TOPEKA, Kan. (AP) - Two new Republican leaders in the Kansas Legislature want to move quickly to repeal an income tax break for more than 330,000 farmers and business owners, a move that would repudiate a key piece of GOP Gov. Sam Brownback’s political legacy.
The targeted tax break was enacted in 2012. It is an exemption for profits farmers and owners of limited liability corporations and other businesses have reported on their personal income tax returns; the break also applies to rents and royalties. It has been a major contributor to the state’s budget problems over the past four years, and legislators expect its repeal to raise about $260 million a year.
House Taxation Committee Chairman Steven Johnson, an Assaria Republican, said he’s hoping legislators can pass a bill repealing the tax break within weeks of convening their next annual session on Jan. 9. He said he also hopes to make the policy retroactive to the start of 2017, so the state can collect new revenues more quickly.
Incoming Senate Majority Leader Jim Denning, an Overland Park Republican, said he also wants to pass a bill repealing the policy quickly. The idea has bipartisan support, and Denning said he believes Brownback would allow such a measure become law without his signature rather than veto it.
“It’s no surprise,” Denning said during an Associated Press interview. “Everybody knows this thing’s going to get closed.”
Brownback pushed legislators for aggressive personal income tax cuts in 2012 in what even some GOP voters now view as an unsuccessful effort to stimulate the economy. Voters ousted two dozen of Brownback’s legislative allies in last year’s elections, with many voters saying the state’s budget problems motivated their choice of candidates.
The governor and lawmakers must close projected budget shortfalls totaling nearly $1.1 billion through June 2019, prompting many lawmakers to rethink the tax cuts.
Critics of the exemption for farmers and business owners such as lawyers and dentists say it’s unfair for them to escape personal income taxes when their employees still must pay. Some critics also argue that wealthy taxpayers benefited the most.
Brownback has described the policy as a small-business tax break that encourages expansion. He has not said publicly whether he would accept its repeal, and spokeswoman Melika Willoughby said in an email statement that he “remains committed to supporting pro-growth tax policies.”
Meanwhile, incoming House Minority Leader Jim Ward, a Wichita Democrat, said repealing the tax break is a “good first step” toward dealing with the state’s budget woes, but he doesn’t want lawmakers to consider the idea separately from higher income tax rates for the wealthy or other tax proposals.
He said it’s difficult to pass any tax increase, and some legislators might vote for the repeal and then say, “We’re done.”
“The question is: How many of these votes do you want to take?” Ward said. “And if you’re going to take serious steps to address the problem - which is a structural budget problem - shouldn’t we have a comprehensive approach?”
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