Topeka Capital Journal: Senate poised for vote on tax bill
media mentionPosted: May 9, 2012 – 11:44am
By Tim Carpenter
THE CAPITAL-JOURNAL
The Senate takes up a controversial income-tax reduction compromise Wednesday labeled by Republicans as a fair piece of legislation and by Democrats as damaging to the working poor.
The measure pending before the Senate would drop individual state income tax rates and phase out taxes on non-wage income for more than 190,000 businesses in Kansas.
It delivers local property tax relief by funneling money to cities and counties. The measure permits the statewide sales tax to drop from 6.3 percent to 5.7 percent as scheduled in 2013. In addition, the bill shrinks provisions in the tax code aimed at helping low- and middle-income Kansans.
“Everybody in this state will get a tax reduction of some kind. That is the bottom line,” said Sen. Les Donovan, a Wichita Republican and the Senate’s lead negotiator on the tax bill.
However, before the Senate took action on Wednesday, the House moved to concur with a separate tax-reduction bill passed by the Senate in March. It differed from a bill passed by the House, prompting weeks of negotiations on a compromise.
There was heartburn among some representatives about enactment of the Senate bill because it might produce deficits in the state budget and necessitate years of cuts by Gov. Sam Brownback.
“We will be in a mess,” said Rep. Tom Moxley, R-Council Grove. “We are handing the reins of government, in this case, to the governor.”
The maneuver by the GOP-led House — still being debated — was designed to put pressure on senators to approve the tax reform bill on their calendar.
Brownback, a Topeka Republican, originally recommended continuation of the higher sales tax along with reductions in business and individual income taxes. He sought deletion of dozens of tax breaks, including a benefit for charitable contributions and mortgage interest.
Brownback also endorsed the compromise bill supported by the four Republican conferees from the House and Senate. The compromise was not signed by the two Democrats involved in negotiations.
On eve of the Senate debate, the non-partisan Institute on Taxation and Economic Policy in Washington, D.C., offered an assessment indicating the tax bill would increase taxes on 20 percent of Kansans making less than $20,000 per year by an average $86.
At the same time, the institute said, the top 1 percent of Kansans based on income would receive an average tax cut of $19,000.
“This tax bill is clearly going to benefit the wealthy Kansans and corporations and appears to even increase the tax burden on people hit the hardest by this economic recession,” said House Minority Leader Paul Davis, a Lawrence Democrat.
Rep. Richard Carlson, R-St. Marys and the House’s top negotiator on the tax bill, said the compromise legislation would spark economic renewal and help job prospects state residents. Tax breaks sought by Brownback, including one tied to charity, were retained.
“I hope we have been very fair for all citizens of Kansas,” Carlson said.
Senate Minority Leader Anthony Hensley, D-Topeka said he was disappointed the bill would repeal a tax credit for low-income renters and require Kansans without substantive incomes to choose between a rebate on sales tax paid on food and the state’s earned income tax credit.
“I call it a cruel hoax on low-income people,” Hensley said.
Hensley and Davis said they were unhappy the Kansas Department of Revenue had declined to produce detailed computer runs outlining potential implications of the tax bill on poor Kansans eligible for the sales tax rebate and income tax credit.
“To me,” he said, “it’s astonishing they’d withhold that detail from the Legislature.”
Overall, the tax legislation before the Senate would reduce state revenue by $1.9 billion over a six-year period.
There is divergence of opinion about whether the bill would result in state budget deficits after 2018.
Under the bill before the Senate, the state’s severance tax on oil and gas wells would increase by $292 million during the six years. The bill would drop individual income taxes by $2.1 billion and corporate income taxes would decrease $20.5 million.
The bill would mandate local property tax reductions by transferring $45 million annually to cities and counties to roll back mill levies.