TOPEKA, Kan. (AP) - Republican legislators in Kansas are pursuing multiple proposals for moving the state to a “flat” personal income tax while increasing taxes to address the state’s serious budget problems.
The House Taxation Committee endorsed a bill Wednesday that would impose a personal income tax rate of 5 percent for all filers, rather than having two rates. The Senate Assessment and Taxation Committee is working on a similar proposal.
The state faces projected budget shortfalls totaling more than $1 billion through June 2019, and lawmakers in both parties want to roll back past income tax cuts championed by Republican Gov. Sam Brownback. But fellow conservatives see an opportunity to simplify the income tax code further and GOP leaders in both chambers want to see how much support the idea has.
The House committee’s 14-7 vote on its flat-tax measure was along party lines, with Democrats opposing it and arguing that it would be unfair to poor and middle-class families. Some Republicans also didn’t like the bill but said they wanted to restart a debate over raising revenue that has stalled over the past few weeks.
“We need to see what our next step is going to be,” said Rep. Tom Phillips, a Manhattan Republican.
The House committee’s bill would raise about $850 million in new revenue over two years.
Lawmakers are working on tax and budget proposals at the same time and expect to get the state through the June 30 end of its current 2017 budget year with internal government borrowing and by temporarily shorting payments to public employee pensions.
The Senate gave first-round approval Wednesday to proposed spending blueprints for the state’s 2018 and 2019 budget years that would require $545 million in new revenue over the two years.
The gap had been higher, but senators agreed to short state contributions to public employee pensions by $330 million over two years to give lawmakers working on tax proposals more options. Senators previously expressed support for making the full payments and expect the issue to be reviewed again later.
The House Appropriations Committee also worked on its own budget proposals and hoped to vote on them Thursday.
Bipartisan majorities in both chambers last month passed a bill that would have rolled back past Brownback tax cuts to raise more than $1 billion over two years. Brownback vetoed the measure, having proposed boosting tobacco and liquor taxes and annual business filing fees.
Brownback’s office has said he is open to proposals that would make the income tax code “fairer, flatter, and simpler.” After the tax cuts he championed, the state has a rate of 2.7 percent for lower-income earners and a top rate of 4.6 percent for higher-income earners.
House Speaker Ron Ryckman Jr., an Olathe Republican, called a flat income tax “just one more option” but added, “I like the concept.”
Such proposals face strong resistance from Democrats and moderate Republicans who backed the bill vetoed by Brownback. Moving to a single tax rate of 5 percent could hit poor and middle-class families harder because more of their income is now taxed at the lowest rate of 2.7 percent.
“I’m kind of shocked that this is a real proposal,” said Rep. Kathy Wolfe Moore, a Kansas City Democrat.
Democrats and many GOP moderates want to reinstate a third tax bracket, which the state dropped in 2012. The bill vetoed by Brownback called for a third bracket and a top rate of 5.45 percent; before the 2012 change, it had been 6.45 percent.
But Republicans drafting the flat-tax plans are considering provisions designed to lessen the blow for poor or middle-class families. The House committee’s bill increases the standard deductions taken by all filers and lowering the state’s 6.5 percent sales tax on groceries.
It would also repeal a personal income tax exemption for more than 330,000 farmers and business owners, another plus for some GOP legislators who view the break as unfair.
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