, the AG said military pensions — as well as federal and state government pensions — are exempt from state income tax. He said the proposal would eliminate all state income tax on:

  • Social Security retirement benefits
  • Non-state public pensions
  • Private pension benefits
  • Defined benefit pension plans
  • Defined contribution pension plans like 401(k)s
  • Retirement pensions
  • Individual retirement accounts
  • Pension plans maintained or contributed by an employer, or maintained or contributed by a self-employed person as an employer
  • Deferred compensation pension plans or any income attributable to deferred compensation plans

Schmidt said the plan would make the Sunflower State more competitive in attracting workers by not taxing pension benefits during retirement and also by retaining current and future retirees.

Nationally, the AG said 12 states do not tax retirement income and Iowa should become the 13th. In the Midwest, he said Kansas would join South Dakota, Texas and Iowa in exempting all private retirement income from tax. He said the state would also join six other regional states that exempt all Social Security income from tax.

If effective in the 2023 tax year, Schmidt said the exemption of all Social Security income should provide about $32.5 million in relief, $109.2 million in 2024 and $112.5 million in 2025. He said the full exemption of all private pension income would provide approximately $69.9 million in relief in 2023, $233.8 million in 2024 and 236, $1 million in 2025.

To maintain the stability of the state budget and state services while the relief is implemented and to avoid shifting the tax burden to other taxpayers, Schmidt said he would work closely with the Legislative Assembly to find a fiscally responsible approach in order to be able to achieve tax on retirement. Free goal of total elimination.

However, the Kansas Democratic Party said Schmidt’s campaign promoted lies about Governor Kelly’s economic policies in a desperate attempt to cover his tracks as a former economic adviser to Sam Brownback.

“Derek Schmidt clings to straws and resorts to lies because he knows he can’t hide from his own record of collaborating with Sam Brownback and the failed ‘tax experiment’ that sunk state’s economy, increased taxes on Kansas families and cut critical retirement funds for our seniors,” said KDP spokesperson Emma O’Brien. “This desperate attempt to run away from of his own record is nothing more than an election-year gimmick, and the Kansans are not falling for it.”

Governor Kelly echoed the sentiments of the KDP.

“Just like a typical politician, Derek Schmidt will say or do anything in an election year, but his true record shows he will take us back to the Brownback era of fiscal irresponsibility and underfunded schools. In fact he’s now even using a partisan website run by Brownback’s top economic adviser to mislead Kansans about Governor Kelly’s success in working with both sides to balance the budget and make life more affordable for seniors in removing the food tax and reducing property taxes.”

Copyright 2022 WIBW. All rights reserved.

Source link


Comments are closed.