Kansas Politics and Government: The Clash of Political Cultures

8. Taxing, Spending, and Borrowing

chapter eight Taxing, Spending, and Borrowing alexander Hamilton and andrew Jackson offered the nation competing visions of public finance. Hamilton championed a hierarchic view of the U.S. Constitution and envisioned national taxing and borrowing that would firmly elevate national power at the expense of state governments. Jackson vigorously challenged this view believing that freedom and equality could best be achieved and preserved through a diffusion of political powers by placing authority over finance close to the people at the lowest levels of government . Jackson prevailed in shaping mid-nineteenth-century thinking. The finance provisions of the Wyandotte Constitution of 1859 reflect Jacksonian ideals of limited government and equality. Taxing was to be “uniform and equal,” spending was to be restrained and in certain cases prohibited, and borrowing was to be strictly limited. State finance in Kansas has been dramatically transformed from those early days of state history in which government and its financing were largely local matters. State authority has been augmented often through enticements of federal grants-in-aid. Restraints on state taxing, spending, and borrowing have been substantially loosened, and the levers of finance have shifted from the local to the state level. The level of state taxing now exceeds that of local governments, today representing fifty-nine percent of combined state and local taxes, compared to fourteen percent at the beginning of the twentieth century.1 Cultural forces have energized this transformation. issues of state finance reveal the motives of each of Kansas’ dominant political cultures and spark intense conflict. The extraction of taxes underpins civil order yet may threaten individual liberty. Reforms in taxing and spending have been powered by cultural preferences for equality and order. at the same time the politics of individualism—the parochial interests of individuals, groups, Taxing, Spending, and Borrowing 171 and geographic areas—permeates state decisions to tax and spend as well, most often in resistance to preferences for equality and order. a dominant culture of individualism asks what’s in it for me and then assesses how each financial transaction of state government affects my livelihood. State action on finance often represents direct economic transactions with individual Kansans, their families, or their businesses, and residents may know, or can determine with reasonable certainty, how a decision on taxes affects their personal pocketbook or how a decision on spending affects their quality of life. Egalitarian reformers seek taxes levied in accord with ability to pay and oppose taxing those who are politically weak. in response competitive individualists protest, organize, and throw the bums out to protect their liberties and avoid paying taxes. The story of this transformation of state finance— the critical shifts in taxing, spending, and borrowing over state history— may be examined through the cultural lens of liberty, equality, and order. taxing in 2008 Kansas taxpayers paid $12.2 billion in state and local taxes, $7.2 billion in state taxes and $5.0 billion in local taxes. This tax burden equates to $4,401 per capita and 12.1 percent of personal income; Kansas ranks in the midrange among the fifty states in measures of state and local taxes but higher than surrounding states. in 2007 Kansas ranked twenty-third in state taxes per capita and twenty-sixth in state taxes as a percent of personal income; in 2006 the state ranked thirty-second in state and local taxes per capita and twenty-ninth in state and local taxes as a percent of personal income . on most measures of state and local tax burden, Kansas ranks lower than Nebraska but higher than Missouri and oklahoma. in the recent rankings Colorado ranks lower than Kansas on state and local taxes in terms of personal income but higher on a per capita basis. Taxes on property, income, and sales represented 87.1 percent of total state and local taxes in 2008, with property taxes at 33.6 percent, income taxes at 27.9 percent, and sales taxes at 25.6 percent. Taxes on motor fuels and vehicle registration comprised another 5.1 percent of the total, and unemployment compensation represented 2.3 percent. Taxes on insurance premiums and on the production of oil, gas, and coal through severance taxes generate slightly more than one percent of total state and local taxes. State policy makers have unofficially adopted a tax policy of seeking a balance among the three primary tax sources, property, income, and sales. This policy was articulated by the Governor’s Tax Equity Task Force of 1995 as...