Schmidt proposes sweeping policy to exempt retirement benefits from state income tax

0

TOPEKA — Republican gubernatorial candidate Derek Schmidt on Wednesday proposed eliminating state tax on benefits and income from Social Security, IRAs, annuities and other retirement vehicles to reduce the emigration of the people of Kansas.

Schmidt, the attorney general and suspected November opponent of Democratic Gov. Laura Kelly, said the recommended incentive package would be combined with existing income tax exemptions for military, federal and state pensions to help to retain or attract retirees as well as to attract the interest of people preparing for their retirement. The policy change could help Kansas businesses recruit workers, he said.

“To any retirees who are considering leaving Kansas after a lifetime of working and living here, we want you to stay,” Schmidt said. “To any out-of-state retirees who want to move, 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 the proposal would eliminate state income tax on Social Security retirement benefits, public out-of-state pensions, private retirement benefits, defined benefit pension plans, defined contribution pension plans such as 401(k), retirement annuities, individual retirement accounts. , pension plans maintained or contributed by an employer, pension plans maintained or contributed by a self-employed person as an employer and deferred compensation pension plans or any income attributable to a deferred compensation plan.

The US economy endured the COVID-19 pandemic, inflation and stock market fluctuations which contributed to the erosion of the net income of retirement accounts.

Schmidt said the legislature’s passage of the proposal would bring Kansas in line with South Dakota, Texas and 10 other states — Iowa will soon join that group — that exempt all private retirement income from retirement tax. the state.

The Social Security provision would unite Kansas with six other regional states that exempt such benefits from state income tax, he said. Currently, Kansas taxes Social Security if a person whose federally adjusted gross income is more than $75,000 per year.

The cost of Schmidt’s “Retire Tax Free” initiative to the public purse would increase over the next three years. Under his proposal, the cost of waiving Social Security benefits would increase from $32.5 million in fiscal year 2023 to $109 million in fiscal year 2024 and $112 million in fiscal year 2023. of the 2025 financial year.

Total exemption of all private pension income would decrease state income by $69.9 million in fiscal year 2023, $233 million in fiscal year 2024, and $236 million dollars in fiscal year 2025.

Schmidt did not offer a funding source for the income tax adjustments, but said he would “work closely” with the Legislature to determine a responsible method of incorporating tax reform. pensions in the state budget.

“Election Year Gimmick”

Emma O’Brien, spokeswoman for the Kansas Democratic Party, said Kansas voters should recognize Schmidt did nothing as GOP Gov. Sam Brownback skipped millions of dollars in government payments. to the Kansas Public Employees Retirement System and used the money to cover budget shortfalls resulting from an attempt to eliminate state income tax.

Brownback’s 2012 tax cut, which he called an “experiment”, led to years of budget problems before the majority of income tax provisions were repealed by the Legislature under Republican control in 2017.

O’Brien said Schmidt, while serving as attorney general since 2011, did not oppose Brownback’s tax policy that hurt KPERS, underfunded public education and stole the Department of Public Health’s road fund. Kansas Transportation.

“This desperate attempt to run from his own record is nothing more than an election-year gimmick, and the Kansans are not falling for it,” O’Brien said. “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 has sunk the state’s economy, raised taxes for Kansas families, and cut essential retirement funds for our seniors.

‘Bright Future’

The 2022 legislature approved and Kelly signed a bill investing $1.1 billion in KPERS. Lawmakers also created a $500 million fiscal stabilization fund.

The House, Senate and Governor have implemented legislation to phase out the state sales tax on groceries over three years. Kelly had proposed an immediate end to the 6.5% sales tax on foodstuffs. Meanwhile, a series of tax reform bills have been passed, including one providing $50 million in property tax relief for businesses closed during the pandemic.

The Schmidt campaign — his running mate is Katie Sawyer — said an analysis by Kiplinger showed Kansas ranked third worst in the nation in terms of income, sales and property tax burden.

According to surveys compiled by moving companies and data from the US Census Bureau, Kansas ranked 11th worst in 2021 for outbound migration.

“To have a better future, Kansas has to grow,” Schmidt said. “Our state’s heavy tax burden is one of the biggest impediments to population growth and a big reason why so many Kansas retirees leave, taking their talent, civic involvement and savings with them.”


Source link

Share.

Comments are closed.