In a turnabout, Missouri Gov. Matt Blunt says he will work to repeal a new Missouri tax provision that Kansans consider a raid on their state’s coffers.
The governor’s statement came Thursday in a reply to a letter from Kansas Gov. Kathleen Sebelius, who asked the governor’s help in persuading Missouri lawmakers to repeal an income tax increase on Kansans working in Missouri.
In her letter, Sebelius noted that the Kansas City area has made great strides in bistate cooperation.
“That’s why I’m disappointed to learn of Missouri’s move to increase taxes on the tens of thousands of Kansans who work in your state,” she said. “This … threatens to hamper future cooperation.”
Blunt quickly returned a conciliatory letter.
“I do not want to see the cooperative spirit that exists between our two states diminished,” Blunt wrote. “I will support a correction of this provision during the next regular session of the Missouri General Assembly.”
When asked previously about increasing taxes on Kansans, Blunt said he was the governor of Missouri and his focus was on reducing taxes for Missouri residents.
The law eliminated the ability of people who live outside Missouri to deduct real estate taxes paid elsewhere on their Missouri returns. For the typical Johnson County resident who works in Missouri, that’s $190 more.
Kansas taxpayers get a credit for that amount on their state return, but those credits result in less money for the Kansas treasury.
The tax increase could apply to about 50,000 Kansans. The latest statistics, from 2005, showed that 79,991 Kansas residents filed Missouri returns and 52,865 itemized deductions. Officials estimate that more than 90 percent of those itemizers took a deduction for real estate taxes.
Some Kansas lawmakers have suggested retaliating against Missouri by passing a similar law. Kansas still has a law that allows residents of Missouri and other states who work in Kansas to deduct the property taxes they pay in their home states from any income they earn in Kansas.
“Are we prepared to respond to the Missouri action? The answer is absolutely yes,” said Rep. Kenny Wilk, a Lansing Republican and chairman of the House Tax Committee. “Our preference would be for them to take a second look at what they have done.”
Blunt told Sebelius that he signed the tax bill because it eliminated a state tax on Social Security benefits, something he said was one of his highest priorities this year.
Gov. Matt Blunt apparently plans to call a special legislative session starting Aug. 20 to consider an economic development package and speed up repairs to Missouri’s bridges.
By JIM SULLINGER, The Kansas City Star