Topeka Tax plans being considered by House and Senate Republican leaders would increase tax revenue coming to the state by $497 million to $821 million over a five-year period.
The proposals call for higher sales tax and lower income taxes, but would produce a net gain of tax revenue over the next five years over current law, according to analyses by the Kansas Department of Legislative Research, which are being used by legislators.
Under current law, the 6.3 percent state sales tax is scheduled to decrease to 5.7 percent on July 1, less than six weeks from now.
The 6.3 percent rate was approved in 2010 as a temporary rate for three years to avoid deep budget cuts during the Great Recession.
But Gov. Sam Brownback, a Republican, and Senate GOP leaders want to make the 6.3 percent rate permanent, saying the revenue is needed to shore up the budget and buy down future income tax cuts.
House Republican leaders have so far been willing to go to a 6 percent state sales tax. Senate Republicans countered on Wednesday with 6.25 percent, and 5.7 percent for groceries. More negotiations were scheduled for Thursday.
The various scenarios also reduce or eliminate itemized deductions, and significantly cut standard deductions while ratcheting down income tax rates.
Depending on the specific plan, the net effect is to bring in more revenue to the state, ranging from a cumulative $497 million to $821 million over a five-year period.
Democrats, including Sen. Tom Holland, D-Baldwin City, call that a tax increase. "It's a shifting of the tax burden from higher-income people to middle-class and lower-income people," Holland said.
Sales taxes take a larger portion of the budgets of low-income earners because they are paying the same rate for basic items, such as a gallon of milk, as high-wage earners.
State Rep. Arlen Siegfreid, R-Olathe, who is a member of the House-Senate conference committee working on the tax plans, said the increased revenue was needed because of the deep tax cuts signed into law last year by Gov. Sam Brownback.
"There have to be adjustments made to keep essentials going," he said.
Last year, Brownback and the Legislature approved cuts in income tax rates, the elimination of income taxes for the owners of 191,000 business and the repeal of several tax credits aimed at helping low-income Kansans.
The House's chief tax official, state Rep. Richard Carlson, R-St. Marys, noted that in fiscal year 2018, which starts July 1, 2017, the amount of revenue starts to decrease to the state as the income tax cuts are ratcheted down.
However, the five-year spread shows net gains to the state.
"It has always been a tax increase until you get to 2018," said state Sen. Laura Kelly, D-Topeka. And, she said, the state analyses of the various tax plans don't show what will happen with local property taxes. Kelly argues that as the state fails to increase base state aid per pupil for schools, local property taxes will start to increase to fill in the gap.
And she noted that as the income tax cuts get larger, the budget gets tighter in future years. "And that is without a nickel more for schools or state employee pay raises," she said. "This is just flatline, and then we are still in the hole," she said.