A bill cutting Kansas taxes by an estimated $475 million annually cleared its first major hurdle Tuesday evening, as lawmakers nearly doubled its size in the process.
After a tense four-hour debate, the Kansas Senate approved a package of cuts including measures to allow Kansans to benefit from 2017 tax reforms and elimination of state taxes on Social Security benefits and some pensions. A similar measure was vetoed by Gov. Laura Kelly two years ago.
Four Republicans crossed party lines to vote with Democratic opponents of the bill, citing a cost they regarded as exorbitant. The package passed by a 24-15 margin.
But most Republican lawmakers touted the bill, drafted by the Kansas Chamber of Commerce, as a way to provide relief to business owners and Kansans who started paying more taxes after the 2017 changes in the federal tax code.
“It allows Kansas taxpayers to get the money that they were meant to get in the first place,” said Sen. Caryn Tyson, a Parker Republican. “Should we call it a Kelly tax increase every time she vetoes one of these bills.”
Democrats warned that the bill could spell a return to Brownback-era tax cuts while prioritizing business interests over working families. Sen. Ethan Corson, a Democrat from Prairie Village, called it a “bullet train to Brownbackville”
The bill allows Kansas taxpayers to itemize state returns regardless of whether they did so on federal tax returns. The measure also allows multinational corporations to bring overseas profits back to Kansas without paying income tax.
Lawmakers added at least $85 million in tax cuts proposed in an amendment offered by Kelly as an alternative to the original bill.
It now moves to the House, where any changes would be reconciled with the Senate before it is sent to Kelly’s desk.
Senate President Ty Masterson, and Andover Republican, noted that those possible changes meant Senators could vote without worrying about the cost of the bill yet.
“You don’t need to necessarily weigh as heavily on the underlying fiscal note because there’s a lot happening right now,” Masterson said.
But in explaining his ‘no’ vote, Sen. Jeff Longbine, a Republican from Emporia, recalled years of budget cuts after a similar bill passed in 2012.
“I will never forget being called back into the (Senate) president’s office and being assured that that bill won’t be the bill,” “Fool me once, you won’t fool me twice. I will vote for a reasonable, responsible bill,” he said.
Kelly declined to say Tuesday whether she would veto the bill. But she warned it would “blow a hole” in the state’s budget as the pandemic continues to rage while benefiting only the top 6% of Kansans.
Kelly’s amendment, which she proposed Tuesday morning, aimed to cut taxes without lowering revenue. The proposal would increase the state’s standard tax deduction by 20% in 2021 and 35% in tax year 2022. The deductions would be paid for by a sales tax on digital products such as movie and music streaming services and by applying Kansas sales tax to out of state retailers who sell products in Kansas.
“Our plan’s about fairness, it’s about ensuring our Kansas mainstream businesses can compete with out of state retailers. It’s about giving tax relief to the hard working Kansans who need it the most. And it’s about supporting our COVID-19 recovery efforts,” Kelly said.
But lawmakers retained only a small portion of Kelly’s proposal — the standard deduction increase — while dumping the rest, which was intended to fund the tax cut.
“How this bill stands now is we want our cake and we want to eat it too and we don’t want to pay for it,” Senate Minority Leader Dinah Sykes, a Lenexa Democrat, said in characterizing the GOP’s decision to discard most of Kelly’s amendment.
Republican lawmakers said parts of Kelly’s proposal werenot properly vetted and would constitute an unnecessary tax on Kansas citizens.
During debate, senators sparred over who the reforms were meant to help.
“It’s geared for rich people, those that can itemize,” said Sen. Tom Holland, a Baldwin Democrat. “Make no mistake, the underlying bill is total Wall Street.”
Amendments to provide a tax cut to seniors and to reduce the standard deduction, Holland said, would serve to help the average Kansan.
Though Tyson acknowledged that companies would benefit, she said the itemization measure would help all Kansans. The amendments, she added, meant there was “something in it for everyone.”
“The majority who are helped by this bill are in the middle income bracket,” said Tyson, who chairs the Senate tax committee. “It may not be the stories and soundbites you hear about corporations but I would give you examples of constituents who had exorbitant medical bills and were not able to deduct them.”
This article appeared in the Kansas City Star, here.
Paid for by The Senate Democrats Committee, Cory Sheedy, Treasurer.