Kansas Tax Dodge Wonderland: Unfair Tax System Exposed

Kansas Tax Dodge Wonderland: A Breakdown of RNR and SALT Parity Act

Welcome to Kansas Tax Land, where if you’ve got the right stack of LLCs and a good tax advisor, you’re golden. But for the rest of us? Well, we’re just here to watch our tax bills climb as our deductions disappear. Thanks to the Revenue Neutral Rate (RNR) and the SALT Parity Act, Kansas’s tax system has become a well-oiled machine for the well-connected. Let’s break down the absurdity.

Revenue Neutral Rate (RNR): Neutral in Name Only

The revenue neutral bill from 2021Photo byKansas Legislation

The RNR, introduced through Kansas Senate Bill 13 (2021), was designed to ensure transparency in local tax increases. The idea? Local governments can’t raise taxes without publicly notifying property owners and holding a public hearing if they plan to exceed the Revenue Neutral Rate (the rate at which property taxes stay the same as last year, despite changing values).

Here’s the kicker: even if your local government keeps the mill levy flat or lowers it slightly, rising property values mean your tax bill still goes up. Congratulations, Kansas—where “neutral” is a polite way of saying “surprise, you owe more”.

For Example: Let’s say you own a home in Leavenworth. Your property value goes up 15%, your local government swears they’ve kept taxes “neutral,” but somehow you still get a heftier tax bill. But hey, you’ve got a public hearing to attend, so there’s that. The irony? You can show up, speak your piece, and watch the mill levy stay the same—but walk out knowing your property appraisal made sure your taxes didn’t stay “neutral” at all.

SALT Cap: Federal Fun for Homeowners

Enter the SALT Cap, which was introduced under the Tax Cuts and Jobs Act of 2017. This $10,000 cap on the amount of state and local taxes you can deduct on your federal return means that middle-income homeowners are seeing their federal tax deductions shrink while their local tax burdens rise.

The result? A fun little federal/state squeeze where your property taxes rise thanks to those inflated property values, and you can’t even fully deduct them from your federal return. The rich, of course, have figured out how to dodge this one, but more on that in a second.

SALT Parity Act: The Businessman’s Golden Ticket

Summary of business friendly tax reductionsPhoto byKansas Legislation

For the elite who know how to play the game, the SALT Parity Act is their get-out-of-taxes-free card. Passed in Kansas House Bill 2239 (2022), the law allows pass-through entities like LLCs, S-corps, and partnerships to pay their state taxes at the entity level—completely bypassing the $10,000 SALT deduction cap.

If you own a handful of LLCs (maybe a Restaurant LLC for extra flavor?), Kansas lets you write off all those state and local taxes as a business expense. No cap, no problem. But if you’re a regular homeowner? Sorry, the SALT cap applies, and you’re stuck paying full freight.

For instance: If you own a few rental properties under different LLCs, you can deduct every penny of those state taxes, while your neighbor, who’s just trying to keep their house afloat, gets hit with rising property taxes and limited federal deductions.

Winners and Losers: Guess Who Wins?

Here’s the breakdown:

Winners:

- Wealthy business owners with multiple LLCs. Thanks to the SALT Parity Act, they can deduct all their state and local taxes as business expenses, dodging the SALT cap entirely.

- State representatives who, let’s say, own swaths of property through LLCs, maybe even throw in a Restaurant LLC to sweeten the pot. They’re winning the tax game hands down.

Losers:

- Middle-income homeowners who don’t have a fleet of LLCs or tax attorneys. They get hit with rising property taxes due to inflated assessments, and the SALT cap leaves them with shrinking deductions.

- Local governments struggling to maintain services while facing constraints from public hearings and reduced flexibility, all while property taxes climb “transparently.”

Conclusion: The Kansas Tax Wonderland

In Kansas, the RNR and SALT Parity Act have made sure that wealthy business owners can skip the tax burden by structuring their assets just right. Meanwhile, the rest of us get to watch our property values rise, our deductions disappear, and sit through public hearings that change little.

Until Kansas decides to fix this tax loophole extravaganza, we’ll just have to keep playing the game. If you don’t have a stable of LLCs and state rep status, prepare for your property taxes to keep rising, while you carry the weight of a system designed to let the wealthy walk away unscathed.