Brownback’s tax proposal on the ropes

House Republican leaders on Friday released their own tax plan. From left to right are Majority Leader Arlen Siegfreid of Olathe, Speaker Mike O'Neal of Hutchinson, Richard Carlson of St. Marys, and Marvin Kleeb of Overland Park.

? Gov. Sam Brownback’s tax plan was on the ropes Friday after reports and studies showed it would increase taxes for many Kansans while cutting taxes for businesses and the wealthy.

House Democratic Leader Paul Davis of Lawrence said he doubted the plan by Brownback, a Republican, could pass either the House or Senate even though the GOP has huge majorities in both chambers.

“There is opposition all across the political spectrum for a lot of different reasons,” Davis said.

House Republican leaders praised Brownback for producing a plan, but on Friday offered one of their own. In a statement, the House GOP leaders said they wanted a comprehensive plan that increased jobs “while not increasing the tax burden on lower-income Kansans.”

In a news conference, Brownback defended his proposal, which he unveiled 9 days ago. But Brownback added that he was “open to suggestions.” He maintained that tax rates must be cut to spur economic development.

Brownback’s proposal would lower state income tax rates and cut taxes for nearly 200,000 businesses.

But many Kansans would see an increase in their overall taxes because his plan would also do away with tax credits and deductions, and it would make permanent the temporary 6.3 percent state sales tax that was scheduled to decrease to 5.7 percent next year.

A study by the non-partisan Institute on Taxation and Economic Policy said that “80 percent of the state’s income distribution would collectively see a tax hike under the Brownback plan” because of the loss of credits, deductions and keeping the higher sales tax rate.

Figures provided by the Kansas Department of Revenue showed that as a group, people earning $25,000 or less, who now see a $1.7 million refund, would under Brownback’s plan end up paying $86.5 million, while those earning $250,000 and more would see the largest percentage tax cut at 18.5 percent. In 2009, there were 564,368 returns in the under $25,000 earning category, while there were 21,158 earning more than $250,000.

Senate Democratic Leader Anthony Hensley of Topeka has called Brownback’s plan “Robin Hood in reverse.”

But Brownback argues that lowering tax rates will spur business growth and improve the overall economy, helping people in all income levels. “The best thing we can do is create jobs,” he said.

He has come under fire for wanting to eliminate deductions such as the home mortgage, charitable contribution, food sales tax rebate, and especially the Earned Income Tax Credit, which goes to help working low-income families.

Brownback said taking the EITC funds and plowing them into Medicaid would provide a greater benefit for poor people. But he conceded he didn’t plan to use the funds to increase the number of people eligible for Medicaid, only to reduce waiting lists for in-home services for those with disabilities.

Meanwhile, House Republican leaders outlined a plan that would keep the tax deductions, except the EITC, and allow the state sales tax to decrease as scheduled. Like Brownback’s plan, it would exempt 191,000 partnerships, sole proprietorships and other small firms from having to pay income taxes on their business earnings.

The plan would limit state spending growth to no more than two percent annually. Revenues collected above that amount would be used to reduce state income taxes.

House Speaker Mike O’Neal, R-Hutchinson, said the proposal represented comprehensive tax reform and a responsible budget. “This plan is a prudent approach,” he said.

But Democrats assailed it, saying the two percent cap on spending would mean funding needs for social services and schools, which have been cut in recent years, would go unmet.

And they said they didn’t understand why Republicans are adamant about eliminating the EITC.

“That is a tax credit that really helps low income, especially single mothers. It rewards work,” Hensley said.

Democrats said the Republicans are missing the mark on their tax plans.

“Kansas doesn’t have an income tax problem. It has a property tax problem,” said Hensley.

According to the Tax Foundation, Kansas was the 41st worst in property taxes while its income tax ranked 21st.

The Democratic plan would use a portion of higher than projected state revenues and allocate $45 million to local governments to reduce property taxes.