House GOP rolls out a new version of tax reform

Jan. 21, 2012
TOPEKA | The Republican leadership in the Kansas House has crafted a tax plan that is at odds with the proposal made earlier this month by Gov. Sam Brownback.

The Republican governor proposed an end to the tax deduction for home mortgage interest. That wasn’t in the plan rolled out this week by the House GOP.

Brownback would have kept the sales tax increase adopted by the 2010 Legislature. The House leadership, on the other hand, would keep the sunset of the sales tax increase of .6 tenths of 1 percent to the original limit of 5.7 percent.

Rep. Charlotte O’Hara, an Overland Park Republican, characterized the House leadership plan as “simply nibbling around the edges” and called for implementation of the Fair Tax in Kansas, a bolder tax reform initiative.

Governor Brownback’s proposal would lower personal and corporate income tax rates, which would be funded by ending a proposed list of 23 exemptions/incentives.

Here is the leadership plan as outlined in Majority Leader Arlen Siegfreid’s Weekly Wrap Up:
• The House is focused on comprehensive tax reform that is specifically directed at growing the private sector economic base creating more private sector jobs while not increasing the tax burden on lower-income Kansans.
• Utilizing the tax reform package the House lead with and passed last session, the House is incorporating many of the Governor’s pro-growth, pro-jobs provisions to reset and expand the Kansas economy.
• The new House version will keep in place the current statutory tax deductions, credits and exemptions, including the food sales tax refund, historic tax credits and mortgage deduction, while following the Governor’s recommendation of leveraging the EITC with federal Medicaid funds from $60 million to approximately $113 million, insuring and increasing the safety net for our most vulnerable citizens.
• The House plan proposes keeping the current statutory sunset of the .6 tenths of 1 percent to the original limit of 5.7 percent.
• The House vision of growth will include the Governor’s small business provision, allowing small businesses to retain non-wage profits and to reinvest that investment capital back into the small business and the creation of new jobs throughout Kansas.
• While meeting the states' obligations and needs, a 2 percent growth factor, similar to the Governor’s proposal, will be built into the plan and all increased revenue over the 2 percent will be used to first reduce the individual income tax brackets, with an emphasis on reducing the low and moderate tax brackets on an accelerated basis.
• The House vision will focus on growth and job creation while insuring a healthy ending cash balance to keep our state on a sound fiscal basis.
• The House will endorse the Governor’s plan to accelerate the severance tax collection on new wells.
• This plan proposes expansion of the successful ROZ (Rural Opportunity Zone) program.

O’Hara reiterated her support for the Fair Tax for Kansas.

"With the Fair Tax, all sales tax exemptions/incentives (exemptions total $5.3 billion) would end," she said. "By broadening the sales tax base we would more than fund the elimination of corporate and personal income tax, which currently is a $2.9 billion revenue stream for the state. The state sales tax should be rolled back to be revenue neutral."

Here’s something to think about. Under our present tax system every check written to pay income tax (both personal and corporate) goes to pay for someone’s tax break.

For an additional bonus, local taxing entities (county and city) could reduce their sales tax rate and property taxes with the broadening of the sales tax base. This would be tremendously helpful in growing our economy here in Kansas.