Tax plans coming together, but business owners' taxes still a hot issue / LJWorld.com

Archive for Tuesday, May 19, 2015

Tax plans coming together, but business owners’ taxes still a hot issue

A grassroots group calling itself the Kansas Eagles uses T-shirts to convey its message to House and Senate tax committees, Tuesday, May 19, 2015, at the Kansas Statehouse in Topeka.

By Peter Hancock

May 19, 2015, 10:50 a.m. Updated May 19, 2015, 10:40 p.m.

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.

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Leslie Swearingen 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months ago

If you're using my tax dollars to pay for stuff, YES!

Scott Quenette 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months 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 2 years, 3 months ago

Why do people in government offer services they can not afford?