Editorial: House made the right call
The Kansas House was right to reject income tax breaks in its last act of the session.
It wouldn’t be prudent for the state to implement tax cuts until after the Kansas Supreme Court has ruled that the state’s proposal for K-12 spending is adequate.
The Senate approved the cuts as part of a tax bill that squeaked by on a 21-19 vote Thursday night. The Senate bill included two tax cuts. For individuals, the bill would have allowed taxpayers to itemize deductions on state tax returns, even if they are no longer able to on their federal returns due to the new, higher standard deduction for federal taxes.
For large, multinational corporations that pay Kansas taxes, it provided an exemption for one year on any foreign assets that are repatriated back to the United States, something the new federal law incentivizes.
But the bill and the tax cuts failed in the House on a 59-59 vote since it needed at least 63 ‘yes’ votes to pass.
The tax cuts were designed to prevent the state from an unintended windfall as the result of a recent federal tax overhaul that President Donald Trump and the Republican-controlled Congress pushed through in December. Estimates of that windfall are roughly $105 million for the upcoming fiscal year that begins July 1.
Earlier this month, lawmakers approved a bill that gradually increases annual spending on public education by $530 million in five years. Although that may seem significant, it is far short of the nearly $2 billion per year in new funding that a consultant hired by legislators said is needed.
Today, the state will pitch its new plan to the state Supreme Court, which has already ruled that Kansas’ current education funding is inadequate. If the court rules that the state’s plan remains inadequate and should be closer to the estimates provided by the consultant, lawmakers will need every bit of the windfall anticipated from federal tax cuts and more.
The state broached financial peril by overcommitting to tax cuts from 2012 to 2017. With so much financial risk still looming, it is premature to introduce new cuts. The House was right to stop short of backing the Senate’s tax proposal.