In 2012, Kansas lawmakers passed a large income tax cut that was intended to reduce revenue from taxes by a little more than 10 percent,according to Josh Barro writing for The New York Times. Gov. Sam Brownback said at the time that these cuts would create “tens of thousands of jobs,” which would more than justify the cut. This cut reduced tax rates and increased the standard deduction, as per usual, but also eliminated the tax on a number of income types entirely, including that on 1099-MISC income, which is sometimes referred to as “small business income.”
Abilene, KS
Unfortunately, these cuts may have had an unintentionally large effect, as the state expected to collect $651 million from personal income tax in April and May, according to the news source. It received $369 million.
Unfortunately for Kansas, it seems that the tax cuts are also doing little to effect job creation, and employment figures have trailed both the national average and those of most surrounding states since he signed the bill, Barro explained.
Part of the problem may be a misunderstanding as to what “small business income” is. While there exists a stereotype of small businesses as the employment leaders that drive the economy, many on-paper small businesses do not employ anyone. A writer who freelances for a variety of publications, for example, is considered a small business, as is a contractor and anyone else who works for him- or herself.
Another problem is that many people are able to “shift” income from one category to another. By eliminating tax on 1099-MISC forms, Kansas made it extremely attractive to collect income in this way.
Finally, an economic study conducted in 2013 and published in The Review of Economics and Statisticsfound that, while new companies create more jobs than old ones, small companies were no more likely than large companies to create jobs.
Find out more about the changes going on in the Sunflower State:
Section 363 Sales in Bankruptcy: What Businesses, Lenders, and Buyers Need to Know
When a company enters Chapter 11 bankruptcy, many assume the process will culminate in a lengthy reorganization plan. However, distressed businesses are increasingly being sold through a different mechanism — a sale under Section 363 of the United States Bankruptcy Code. A Section 363 sale allows a company, as a debtor-in-possession in bankruptcy, to sell […]
Zoning Laws Explained: What You Need to Know Before Buying Property
Before buying property, it is critical to determine whether local zoning laws may affect your plans. If you plan to redevelop the property, you will want to confirm that local zoning regulations permit development as intended. If acquiring property that is already developed, you must verify that the use is permitted in the underlying zoning […]
Special Needs Trusts in New Jersey: Planning for Your Loved One’s Future
For parents of a child with a disability, estate planning raises concerns that go well beyond deciding who will inherit their assets. Parents may spend years making sure their child has the right care, services, and support. Eventually, they must also confront a difficult question: Who will take over when they can no longer do […]
What Every Real Estate Investor Should Know Before Buying a Rental Property
Before buying a New Jersey rental property, an investor should verify realistic operating numbers, the property’s legal and regulatory status, lead-based paint and flood compliance, the existing leases and tenant protections, and the right ownership structure. A rental property is more than a piece of real estate; it is an operating business subject to legal, […]
Can You Change an Irrevocable Trust in New Jersey?
In New Jersey, an irrevocable trust can sometimes be modified even though its name suggests otherwise, and one of the primary tools for doing so is a process called decanting. Whether decanting is available depends on the specific terms of the trust and the discretion given to the trustee. Key takeaways: New Jersey has no […]
How Intellectual Property Valuation Will Impact Business Transactions
Intellectual property valuation determines the monetary value of a business’s IP assets, and it drives outcomes in licensing deals, joint ventures, mergers and acquisitions, financing, and ownership disputes. The most valuable assets of a business are often the things that cannot be seen or touched: a proprietary process, a copyrighted work, brand recognition, or the […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
.jpg)
