How tax bills are like ordering pizza

Most people have had the experience of being in a large group that suddenly decides to order out for pizza. The negotiating process can be excruciating. Put meat on the pizza and vegetarians in the group won’t touch it. Don’t include meat and a whole other faction says, “What’s the point?” Everything you try picks up a few votes here, but loses some number of other votes over there.

The only difference between that and negotiating a tax bill is that, by and large, at least most people are at least in favor of the general concept of pizza.

Beyond that difference, though, that process is pretty similar to what the House Taxation Committee went through Monday when it narrowly advanced a bill that would partially — and I do mean partially — undo one of the more controversial income tax cuts passed by the Republican-controlled Legislature in 2012.

It has to do with the complete exemption from state taxes on so-called “pass-through” income. That’s money derived from businesses that merely passes through as personal income for the owners. It applies to self-employed people who work out of their home. It also applies to many farms, partnerships such as law firms and medical practices, and certain types of corporations.

By agreeing to reimpose a very small tax of 2.7 percent on that income, which would be the lowest rate in the Kansas tax code, some Democrats on the panel begrudgingly agreed to endorse it. Ranking Democrat Rep. Tom Sawyer of Wichita said it was at least a start. And by itself it was something he could live with, although he would have preferred to see some additional controls, like a provision that applied the full tax rate to businesses that don’t have any other employees besides the owner.

But by picking up some Democratic votes, conservatives said it would be a poison pill if that provision were included in any final tax package. GOP Reps. Marc Rhoades of Newton and Kasha Kelley of Arkansas City said they still think more cutting can be done on the spending side of the budget. They might be willing to look at some “consumption” taxes, i.e., sales tax. But with the income tax provision in the mix, they will be a solid “no” vote on any tax package.

Meanwhile back on the other side, Democrats and some moderate Republicans say a sales tax increase is just as much of a poison pill for them as an income tax hike is for the conservatives. They argue it falls disproportionately on the poor, who spend a higher percentage of their incomes on retail sales. Sawyer said the only way he would consider it would be if Republicans would agree to exempt food from the tax, which most Republicans won’t do.

The trick for lawmakers as they near the 90th day of the session is to find some mix of pizza ingredients that will attract support from at least 50 percent plus one in each chamber … and a signature from the governor.