Originally published on Forbes.com Apr 27th, 2013
Kansas just passed the most restrictive abortion law in the country. It really throws down the gauntlet and:
Declares the life of each human being begins at fertilization, with all state laws to be interpreted and construed to protect the rights, privileges, and immunities of the unborn child, subject only to the U.S. Constitution and the judicial decisions and interpretations of the U.S. Supreme Court.
Abortion is one of those issues where each side tends to think that they totally possess the moral high ground. This can lead to a loss of perspective. There will be a tendency when you muster at least a local majority to throw everything, including the kitchen sink, at your opponents, regardless of collateral damage to other policy goals. Like sensible tax policies.
Kansas exempts prescription drugs from sales tax. Most, if not all states, have a similar exemption. Educational materials purchased for distribution to the public for free by a non-profit to foster the improvement of public health are also exempt. Tangible personal property purchased by a 501(c)(3) organization that provides health services to the medically underserved is also exempt.
The new legislation repeals the exemption for drugs that are prescribed for abortion. It also repeals the not-for-profit sales tax exemptions for organizations where abortions are performed. That’s not enough. There are also income tax provisions. I have to confess that I am having trouble figuring one of them out. Kansas adjusted gross income is increased by:
For taxable years commencing after December 31, 2013, that portion of the amount of any expenditure deduction claimed in determining federal adjusted gross income for expenses paid for medical care of the taxpayer or the taxpayer’s spouse or dependents when such expenses were paid or incurred for an abortion, or for a health benefit plan, as defined in section 1, and amendments thereto, for the purchase of an optional rider for coverage of abortion in accordance with K.S.A. 2012 Supp. 40-2,190, and amendments thereto, to the extent that such taxes and assessments are claimed as an itemized deduction for federal income tax purposes.
Kansas follows federal adjusted gross income pretty closely and allows federal itemized deductions relatively unscathed. I’m still trying to wrap my head around the above provision, since medical expenditures are generally not allowed against federal adjusted gross income. I have seen comments like this:
It would also prohibit women who claim income tax deductions for medical expenses from including the cost of abortion services.
I’m not sure that provision gets it done, but if it does not, I’m not sure what it is doing. Let’s assume for the sake of argument that they have made the cost of an abortion non-deductible for Kansas income tax purposes along with the sales tax provisions. What is it that they think they are accomplishing other than cluttering up their tax law and making pointless work for the Kansas Department of Revenue?
This Is One Of The Sources Of Needless Tax Complexity
Kansas can’t ban abortions because of Roe v Wade. So it is going to throw some provisions into its income tax law so that somebody who pays say $1,000 for an abortion might have to pay an extra 60 bucks or so in Kansas income tax. The sales tax on prescription drugs is even worse. Prior to this bill, if a doctor prescribed the drug it was exempt. Pretty simple. What is the mechanism that will have to be put into place in order to tax some prescriptions. Will the doctors have to indicate what the prescriptions are for? Will the Department of Revenue issue a list of drugs, which they will have to update, that might be taxable depending on purpose? Will either of these provisions have the slightest effect on the number of abortions that are performed?
The provision that entirely yanks the sales tax exemption for health care facilities that provide abortions might actually have some effect, since the prospect of having to pay sales tax on everything might influence a center to pass on providing abortion services.
Likely these provisions will be litigated. I would think it probable that they would stand up, but it is more fairly fruitless effort clogging the system.
Can’t We All Get Along On Some Things?
One of my great wishes is that taxation should be declared the Switzerland of the culture war. Setting tax policy to raise the right amount of revenue without distorting the economy is challenging enough without bringing other issues into it. Also, it is more or less likely that you will do more harm to your cause than good by attacking the other side with tax provisions. It seems though that fighting the culture war with tax provisions is an irresistible impulse. Kansas has just succumbed.
You can follow me on twitter @peterreillycpa.
Afternote
I was talking about this with my covivant. CV does not read my blog as religiously as one would think. CV pointed out that if Kansas wants to be thorough in recognizing the unborn, the number of federal exemptions should be adjusted upward for a taxpayer who is pregnant on December 31. The Court of Claims addressed this issue on the federal level in Cassman v. U.S., 31 Fed. Cl. 121 ( 1994 ). Interesting question might be whether someone in Kansas might be able to use the Kansas statute in a federal case. Great opportunity for more low tax dollar litigation. On the other hand, it gives people work.