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Archive for Thursday, May 23, 2013

Senate Republicans approve sales tax increase, cuts in income tax rates, lower food sales tax

May 23, 2013

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— The Kansas Senate, with only Republican support, on Thursday approved a tax plan that will increase taxes by $879 million over the next 5 years.

The measure would make permanent the 6.3 percent state sales tax, but lower the sales tax on groceries to 4.95 percent.

Over the next 5 years, it would also phase out itemized deductions, such as mortgage interest and property tax, and decrease the standard deduction. But it would also lower state income tax rates from the top rate of 4.9 percent to 3.5 percent, and the bottom rate from 3 percent to 2.5 percent.

"We see this as an overall tax cut," said Sen. Caryn Tyson. R-Parker.

But Sen. Tom Holland, D-Baldwin City, disagreed, saying, "This, make no mistake, is a tax increase."

The combination of the various tax changes will produce $879 million more in taxes over 5 years. Holland said the tax cuts are skewed to the wealthy, with low-income Kansans seeing an increase in their tax burden.

But Tyson said the lower food sales tax proposal "does get the money into the hands that need it."

Democrats joined Republicans in approving the lower food sales tax portion of the bill in a unanimous vote.

Republican Sen. Jeff Melcher, of Leawood, spoke against the lower sales tax rate on food, saying it would encourage more food purchases and obesity. But then he voted for it.

Kansas is one of only seven states that charge the full sales tax on groceries.

But Democrats, and some Republicans, parted company with Senate GOP leaders on the rest of the bill, including portions that extend the higher sales tax, reduce the state income tax, phase out itemized deductions and cut the standard deduction.

Democratic amendments to remove the entire sales tax from groceries and to keep itemized deductions used by hundreds of thousands of tax filers on mortgage interest and property taxes were defeated.

The total tax package was approved 24-15 with only Republicans in support, and now goes to the House on Friday for consideration as the 2013 legislative session hit overtime.

The Kansas Constitution specifies a 90-day session, but it allows legislators to meet longer. Thursday was the 90th day.

Republican leaders had vowed that this year's session would only go 80 days, but they have been at an impasse over taxes and the budget.

Under current law, the 6.3 percent state sales tax is set to decrease to 5.7 percent on July 1. It was approved in 2010 as a temporary measure to avoid deep budget cuts during the Great Recession.

But Gov. Sam Brownback wants to keep the rate at 6.3 percent to shore up the budget — depleted from income tax cuts Brownback signed into law last year — and buy down future income tax cuts.

Conservative Republicans, such as Brownback, are championing the phase-out of state income tax as a way to grow the economy, even if that means increasing sales taxes.

After the Senate vote on Thursday, Brownback issued a statement of support. "The tax proposal passed by the Kansas Senate Thursday night lowers the tax burden on all Kansans. I appreciate the work by the Kansas Legislature this session and will sign this pro-growth tax bill should lawmakers vote to send it to me,” he said.

But Democrats say the higher sales tax and elimination of itemized deductions hurts low- and middle-income Kansans.

"This is really bad tax policy," said Senate Minority Leader Anthony Hensley, D-Topeka. "I can't participate in tax policy that is just going to take this state down the road to ruin."

But Senate President Susan Wagle, R-Wichita, said she agreed with Brownback's philosophy that reducing income taxes would spur economic growth. She said the lower sales tax on food was a "sweetener" to lure House members to vote for the package.

Meanwhile, House Republicans have proposed setting the sales tax at 6 percent. That proposal was shot down as an amendment in the Senate, failing on a voice vote.

Wagle later issued a release saying the Senate was willing to work through the Memorial Day weekend to wrap up the session.

Comments

Larry Sturm 10 months, 3 weeks ago

Goodby to the housing maarket in Kansas.Getting rid of the morgage interest deduction will kill the realestate market.

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verity 10 months, 4 weeks ago

We can bitch, moan and complain, not going to do a bit of good as long as nobody runs against these fools (and that's being nice).

Paul Davis for governor, Marci Francisco for Lt Governor

Please email them or post on their Facebook pages.

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1Dem 10 months, 4 weeks ago

"Kansas is one of only seven states that charge the full sales tax on groceries."

1

Linda Endicott 10 months, 4 weeks ago

I'm not sure I understand exactly how they're going to do this...if you go to a place like Wal-Mart and buy both food and non-food, how do they calculate what sales tax you owe? Will we have to start putting stuff on the checkout and separate it by what it is?

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verity 10 months, 4 weeks ago

Something that is never mentioned is that local governments also charge sales tax in addition to the state sales tax. I just bought some lumber today in a very small Kansas town a short distance from the town I live in and paid 8.3% sales tax. Most receipts don't tell you the percentage you're actually paying, but I see now that's what I'm paying on everything, so probably the extra 2% is a county tax.

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appleaday 10 months, 4 weeks ago

Well, hang on -- the House just voted it down 109-5, meaning they all have to go back on Tuesday. This whole thing is disgusting.

1

George_Braziller 10 months, 4 weeks ago

So now I get to pay taxes on my taxes. I make money to pay my property tax bill but now can't deduct it so I get to pay income tax on the amount as well.

3

toe 10 months, 4 weeks ago

The plan approved by the Senate is excellent. Sales taxes should be 10% and all income tax eliminated. Property taxes should be capped. The more people that pay taxes and see the government benefits come at a cost, the better off everyone is.

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tomatogrower 10 months, 4 weeks ago

Think about it. You will be paying more taxes to Kansas if you are a homeowner, which will probably make more people decide owning a home isn't worth it. Then they will go rent from a business who will be able to deduct the property tax as business expense, and, oh wait, they don't have to pay any taxes anyway. They're a business. Who benefits?

1

donttreadonme 10 months, 4 weeks ago

How come no mention of the House and Senate Budget Chairmen adding full-time staffers, and sending state money to support 2 golf tournaments?

The "liberal" media. Yeah, right.

0

Lynn731 10 months, 4 weeks ago

I would much rather see no property taxes, and no tax on groceries. Sales tax on other things is the fairest tax of all. Everyone pays their fair share. People who work hard to acquire property (homes) should not be penalized for it, nor should they be penalized for saving up and buying a new car.

1

tomatogrower 10 months, 4 weeks ago

"Republican Sen. Jeff Melcher, of Leawood, spoke against the lower sales tax rate on food, saying it would encourage more food purchases and obesity. But then he voted for it."

Really? Really? Maybe it would allow them to buy more fruits and veggies, instead of more stomach filling pasta and ramen noodles. Maybe it will allow them that little extra to pay the gas bill instead of asking for assistance. Maybe it would save them enough to go to the laundrymat instead of washing their clothes in the sink. And of course he voted for it. He better toe his parity's line, or they will make sure he doesn't get the cushy KPERS deal that allows part time legislators to get a higher pension than teachers and firefighters. You know the Republican mantra. Those who do the real work should get less, than those who take "risks", whatever that means. I mean they don't need any of their workers, they built their businesses all by themselves.

3

JohnBrown 10 months, 4 weeks ago

"We see this as an overall tax cut," said Sen. Caryn Tyson. R-Parker.

Amazing how Tea Party RINOs lie whenever it suits them. Anytime you mess with the tax code and it results in more taxes it's a tax increase. Duh.

Funny how these RINOs recognize that increasing taxes can reduce deficits. We need to get some of these people to Washington and have a talk with Boehner.

JohnBrown

6

jafs 10 months, 4 weeks ago

I am amazed that anybody can say "This is a tax decrease" if it results in more tax revenue.

Don't they understand that's impossible? This isn't using some sort of weird projections about how the taxes will change the economy, and predicting more taxable activity, right? It's just calculating that with the new plan, the government will collect more in taxes from the same activity.

Obviously it's a tax increase then, if it results in more revenue.

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lhenry69 10 months, 4 weeks ago

Looking for another home in another State....that isn't insane........tyson and brownback need to drive thru Parker Ks and take a look at what prosparity is....put more burden on them browny.....

2

arch007bak 11 months ago

Has one shred of evidence ever been shown that reducing income tax rates at the top produces economic and job growth? It didn't work in the 80's under Reagan, didn't work under GW Bush and yet somehow it will work now...

Wasn't it Einstein that said something about trying the same thing over and over and expecting different results?

9

Thinking_Out_Loud 11 months ago

I don't think I'd ever heard of low sales tax before as one of the causes of obesity. I wonder if Sen. Melcher has published these findings?

11

verity 11 months ago

We know what their word is worth now, don't we---regarding the sales tax.

So we're to believe that the income taxes of the rest of us will eventually disappear even as they are raising them. Right.

And apparently everyone is afraid to run against the well-funded Koch Machine, so we are stuck with this forever. Going to be a long winter as we regress to the dark ages.

5

Andreas Moeller 11 months ago

"...lowers the tax burden on all Kansans" says Brownback. But the reality is: "...a tax plan that will increase taxes by $879 million over the next 5 years". That just says it all, no matter how politicians want to turn it. And I am not even against increasing taxes, if its for a reasonable cause. Just stop the blatant lying. And then some representatives are just off the wall, "lower food tax will increase obesity", and should just retire.

14

Stacy Napier 11 months ago

Its not really a tax increase for the poor. It's just makes them pay a fair share. Sorry but I am for a flat tax and this moves closer to it. Just because you only make 20,000 a year doesn't mean you should not have to pay any tax. You should pony up the same percentage of every dollar you make as I do.

And if you have money to spend on things then you have to pay tax on that. Thats how you get all those who cheat and make cash pay.

I do think the food tax should be lower because everyone has to eat.

2

George_Braziller 11 months ago

Bingo. This is a recipe for disaster. Hold onto your panties. The rich will get richer, the poor will get pooer, funding for the safety net programs will drop, but local property taxes will shoot through the roof.

"This is really bad tax policy," said Senate Minority Leader Anthony Hensley, D-Topeka. "I cant participate in tax policy that is just going to take this state down the road to ruin," he said.

10

WilburM 11 months ago

The reduced sales tax on food, while a decent idea in itself (it should be zero!), represents lipstick on the pig of tax increases on the poor, tax breaks for the wealthy. God help us if this is what Brownback and the GOP Senate consider "negotiation." And remember all those (191K) Chapter S and LLCs not paying ANY income tax.

Bad policy, bad process.

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