Kansas House members are awaiting the start of floor debate on changes to the tax code after the House Taxation Committee approved an alternative to Gov. Sam Brownback’s proposal Monday afternoon.
Under the plan, individual income tax rates would be slightly reduced starting in 2013. The committee’s proposal envisions continuing to lower the rate by capping spending growth at two percent.
Rep. Richard Carlson, the St. Marys Republican who chairs the tax committee, said he didn’t know when the floor debate would begin, but he’s looking forward to it. “I’m very much an advocate of tax reform in Kansas and generating growth,” he said.
Carlson said the two most important things about the bill are that it would slowly eliminate the personal income tax — something advocated by Brownback — and provide additional tax exemptions for small businesses. He said the exemptions would help Kansas climb from its current position of 49th in the nation in job growth.
One differences between the House’s plan and Brownback’s involves the one-cent sales tax increase passed two years ago. The taxation committee would let the sales tax increase expire, while Brownback proposed keeping it.
Carlson said the increase has run its course based on the initial agreement with the voters. “Even though I didn’t vote for the sales tax, we made a promise,” he said. “It’s important to let it sunset.”
Carlson seemed confident that there would not be any issues with road projects even though the plan calls for borrowing money from the T-Works transportation plan. Those with construction interests have come out against the House proposal.
Carlson asserted the $350 million that would be borrowed in 2014 and 2015 is insignificant compared to the $5.5 billion in the 10-year T-Works transportation plan. He said the state would pay $50 million during the following seven years to infuse the borrowed money back into the plan.
“The total borrowed compared to the T-Works bill is maybe one or two project in the entire state that might even slightly be delayed,” he said.
The committee’s plan would put an end to refunds greater than the taxes owed, although other tax deductions – home mortgage interest and charitable deductions – would be kept.
This action would affect credits for earned income tax, bulk food sales, historic preservation, community service, telecommunications and railroads.
Carlson said further research need to be done about effects since there have been changes to the bill. He said it would be at least several days before there is refined data.
Carlson acknowledged that debates will transform the numbers as well, calling it “a complex bill with many moving parts.” “There are always amendments to tax bills, so you never know,” he said.
He said lowering and eventually eliminating state income tax is in the best interest of Kansas. He said Kansas doesn’t want to be a higher income tax state compared to its neighbors; Colorado, Missouri and Oklahoma have lower state income tax.
“We are losing taxpayers to those states and other states with no income tax,” he said.