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Archive for Thursday, April 26, 2012

Kansas legislative negotiators agree on tax cuts

April 26, 2012, 5:03 p.m. Updated April 26, 2012, 7:48 p.m.

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— Kansas would cut its sales, business and individual income taxes — eventually by at least $500 million a year — under a new plan designed to stimulate the state's economy, but critics worry it would create budget problems.

Negotiators for the Kansas House and Senate agreed on the plan Thursday. The compromise legislation reconciles numerous differences between the two chambers over tax policy.

The plan, drafted by three senators and three House members, would cut individual income tax rates and phase out income taxes over five years for 191,000 partnerships, sole proprietorships and other businesses — ideas pushed by Republican Gov. Sam Brownback.

The compromise legislation also would reduce the state's sales tax to 5.7 percent in July 2013 from 6.3 percent and provide additional state aid to cities and counties to keep their property taxes in check.

The negotiators don't plan to present their proposal to either chamber until they've reviewed numbers on how it might affect the state budget. Democrats involved in the negotiations don't like the compromise plan, and even some Republicans in the GOP-controlled Legislature are likely to be wary, particularly in the Senate.

But the lead negotiators, Sen. Les Donovan, a Wichita Republican, and Rep. Richard Carlson, a St. Marys Republican, were optimistic they could sell the plan to most of their colleagues. They're hoping for votes in each chamber next week.

"If we didn't think this was going to be a positive for the state and for more people to move here, more companies to come here and more jobs and more payroll, why would we do it?" Donovan said. "That's exactly why we're doing it."

The plan is expected to provide at least $119 million in tax relief for the fiscal year beginning July 1 and $500 million worth during the following fiscal year. But state researchers haven't finished their calculations, and those figures could be significantly higher.

Brownback, who made cutting income taxes his signature issue this year, said before negotiators met Thursday that he liked the direction of their talks. He described the business tax break and the lower income tax rates as core parts of the tax plan he outlined in January.

Under legislative negotiators' plan, the state's top individual income tax rate would drop to 4.9 percent from 6.45 percent, as Brownback proposed.

The negotiators — like both chambers — jettisoned Brownback's proposals to eliminate a tax credit for poor workers and popular income tax deductions for charitable contributions and interest paid on home mortgages. And the governor didn't seek to cut the sales tax or rein in local property taxes.

Still, Brownback spokeswoman Sherriene Jones-Sontag endorsed the negotiators' plan.

"It gets the individual income tax rates down for all Kansans. It lessens the tax burden on small businesses," Jones-Sontag said. "He hopes the Legislature will pass the bill quickly and get it to his desk for a big signing ceremony."

The push by Brownback and many GOP legislators to cut income taxes has drawn bipartisan criticism. More than 40 former Republican legislators had a news conference Wednesday to argue that the tax burden will shift from the wealthy to the poor and public schools will be left with inadequate funding.

"We have lots of other needs," said Sen. Tom Holland, a Baldwin City Democrat, one of the negotiators. "We're going to basically mortgage our futures on cutting income taxes for no material growth that's going to be recognized. I think it's a foolhardy exercise."

Comments

oletimer 1 year, 11 months ago

We need to raise taxation on the rich, which will not happen because the rich make the rules. How in the world can they cut any taxes? The state is broke already, with nothing on the horizon. How can the idiots in Topeka expect things to get any better taking money away? Maybe I need to do that. Get a lower paying job, and plan on spending more on expenses. The state can do it, why can't I?

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jafs 1 year, 11 months ago

Apparently many R states are "moochers" since they demand more federal tax dollars than they contribute.

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Jimo 1 year, 11 months ago

I don't see anything in this article on where the additional $500 M of cuts will be made. Or are we back to the tax fairy?

Who will it be? The poor? The disabled? The elderly? Roads? Schools?

And here Brownback was supposed to be Catholic. Turns out he's an atheist.

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WilburNether 1 year, 11 months ago

Oh, my, just listen to the squealing of the little piggies who feed at the public trough! They are in anguish at the thought of having less of other people's money to feed on. Squeal, little piggies, squeal!

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Michael LoBurgio 1 year, 11 months ago

Kansas seeks Medicaid waiver from feds sam is screwing kansans

http://bit.ly/Jwr27V

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seriouscat 1 year, 11 months ago

Please let this be rock bottom, please let this be rock bottom, please let this be rock bottom....

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just_another_bozo_on_this_bus 1 year, 11 months ago

The rich say we're broke, so the poor and the middle class must pay.

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bobberboy 1 year, 11 months ago

small business = are these the same people that overcharge for their services everytime we turn around ?

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Michael LoBurgio 1 year, 11 months ago

A Kansas House tax committee passed a bill in which anyone making more than $250,000 — about 21,000 people — will see a $1,500 cut, according to Kansas Department of Revenue!

The hike would come from the elimination of tax credits for Middle class and Poor!

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Michael LoBurgio 1 year, 11 months ago

What’s in the agreement?

• In 2013-2014, limited liability companies, subchapter S corporations and sole proprietorships don’t have to pay nonwage income tax on their first $100,000. It moves to the first $250,000 the following two years before the tax is eliminated in 2017.

• Kansas’ three individual income tax brackets are collapsed to two. Taxpayers earning less than $30,000 a year pay 3 percent. Those earning more pay 4.9 percent.

• As in current law, six-tenths of the one-cent sales tax lawmakers approved in 2010 is eliminated on July 1, 2013. The remainder continues to fund highway projects.

• Qualifying tax filers must choose either the earned income tax credit or the food sales tax rebate.

24 counties are added to the existing 50 counties in the rural opportunity zones program, a Brownback initiative that encourages people who have lived out of state for at least five years to move to Kansas by offering an exemption from income taxes for five years and repaying up to $15,000 in student loans.

• Oil producers are exempt from severance taxes on only the first 100 barrels of oil per well in new oil fields.

Read more here: http://www.kansas.com/2012/04/26/2312090/kansas-governor-says-he-likes.html#storylink=cpy

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Michael LoBurgio 1 year, 11 months ago

Members of the state Legislature’s tax committees aren’t just key decision makers on Gov. Sam Brownback’s tax plan — they’d also be among its biggest beneficiaries.

Twenty of the 23 members of the House Taxation Committee have business interests that would be exempted from state income tax under the Brownback plan. In the Senate, nine of 11 members of the Assessment and Taxation Committee have interests that would go untaxed.

The data is reported in the lawmakers’ statements of substantial interest, a form all state officials are required to file disclosing business interests that could affect their governmental duties.

After looking at the data gathered by The Eagle, Senate Minority Leader and tax committee member Anthony Hensley, D-Topeka, suggested that some of the members should consider recusing themselves from voting on the plan.

“They certainly ought to at least let the general public and the rest of their colleagues know that they have a conflict of interest,” Hensley said. “We have rules in the Senate that provide for that.

Read more here: http://www.kansas.com/2012/01/22/2185537/legislative-tax-committee-members.html#storylink=cpy

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Fossick 1 year, 11 months ago

Good job, negotiators. Reduce the sales tax, check. Reduce marginal rates, check. While I would have preferred an increase in the standard deduction in lieu of retaining interest deductions - we ought not be promoting debt, which is what that does - and while I would rather see sales tax eliminated on food, I can't say I dislike the final result. Once the senate rolls over next year, you can really get to work.

Next I would love to see a property tax forgiveness of up to $30,000 / year on one residential or farm property, for anyone legally blind or older than 65. The state should not be charging old people to live in their own houses.

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Joshua Montgomery 1 year, 11 months ago

As a small business owner it is more important to me that I have access to smart, well educated workers with access to healthcare than that my tax rate is reduced by a few points.

This tax cut is being sold as a way to create jobs and stimulate the economy (despite Kansas's reasonably low 6.1% unemployment).

What this will in fact do is shrink the tax base, de-fund education, de-fund services for the poor and start the process of turning Kansas into a backwater like Mississippi.

Look for a sharper division between rich and poor, an increase in poverty, an increase in crime and an overall decrease in our quality of life.

The people who will suffer the most due to these cuts are the children of poor and working class families.

This is wrong and we should fight it.

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Bob_Keeshan 1 year, 11 months ago

Every business in the state will reorganize as a "small business" and stop paying taxes.

Brilliant.

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Gandalf 1 year, 11 months ago

Watch, after Evilsam loses his legal battle with the feds over disability, he will come back to cut the earned income credit to pay for it.

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handley 1 year, 11 months ago

Bottom line the rich will get richer, the poor will get poorer, and the middle class will have to pay for it.

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