Archive for Wednesday, April 29, 2015

Kansas GOP leaders quietly molding tax plan

April 29, 2015, 5:19 p.m. Updated April 29, 2015, 10:00 p.m.

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— Republican leaders in the Kansas Legislature are quietly trying to put together a package of tax measures to balance the state budget, but they say it will probably take until late next week before a plan is introduced.

"I think by the end of the week we may start to have a feel for what the solution possibilities could be," House Taxation Committee chairman Rep. Marvin Kleeb, R-Olathe, said Wednesday.

Lawmakers returned to the Statehouse Wednesday after a three and a half week break for the start of what traditionally is a short wrap-up session. During the break, however, state budget officials released new figures dramatically lowering the estimated amount of revenue available next year.

Based on the budget that House and Senate negotiators have tentatively agreed to, and depending on what assumptions one makes about measures Gov. Sam Brownback has proposed but which lawmakers have not yet approved, the gap between anticipated spending and projected revenue in next year's budget can be anywhere from $131.4 million to $807 million.

But the generally accepted figure in the Statehouse is $422 million, which assumes lawmakers will pass all of Brownback's proposed fund transfers and "revenue adjustments," except his proposed tax increases on alcohol and tobacco products.

Sen. Jim Denning, R-Overland Park, said he plans to propose a tax package that would include a significant change to one of the sweeping income tax cuts that lawmakers approved in 2012, the exemption for "pass-through income," or the income that certain business owners receive from the operation of their businesses.

"Right now, there's a way for all income to pass through tax-free, including owners' wages," Denning said. "That never was the legislative intent. So what my plan does is, I just use the Social Security wage base, which is $118,500, and say all the pass-through entities have to pay income on that amount, at a minimum. And then if they have income or working capital above that, then it can pass through tax-free, which was the legislative intent."

Denning said that alone would generate about $160 million in additional revenue for the state. He is also proposing a slight increase in the state sales tax, and a tax on "passive" income such as rents and royalties. But he said he doesn't yet have estimates of how much those measures would generate.

Kleeb said he has discussed that plan with Denning, and he believes some of it may make its way in to the final package.

"There are three or four ideas out there when it comes to a pass-through income tax solution," he said. "All of them have some merit. All of them are heading in pretty much the same direction. It's just some nuances of how to get there."

But any change to the exemption for pass-through income is likely to meet stiff resistance from the Kansas business community. Last week, the National Federation of Independent Businesses began airing radio ads statewide, urging Kansans to call their legislators and oppose any such change.

And Brownback has said he does not want lawmakers to change course on income taxes, which he calls "a tax on productivity." Instead, he wants to shift the state toward more reliance on "consumption taxes," such as the sales tax.

The challenge for GOP leaders is to find a plan that both balances the budget and garners the necessary votes to pass both chambers: 63 in the House; and 21 in the Senate.

On one side, there are conservative Republicans who have taken campaign pledges never to vote for any tax increase.

"Just like there are liberal Democrats who will vote for nothing that maybe even remotely makes the governor look good," said Sen. Ty Masterson, R-Augusta, who chairs the Senate budget committee. "There are people that are just heck-no's on anything."

But House Democratic Leader Tom Burroughs of Kansas City said most Democrats have not dug in their heels that far.

Asked what kind of tax package Democrats would support, Burroughs said, "One that's fair, equitable and sustainable. That's what we've stated from the very beginning and we still feel that way."

"These small tax increases here and there, the fee increases that we've had presented to us throughout the session that have continued to be a stop-gap, a Band-Aid on a major wound, is not doing the job. We have to have a tax plan on the table that will bring long-term sustainability to the state economy."

Comments

Cille King 2 years, 6 months ago

"So what my plan does is, I just use the Social Security wage base, which is $118,500, and say all the pass-through entities have to pay income on that amount, at a minimum. And then if they have income or working capital above that, then it can pass through tax-free, which was the legislative intent."

We always knew that the legislative intent was to tax the lower and middle income more and let those in the top income brackets- in this proposal - income over $118,500 - pay a lesser percentage of income tax.

Earned income above $118,500 should also be taxed. Those making a lot should pay their fair share.

Andy Anderson 2 years, 6 months ago

"Fair share"? I thought we all were equal? Why should some pay more than others?

Your comment is not sustainable.

Lawrence Freeman 2 years, 6 months ago

OK, tax all their income at the same rate as the poor. Fair enough for you?

David Reber 2 years, 6 months ago

Why should some pay more than others? Good question, Andy. So.....why do you apparently support a system in which you, me, and everyone else earning less than $118K pays income tax on 100% of their earnings, while people earning far more pay tax only on the first $118K?

Steve King 2 years, 6 months ago

I thought the trickle down of prosperity was going to make Kansas an economic powerhouse. If so why are they raising taxes? Is it not working?

James Howlette 2 years, 6 months ago

The poor and middle class were obviously not paying enough.

James Howlette 2 years, 6 months ago

"Just like there are liberal Democrats who will vote for nothing that maybe even remotely makes the governor look good,"

I'm intrigued. Please tell us an example of something from the Kansas legislature that even remotely made Brownback look good.

Phillip Chappuie 2 years, 6 months ago

"Fair share"? I thought we all were equal? Why should some pay more than others?

We are all equal. It is just that some are more equal than others. Like those who have pass through income. You see, in a world in which a single mother with two kids earning, say 25K a year, it doesn't leave much net after expenses. But if the same person earned 125K...well, there is mucho net after expenses. Fair? The Brownback plan tends to ignore and marginalize the hard working people of this state that live check to check trying to get by, pay for a house and raise their kids. Where is the fair? I guess for Mr. Anderson, the fair is down on Mass street on Saturday.

Marc Wilborn 2 years, 6 months ago

Maybe the moderate legislators will run Sam out of town after this gets passed?

Andy Anderson 2 years, 6 months ago

"moderate legislators"?

They're all Neo-Cons

The term "Fifth Column" came into popular use in the Spanish Civil War in the 1930s and thereafter as socialism and fascism were sweeping into conflict to take over the nations of the West. It means a group of guerrillas, activists, intellectuals, etc. who work to undermine a nation (or some larger organization) from within. Its activities can be out in the open, or they can be secret.

http://www.thedailybell.com/editorials/36265/Nelson-Hultberg-The-Neoconservatives-Tyrannys-Fifth-Column/?uuid=6F7D110D-5056-9627-3CB48C525D40DC3E

Dorothy Hoyt-Reed 2 years, 6 months ago

"Just like there are liberal Democrats who will vote for nothing that maybe even remotely makes the governor look good," said Sen. Ty Masterson, R-Augusta, who chairs the Senate budget committee. "There are people that are just heck-no's on anything."

This is all on you, bud. There are a handful of Democrats, liberal or moderate, in the Kansas legislature. This experiment is yours. This failure is yours. They can say no all they want and it doesn't do any good does it? They have a solution. Repeal the tax vacation that over a quarter of million people have. Make them pay income tax again. Where were those people when you needed them? Using their tax break to take a vacation outside of Kansas? Why haven't they created a bunch of jobs? I'd say your donors let you down. They didn't feed the economy like they promised. They said no to expanding their business that didn't warrant expansion. They didn't use their tax cut to create jobs or give their employees a big raise, so they could go out an "consume mass quantities". If we had a state full of Coneheads, maybe your governor would look good.

Dorothy Hoyt-Reed 2 years, 6 months ago

Here's another quote (and then my response) by Masterson on cjonline, He uses funny math to defend the budget problems and doesn't realize their aren't enough Democrats to make much difference in the Kansas legislature.

"“From my perspective, I was hearing just a tremendous amount of misinformation. I sense a very misinformed public, and so I understand their angst but when confronted with the actual numbers and facts, they seem surprised,” Masterson said."

So, Masterson, there is no revenue shortfall? So, you guys aren't robbing the highway funds, and the funds won't run out in a couple of years? So, over a quarter of million people, some small businesses, some very rich people, are paying income taxes? So, Kansas doesn't have one of the most regressive tax systems in the country? So, you aren't going to enact some more regressive taxes? So, you haven't changed the definition of school funding to include pensions?

You have done all these things, so own up to them. You have brought our state into financial ruin, own up to it. But there are plenty of voters out there who really don't care, because of guns. But now you have made abortion more dangerous; you have made gun toting more accessible; you have made charity raffles and fantasy football legal. Now these people might actually start paying attention to what you are doing to the budget. Wake up, Kansas!!!

Dorothy Hoyt-Reed 2 years, 6 months ago

Just was reminded that Ty Masterson also declared personal bankruptcy. Thanks a lot, Andover, for sending him to Topeka, so they could put him in charge of the state budget.

Lynn Grant 2 years, 6 months ago

Sen. Masterson, the public"s surprise is that you are presenting what you call "actual number and facts." They are amazed that you think that they should believe your fuzzy math.

Betty Bartholomew 2 years, 6 months ago

Sometimes, I pick up my keyboard and hit myself in the face. It feels better than thinking about the state budget and the republican excuses for it.

They accuse democrats of being "tax and spend", but at least the democrats understand that you have to have tax income in order to spend on anything, even if you could trim the budget to only constitutional obligations, and you can't just pull money out of thin air.

And why do they not understand that if they raise sales taxes, people will buy fewer things across most income levels? Stores don't lower the prices of their goods to balance out an increase in sales tax, and employers don't give raises to compensate for it, either.

And then they want to play the sales tax off like it's fair because everybody has to pay it? Well, in theory, we should all be having to pay taxes on our personal income, but they think it's ok to let a certain segment of the population out of that one, so they can stick what they think is "fair" in a pipe and smoke it.

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