GOP lawmakers, Democratic governor in Kansas fighting again over income tax cuts

TOPEKA, Kan. — Top Republican lawmakers in Kansas have renewed their battle with the Democratic governor over income tax cuts, which have drawn criticism from both parties for favoring the wealthy, with no sign of a breakthrough in the impasse that defeated last year’s tax cut.

The House of Representatives was scheduled to vote Thursday on a Republican Party plan to cut income, sales and property taxes by a total of $1.6 billion over three years. The Senate approved it 25-11 on Wednesday, but with four members absent it appeared Republican supporters fell at least one vote short of a two-thirds majority in the 40-member chamber needed to override an expected veto from Governor Laura Kelly aside. .

Top Republicans want to impose a single personal tax rate of 5.25%, replacing three rates that would total 5.7% in 2025. Kelly is strongly opposed to the idea, and U.S. Treasury Department projections have shown that with a single rate, the biggest savings in raw dollars would go to people with incomes above $250,000 a year.

The dispute over the uniform rate plan blocked a major tax cut in Kansas last year, while a dozen other states cut taxes, according to the conservative-leaning Tax Foundation. Kansas now expects to have nearly $4.5 billion in cash by the end of June, equivalent to 17% of the current $25 billion state budget.

“We need to give the money back,” said Sen. Mike Thompson, a conservative Republican from the Kansas City area.

Republican lawmakers who drafted 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. Proponents noted that all income groups would see cuts and some poor families would see their tax burden disappear.

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

“We gave her a lot of things in this legislation,” said Republican Senator Caryn Tyson, chairman of the Senate Tax Committee.

Lawmakers took action during the first fourteen days of their annual ninety-day legislative session. Republican leaders treated the tax issues involved as familiar and expedited votes on a plan in each chamber.

Kelly last week outlined her own proposals for sales, property and Social Security taxes. Her income tax proposal would increase the standard deduction that all individual filers claim. Her entire plan would cut taxes by a total of $1.1 billion over three years.

Kansas is debating tax cuts at a time when the national trend of tax cuts may be slowing as revenues rise due to federal spending and inflation declines. Supporters of Kelly’s plan argue it is more affordable for the state in the long run and will ultimately cost $324 million a year in revenue, compared to $583 million under the Republican plan. Republican lawmakers dispute that, but neither party has made public their long-term projections.

Kelly still cites an aggressive tax-cutting experiment in 2012 and 2013 under Republican Gov. Sam Brownback, which was followed by large, persistent budget deficits until most cuts were reversed in 2017.

“Kansans have seen reckless tax experiments before that hurt our schools, roads and economy, and they don’t want to go back,” Kelly spokesperson Brianna Johnson said in an email.

Neva Butkus, a state policy analyst for the left-leaning Institute on Taxation and Economic Policy, said the Republican package would widen the gap between the poorest families, who already pay a higher percentage of their income in taxes, and the wealthiest families.

Butkus said that while the package’s provisions would help poor families, “it is absolutely incapable of counteracting the gigantic tax cut that you would see at the top.”

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

In 2022, Iowa moved to a flat tax, initially set at 4.4% but eventually dropping to 3.9%. Now GOP Governor Kim Reynolds is pushing to lower interest rates to $3.65% this year.

Kansas Senate President Ty Masterson, a Republican from Wichita, said maintaining a multi-rate income tax would keep Kansas “behind the eight ball” economically.

“It’s not the future,” he said.

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