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Politics Taxes


KANSAS’ WEALTHIEST 3.8% PAYS 41% OF ITS TAXES AND GOP LAWMAKERS ARE BATTLING
WITH THE DEMOCRATIC GOVERNOR OVER A HUGE NEW CUT


THE GOP-SUPERMAJORITY HAS APPROVED A 'FLAT TAX' PLAN TO CUT INCOME, SALES AND
PROPERTY TAXES BY NEARLY $1.6 BILLION OVER THE NEXT THREE YEARS.

BY
John Hanna
 AND 
The Associated Press
January 19, 2024 1:14 PM EST

Kansas state Rep. Susan Concannon, R-Beloit, confers with Rep. Susan Humphries,
R-Wichita, during a House debate on a Republican plan for cutting taxes,
Thursday, Jan. 18, 2024, at the Statehouse in Topeka, Kan. AP Photo/John Hanna

Republican lawmakers in Kansas on Thursday passed a broad package of tax cuts
promoted as widespread relief that the Democratic governor is likely to veto
because she says it favors the wealthy and threatens the state’s budget in the
future.

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Republican lawmakers in Kansas on Thursday passed a broad package of tax cuts
promoted as widespread relief that the Democratic governor is likely to veto
because she says it favors the wealthy and threatens the state’s budget in the
future.



The opposing viewpoints kept the two sides locked in a political impasse as the
window for meaningful tax cuts narrows.



The GOP-supermajority Legislature approved a plan to cut income, sales and
property taxes by a total of nearly $1.6 billion over the next three years. But
Gov. Laura Kelly is expected to veto the bill because it would move Kansas to a
single personal income tax rate of 5.25% to replace three rates that now top out
at 5.7%.

The measure cleared the Legislature on an 81-37 vote in the House after the
Senate approved it Wednesday, 25-11. While Republicans appeared to have the
two-thirds majority in the House to override a veto, the defections of two
Republicans and a conservative independent in the Senate appear to leave them at
least a vote short there.



A similar dispute thwarted big tax cuts last year, when a dozen other states cut
taxes, according to the conservative-leaning Tax Foundation.



Kelly’s office wasn’t commenting Thursday, but she’s been public about her
strong opposition to the “flat” tax proposal, viewing it as a boon to the
state’s “super wealthy.” Also, her office released a projection Thursday showing
that the GOP plan would cause a budget shortfall in 2029.

Democratic state Rep. Henry Helgerson of Wichita argued during Thursday’s debate
that lawmakers cannot enact the Republicans’ tax cuts without committing to
budget cuts first.

“Right now, I don’t see it,” he said.



The figures released by Kelly’s office didn’t show what assumptions it used for
growth in spending or revenues over time, and Republicans dismissed them. Senate
President Ty Masterson, a Wichita-area Republican, said he agrees that the state
faces future budget problems if Kelly wants to “spend like a drunken sailor.”

“However, if the state engages in basic fiscal responsibility, there will
continue to be ample money available to deliver ongoing and meaningful tax
reductions to Kansans,” Masterson said in an emailed statement Thursday.

Republicans also defended their package as fair because it contains provisions
that will exempt roughly 310,000 additional Kansas residents from income taxes,
on top of the 40,000 or so poorest ones. The plan included provisions that would
exempt the first $20,300 of a married couple’s income from state taxes — more if
they have children, with the amounts rising with inflation after 2025.



Republican leaders married the income tax proposals to a proposal from Kelly to
eliminate the state’s 2% sales tax on groceries starting April 1 and proposals
she embraced to exempt all of retirees’ Social Security income from taxes and to
lower homeowners’ property taxes.

“It’s a great package,” Republican state Sen. Caryn Tyson, the Senate tax
committee’s chair, said before Wednesday’s vote in her chamber. “It’s got a
little something for everybody.”

The impasse last year over taxes had Kansas projecting that it will have nearly
$4.5 billion in surplus cash at the end of June, equal to 17% of the state’s
current $25 billion budget.



Yet Kansas also is debating tax cuts at a time when the nationwide tax-cutting
trend could be slowing as a revenue surge fueled by federal spending and
inflation recedes.

Kansas’ state tax collections are in line with last year’s but about 1.1% below
projections. Monthly collections have fallen short of expectations each of the
past three months; that happened only five times in the previous six years.

“This is a time when state revenues and surpluses, we’re seeing, are starting to
flatten across the country,” said Neva Butkus, a state policy analyst for the
left-leaning Institute on Taxation and Economic Policy.



Butkus also said that, even with its provisions aimed at helping poor families,
the GOP package would widen the gap between the poorest, who already pay a
higher percentage of their incomes in taxes, and the wealthiest.

Figures from the Kansas Department of Revenue show that with the proposed
single-rate tax, a little more than half of the raw dollar savings would go to
the 3.8% of filers from Kansas earning more than $250,000 a year. That group
pays 41% of the personal income taxes collected from Kansas residents.

The smallest cuts, both in terms of raw dollars and the average percentage,
would go to Kansas residents earning between $50,000 and $75,000 a year.



“Not only does it help the wealthy, it does nothing for the middle class,” said
state Rep. Tom Sawyer, another Wichita Democrat.

But many Republicans argued that a simpler income tax system is fairer and said
Kansas needs to become more competitive with other states. The Tax Foundation
said in a 2022 report that Kansas residents pay more of their incomes in taxes
than residents of most surrounding states.

In 2022, Iowa moved to a flat tax, initially set at 4.4% but scheduled to drop
eventually to 3.9%. Now, GOP Gov. Kim Reynolds is pushing to cut the rate to
$3.65% for this year.



Masterson said retaining an income tax with multiple rates would keep Kansas
“behind the eight ball” economically.

“It’s not the future,” he said.

___

Associated Press writer Hannah Fingerhut in Des Moines, Iowa, contributed to
this report.





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