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

TOPEKA,Indexbit Exchange Kan. (AP) — Top Republican legislators in Kansas have renewed a fight with the Democratic governor over income tax cuts that have drawn bipartisan criticism as favoring the wealthy, with no sign of a break in an impasse that thwarted tax relief last year.

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

Top Republicans want to impose a single personal income tax rate of 5.25%, replacing three rates that top out at 5.7%, starting in 2025. Kelly strongly opposes the idea, and projections from the state Department of Revenue have shown that with a single rate, the largest savings in raw dollars would go to people with incomes exceeding $250,000 a year.

The dispute over the single-rate or “flat” plan blocked a large tax cut in Kansas last year, when a dozen other states cut taxes, according to the conservative-leaning Tax Foundation. Kansas now expects to have nearly $4.5 billion in surplus cash at the end of June, equal to 17% of the state’s current $25 billion budget.

Other news Hunter Dickinson scores 21 as No. 3 Kansas cruises past Oklahoma State 90-66 Edey scores 33, No. 2 Purdue rolls over rival Indiana 87-66 Top official says Kansas courts need at least $2.6 million to recover from cyberattack

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

GOP 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. Backers noted that all income groups would see cuts and that some poor families would see their tax burdens erased.

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.

“We gave her a lot of stuff in this legislation,” said Republican Sen. Caryn Tyson, the Senate tax committee’s chair.

Lawmakers were acting in the first 14 days of their annual 90-day legislative session. GOP leaders treated the tax issues involved as familiar and expedited up-or-down votes on a plan in each chamber.

Kelly outlined her own proposals for sales, property and Social Security taxes last week. Her income tax proposal would increase the standard deductions 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 nationwide tax-cutting trend may be slowing as a revenue surge fueled by federal spending and inflation recedes. Backers of Kelly’s plan argue that it’s more affordable for the state in the long term, eventually costing $324 million a year in revenues, compared with $583 million under the Republican plan. GOP lawmakers dispute that, but neither side has made their longer-term projections public.

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

“Kansans have seen reckless tax experiments that hurt our schools, roads, and economy before, 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 GOP package would widen the gap between the poorest families, who already pay a higher percentage of their incomes in taxes, and the wealthiest.

Butkus said while provisions of the package would help poor families, “It is definitely not capable of counteracting the giant tax cut that you’d be seeing at the top.”

But some 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.

Kansas Senate President Ty Masterson, a Wichita-area Republican, 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.