Topeka House Republicans and Democrats are expected to clash today over legislation to eliminate the state's franchise tax.
House Speaker Melvin Neufeld, R-Ingalls, said the bill would be a boost to the economy, freeing businesses to expand.
"It will create more money in the long run," Neufeld said. The measure, which is scheduled for House floor debate today, would save businesses $44 million annually.
But Democrats say it's unwise to cut taxes so much because of previously committed spending priorities for schools, senior citizens, the state pension system and roads.
Gov. Kathleen Sebelius has proposed a smaller tax cut of $12.8 million, which includes reducing the unemployment insurance tax and corporate income tax, and removing the requirement for 16,000 small businesses to pay the franchise tax.
"Because of these critical obligations, complete elimination of the franchise tax on top of these other tax reductions simply isn't financially responsible," Sebelius said.
House Minority Leader Dennis McKinney, D-Greensburg, said the state also must maintain sound balances in case the economy falters.
He said tax cuts in the $12 million to $15 million range would be responsible. "If you get past that, it gets tough," he said.
But business groups and tax-cut advocates say the Kansas franchise tax is a disincentive for companies to grow. The tax is based on the value of a firm's assets.
Alan Cobb, state director of Americans for Prosperity-Kansas, urged lawmakers to approve the measure.
"A vote to eliminate the franchise tax will make Kansas more competitive," Cobb said.
The franchise tax repeal is HB 2031.