GOP passes smaller plan for cutting Kansas income taxes
photo by: John Hanna/AP Photo
Story updated at 8:01 p.m. Tuesday:
TOPEKA — Most Republicans on Tuesday downsized their ambitions for cutting Kansas income taxes and pushed a narrower proposal through the GOP-controlled Legislature in hopes of overcoming Democratic Gov. Laura Kelly’s resistance to reducing revenues.
The House voted 81-43 to approve a bill that would save taxpayers $284 million over three years. Top GOP legislators started with a goal of providing relief to businesses and individuals whose state income taxes have risen because of changes in federal income tax laws at the end of 2017. The measure also includes a modest increase in the standard deduction for all individual filers.
The Senate approved the measure hours later, 30-10, sending it to Kelly. Most GOP senators last month showed a larger appetite for tax cuts, passing a package that would have cost the state $1.3 billion over three years and gone far beyond Republican leaders’ stated goal of returning the unanticipated state revenue “windfall” tied to federal tax changes.
But that earlier measure also revived memories of a notorious tax-cutting experiment in 2012 and 2013 under GOP Gov. Sam Brownback. Those tax cuts were followed by large and persistent budget shortfalls until lawmakers reversed most of them in 2017.
Senate tax committee Chair Caryn Tyson, a Parker Republican, said she supported much of the bigger plan and parts of it made GOP senators “feel good,” but “It’s another thing to get it into law. We need it into law.”
“All or nothing? Sometimes you end up with nothing,” she told her colleagues Tuesday evening before their vote. “I would rather get pieces and have true reform and get the money to the taxpayers, where it belongs.”
Kelly vetoed two GOP tax-cutting plans in 2019 after winning the governor’s office the year before largely by running against Brownback’s legacy. She said earlier this month than Kansas is still “digging out” from the experiment and shouldn’t cut taxes because it is recovering from the coronavirus pandemic.
Some Republicans had hoped to pass a plan with the two-thirds majorities necessary in both chambers to override a veto by Kelly. Backers of the bill had three votes more than necessary in the Senate — including yes votes from two of the 11 Democrats. But they were three votes short of the required supermajority in the House and had no Democratic support there.
The governor has been open to increasing the standard income tax deduction but has proposed offsetting the cost of that policy by imposing the state’s 6.5% sales tax on online music and movies and digital streaming services. That idea is a nonstarter for Republicans, who derided it as the “Netflix tax.”
The federal tax changes in 2017 were championed by former President Donald Trump and discouraged people from claiming itemized deductions on their federal returns. Kansas law does not allow people to itemize on their state returns if they don’t on their federal returns, resulting in larger state tax bills for some. The bill approved Tuesday would allow people to itemize on their state returns even if they don’t on their federal returns.
Democrats have attacked GOP tax proposals for providing relief to large corporations. House Minority Leader Tom Sawyer, a Wichita Democrat, decried the narrower plan approved Tuesday as a corporate giveaway.
“It’s too rich,” said Sen. Tom Holland, a Baldwin City Democrat who voted no. “It’s still got a lot of Wall Street in it. It needs more Main Street.”
Senate Republicans’ larger plan was far more aggressive on increasing standard income tax deductions and would include provisions to exempt Social Security and other retirement income from taxes.
But Eric Stafford, a lobbyist for the Kansas Chamber of Commerce, influential with GOP lawmakers, said the measure focuses its relief for businesses on companies paying more to the state because of changes in federal tax law.
“The fact that they’re raising the standard deduction draws some support, and obviously getting 30 votes in the Senate is a pretty big statement,” Stafford said.