Topeka — As Kansas lawmakers continue to look for ways to dig the state out of a projected $406 million budget hole for next year, Republicans remain sharply divided over the question of reversing course on the sweeping income tax cuts enacted in 2012, which many say are the cause of the state’s current budget woes.
Both the House and Senate tax committees worked on bills Tuesday that would peel back at least part of the tax cuts that exempted more than 330,000 business owners from paying any taxes on their business income.
But conservative Republicans are putting up fierce resistance to any such attempt, and it remains to be seen whether they still have the power to defeat such a measure on the floors of the full House and Senate.
“Clearly, this is not a tax plan that has failed,” said Rep. Kasha Kelley, R-Arkansas City, who serves on the House tax committee. “This is a tax plan that is taking some time to take root, as all new things do, and to send a signal that it doesn’t work to the rest of the nation, I think, is detrimental.”
The House committee worked on a package Tuesday that includes a provision to reimpose taxes on what is called “guaranteed payments” for certain business entities. That’s money paid to partners in certain businesses, either for the use of capital or for services rendered as a partner, independently of whether the business turns a profit.
Under federal tax law, guaranteed payments are not considered wage income, and therefore under the cuts enacted in 2012 are exempt from state income taxes.
That’s expected to raise about $23 million next year. Kelley offered a motion to remove it from the House tax bill, but her motion failed on an unrecorded voice vote.
The panel did, however, remove another part of the proposal that would have frozen other income tax rates at their current level, thus ending Republican Gov. Sam Brownback’s hopes of phasing out income taxes altogether, a plan sometimes referred to as the “march to zero.”
“Philosophically, I’m against going back on what we did (in 2012),” said Rep. Marc Rhoades, R-Newton, who offered the amendment to remove that provision.
Rhoades also dismissed questions that he said some Republicans have begun raising about the fairness of exempting so many business owners from income taxes while the state is facing such a large financial hole.
“We would not be having this discussion in our party (about) the fairness issue, in my opinion,” Rhaodes said. Maybe a few (would). But if there wasn’t a hole, we wouldn’t be having this discussion.”
The House panel plans to finish debating its package Wednesday. Currently, it also includes increases in taxes on retail sales, motor fuel and cigarettes, as well as adjustments to certain itemized tax deductions.
Senate tax plan
Meanwhile, the Senate tax committee advanced a bill Tuesday that would raise an estimated $496 million in new revenue next year, enough to fill the budget hole and leave the state with a positive ending balance at the end of the year.
That panel also advanced another bill that’s meant as an incentive for lawmakers to wrap up the session this week. It’s a bill that would cut off all legislative pay after Friday, which will be the 96th day of the session.
The Senate tax bill includes a provision to reimpose income taxes on business owners, but would offer them a tax credit based on a percentage of their payroll for employees. That would raise about $82 million next year. It also includes many of the provisions in the House bill regarding sales, motor fuel and cigarette taxes, along with changes in the way motor vehicles are taxed.
Sen. Less Donovan, R-Wichita, who chairs the panel, said that would be a more direct incentive for small businesses to hire more workers, something that the exemption on business income was supposed to do.
But conservatives on that committee resisted as well. The bill narrowly passed out of committee, 6-4, without a recommendation.
Democrats on both committees are also opposing the bills.
Rep. Tom Sawyer, the ranking Democrat on the House panel, said many in his party will not consider raising any other tax until the exemption on business owners’ income is removed.
The Senate could vote on its tax bill as early as Wednesday. There was no immediate word Tuesday on how quickly the House might vote on its forthcoming tax plan.
Comments
Leslie Swearingen 3 years ago
Why are Democrats so concerned about poor people not having tobacco and other luxuries? As a poor person I find that demeaning. I live on a budget and I buy what I can afford not what I want. It can be difficult to tell yourself no but it is not impossible. Every segment of society needs to be engaged to some extent, to do what it has the ability to do to further the interests of society.
I hate being shunted off to one side while others talk about how needy I am, how marginalized, how I just don't know what is good for me, but bless their hearts they are willing to tell me. The feminizes and the health nazis trample over my rights without so much as a fare thee well. It is high time that the poor are allowed to speak for themselves and what they want to do with their lives.
Lawrence Freeman 3 years ago
If you want to tax "sins" how about adultery, unmarried sex, excessive weight or sugar? Better yet tax teapub lies. That would balance the budget in a few days.
Scott Quenette 3 years ago
Democrats are concerned with the poor having the power of self determination regardless of how they they into their position.
Since I'm not a poor person and pay taxes, should I come to your house and tell you what you can and can't have based on my personal preferences?
RJ Johnson 3 years ago
If you're using my tax dollars to pay for stuff, YES!
Scott Quenette 3 years ago
You're using my tax dollars to drive on roads I never see. I don't think you should do that.
Dorothy Hoyt-Reed 3 years ago
If it wasn't for Democrat's programs, Leslie, you would be living in a poor house sleeping on a cot in a room with 20 other women. Do a little history research. Concentrate on what happened to poor people in the US before that evil Roosevelt started the creation of programs that allow you to be poor and disabled, yet still have a computer and a nice place to live. Here are a few links for you. You should seriously be quite grateful for the Democrats.
You could be living here and needing to work on harvesting grain. http://www.poorhousefarm.com/9.html
http://www.elderweb.com/book/export/html/2844
http://www.crf-usa.org/bill-of-rights-in-action/bria-14-3-a-how-welfare-began-in-the-united-states.html
Marc Wilborn 3 years ago
Would you be in favor of requiring mandatory work for the unemployed? I believe that was also an FDR program that came out of the depression. Many of the great things that came out of the depression were created or maintained by that program.
Dorothy Hoyt-Reed 3 years ago
Actually, yes, I would. Mandatory for those who can. But even more important would be to put money into child care. Many people want to work, but if they have no family member to care for their children, then their pay is eaten up with those costs. And don't give me the "They shouldn't have children they can't afford" crud that I hear from many conservatives. Most conservatives are against abortion, but then they put down poor people when they don't abort.
Jim Slade 3 years ago
And refuse some contraceptives, sex education, etc.
And what of those that had children when at a time when they could afford them, but fell on hard times? Should the state take away the children of those making under a certain amount? "Once you make $32K a year as a household you can get 1 kid back. Make $37K a year, you get them both back."
Marc Wilborn 3 years ago
I think that subsidized child care is a very important need that is being completely ignored. It helps those who want to work and can also provide consistency to those children who participate thus hopefully avoiding other problems down the road. I am also for paying taxes to fund these efforts.
Sam Crow 3 years ago
"All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service, It has its distinct and insurmountable limitations when applied to public personnel management."
"The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations,"
--Roosevelt, August 16, 1937
So eliminate public employee unions, including the KNEA.
According to FDR.
Marc Wilborn 3 years ago
Leslie, Democrats have championed the rights of the poor for many decades with little or no success to show for it. As our President said, everyone's a politician in the end and must do what is necessary to appease their own interest groups. That is why the Left is up in arms over Fast Track for the TPP because they can make hay out of it, not stand up for any particular group.
Dorothy Hoyt-Reed 3 years ago
"Democrats have championed the rights of the poor for many decades with little or no success to show for it." Leslie would be living in pretty bad conditions if we didn't champion for the poor. Are you suggesting a return to the poor houses, taking children from parents who are poor and putting them in orphanages? Are you ready to return to shanty towns?
Marc Wilborn 3 years ago
No. I think that the current programs to support the poor do little, if anything, to help these people become less poor. I am all for support if it has adequate structure to provide people a means to climb out of poverty. See my comment above regarding child care.
Bob Reinsch 3 years ago
It's pretty simple. Lower the taxes for people that vote for you, raise the taxes on people that don't vote for you.
Kate Rogge 3 years ago
Clearly, this is not a tax plan that has failed,” said Rep. Kasha Kelley, R-Arkansas City, who serves on the House tax committee. “This is a tax plan that is taking some time to take root, as all new things do, and to send a signal that it doesn’t work to the rest of the nation, I think, is detrimental.”
So Kansas should ride this tax plan rocket into Hell rather than send a signal it doesn't work? Does Rep. Kelley think the rest of the nation hasn't already figured that out? What a damn fool.
Bob Forer 3 years ago
Kate, you are looking in the wrong direction. Many of the folks hell bent on bankrupting our former great state are hoping to ride the tax plan all the way to heaven.
Bob Forer 3 years ago
The headline "Tax Plans Coming Together" is a wee bit of an exaggeration.
The tax on guaranteed payments will raise 23 million. Add another 82 millon for reimposing some of the business taxes which were cut, and we are barely over 100 mil. Still almost 400 mil short.
The boys and girls in the State House need to brush up on their math.
Andy Anderson 3 years ago
Why do people in government offer services they can not afford?
Lawrence Freeman 3 years ago
Compassion? Besides that define afford What service does Kansas offer that other states do not? .
Andy Anderson 3 years ago
"Compassion"? Don't make me laugh. Look what greedy people promoting "compassion" did for Detroit and Baltimore.
Bob Forer 3 years ago
Sorry. Andy but it takes a complex mind to understand my answer to your question, so I won't waste my time.
Andy Anderson 3 years ago
You had a chance to answer a question a youngster could answer. But, you chose to fade out of position by exposing your soft underside.
I bet you were government schooled. Weren't you.
Bob Forer 3 years ago
Nope. Got a scholarship to a liberal arts college. You would not have liked it there. Too many critically complex folks.
Michael Napier 3 years ago
We could afford it... we did afford it... we ran a surplus before all of these tax cuts were introduced champ.
Andy Anderson 3 years ago
The greedy will say and do anything to take the working stiffs money.
Lawrence Freeman 3 years ago
You do know that republicans are in in charge, right?
Andy Anderson 3 years ago
You do know that "greedy" people call themselves many things, right?
Bob Reinsch 3 years ago
Indeed. In Kansas, we call them "Americans for Prosperity".
Lawrence Freeman 3 years ago
Or Andy, Kevin and Bart. :)
Thomas Bryce Jr. 3 years ago
How is Taxing the income for a Business "Stealing" but Taxing the income for a Worker not?
Bob Forer 3 years ago
But for the collection of income taxes, the idiots wearing those shirts would have had no roads to travel upon to the State Capital to get their pictures in the newspaper.
Dorothy Hoyt-Reed 3 years ago
That was the first thing I thought when I saw that picture. If they went to public school, but they don't want to pay for the next generation's education, I say rescind their degree. They are no longer high school graduates; therefore their college degrees are no good, whether or not they went to a public university. These deadbeats are getting pretty irritating. They want something for nothing.
Jack Krebs 3 years ago
Taxes are not stealing. Through our elected representatives, we agree to contribute money to help support services provided by our government for the common benefit of all. Of course, the whole process is messy, full of compromises and even contradictions, but it is part of how we make a coherent society.
Scott Quenette 3 years ago
This is far to simple a concept for some of these geniuses to grasp.
Sam Crow 3 years ago
If there was a correlation between amount of taxes collected and coherence, this would be a very coherent society.
Phillip Chappuie 3 years ago
Kasha Kelley must live in some dream land fantasy world. Take time to root and grow? If the current tax plan keeps growing we'll be dead broke by next summer. The one particular poster makes reference to the greedy people that only want to take the working man's money. I'm afraid he has that all backwards. The greedy are the ones that don't want to pay their fair share and allow the burden to fall back on the working stiffs. It does amaze me that many of the supporters of the Brownback plans claim to be Christian but obviously don't care much at all about little children going to bed hungry. I'm sick of those of privilege claiming to know what is good for everyone else with the only goal of keeping their own safety nets in place.
Sam Crow 3 years ago
"The greedy are the ones that don't want to pay their fair share..."
Federally, 25% of households pay 89% of the total taxes.
Income wise, the 75th percentile would include a teacher married to a cop in Kansas.
How might you define fair ?
Jim Slade 3 years ago
Federally that same 25% account for 87% of the wealth in this nation.
Now lets talk about taxes as a percentage of income.
That's what makes the system unfair.The overreliance on consumption taxes and the absence of a progressive personal income tax in many states neutralize whatever benefits the working poor receive from low-income tax credits. The bleak reality is that even among the 25 states and the District of Columbia that have taken steps to reduce the working poor’s tax share by enacting state EITCs, most still require their poorest taxpayers to pay a higher effective tax rate than any other income group.
Bob Burton 3 years ago
When a business or farmer pay taxes, where do you think that money comes from?? The answer is you when you buy their products.. Hope that helps.. Have a good..
Rebecca Woolfolk 3 years ago
Did they lower the prices of their products when their Kansas income tax was eliminated? Or did they pocket the savings?
Clara Westphal 3 years ago
I agree that the legislators should not be paid for the overtime days to get a bill in place and passed. As long as they are drawing the extra money, they will tarry longer.
Sam Crow 3 years ago
Kind of like welfare.
Larry Sturm 3 years ago
Repeal all of the tax cuts and get our state back on track. Working people should not be paying taxes working for business that don't pay taxes.
William Weissbeck 3 years ago
Who are the two guys in the front row? Were they promised sandwiches? Where did we ever get this crazy notion that income taxes is stealing? Who perpetuates nonsense? Wm. Jennings Bryan fought that battle in 1896 and as a Democrat carried Kansas in the presidential election. It's part of the US Constitution having been adopted in 1913. We are being rather presumptive to think that our elders from 3 generations back were fools.
William Weissbeck 3 years ago
Between the Founding Fathers and the late 19th Century we went from a land based, agricultural economy to an industrial economy. Wealth was shifting from what you owned, to what you earned.
Dorothy Hoyt-Reed 3 years ago
Have you heard of homesteading? We weren't that much of a money based society back then. People didn't have mortgages back then. First, you got a grant from the king of England, then to settle the "wilderness" you homesteaded.
Dorothy Hoyt-Reed 3 years ago
Doctors back then didn't have to go into debt for the rest of their lives to be a doctor, and, wow, some of them took produce for payment. Carpenters were apprenticed to get their training or they we trained by a family member and took over their business. They didn't have to go to a trade school, and yes, go into debt. But many people grew and preserved their own food. They didn't have to pay large amounts of money to utility companies. They could own a horse, and just put up some hay for winter, instead of making some oil company and car company filthy rich. We had an agrarian society which had it's advantages and disadvantages, but we didn't have just a few food and seed companies controlling what we ate. And someone who really did work hard probably could make a good living. Now we expect people to work hard and live in poverty, because we don't deem their job "important" enough to pay a living wage.
Lawrence Freeman 3 years ago
Obtuse?
Lawrence Freeman 3 years ago
Wrong, check out a mirror. obtuse [ əbˈt(y)o͞os, äb- ] ADJECTIVE 1.annoyingly insensitive or slow to understand:
Phillip Chappuie 3 years ago
Mr. Crow, I would begin by defining fair as those who pay zero state income tax should be chipping in just like the rest of us without exemptions do. Pretty simple formula. This concept of greed is exemplified mostly by the perceptions that Brownback tax policy favors those who make the most money and shortfalls fall back on to the "teachers and cops" and the rest of us wage earners.
Sam Crow 3 years ago
I would invite you to walk down Massachusetts Street and ask the independent stores owners if they consider themselves greedy.
Maybe had Ken Baker of Pachamamas been more greedy, it would still be in business, along with his staff
Perhaps the owners of the independent businesses that used to operate in the many now empty storefronts were not greedy enough.
Possibly those small local businesses would be in those places now had the owners not had to pay confiscatory business income taxes to the state.
James Howlette 3 years ago
Perhaps you'd like to ask me. I stayed in business when I paid taxes on my business income. I stayed in business when I didn't. Taxes are a known expense. You budget it in like everything else. And frankly, the state taxes we paid pre-Brownback weren't that bad.
It's hard to sell $50 a plate dinners in Lawrence. Income tax policy change doesn't suddenly make that a viabile business model, assuming it was organized as a pass-through business in the first place.
Lawrence Freeman 3 years ago
We didn't have a tax problem in 2012. We do have a low wage problem in Kansas.
Andy Anderson 3 years ago
I remember in the old days when the lottery was pushed. The greedy government people said their cut of the vigorish would pay for all of their schemes in future....
Too funny.
Fact is. Greedy people in government will always say and do anything to take the working stiffs money.
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