Senate committee forwards two tax proposals
Two tax increase measures on Tuesday were forwarded to the full Senate for consideration.
Senate Bill 147 would increase state income tax rates and repeal the so-called LLC loophole. As amended, the measure would raise approximately $288 million the first year and $372 million the year after that.
Senate Bill 97 is a bill that deals with vehicle cash rebates but was drastically amended to set a flat income tax rate of 3.9 percent while lowering the state sales tax on food to 5.5 percent. It would also eliminate the tax exemption for certain business owners on pass-through income and it would allow a deduction for medical expenses. Preliminary estimates indicate the income tax changes would raise approximately $270 million per year, but the medical deduction and reduction in food sales tax could reduce net revenue to about $200 million per year.
Senate Bill 147 would increase state income tax rates and repeal the so-called LLC loophole. As amended, the measure would raise approximately $288 million the first year and $372 million the year after that.
Senate Bill 97 is a bill that deals with vehicle cash rebates but was drastically amended to set a flat income tax rate of 3.9 percent while lowering the state sales tax on food to 5.5 percent. It would also eliminate the tax exemption for certain business owners on pass-through income and it would allow a deduction for medical expenses. Preliminary estimates indicate the income tax changes would raise approximately $270 million per year, but the medical deduction and reduction in food sales tax could reduce net revenue to about $200 million per year.
The bill would also provide an automatic reduction in the state food sales tax in future years when state tax growth exceeds 1 percent. Current law contains a similar provision that automatically cuts income tax rates if state revenue exceeds certain targets.
Senate Assessment and Taxation Committee Chair Caryn Tyson, R-Parker, described SB 147 as the Senate leadership plan and SB 97 as an option. Consideration of the measures by the full Senate could occur this week.
The proposals have been floated as a way for the Legislature to address a $325 million revenue shortfall in the current fiscal year and a nearly $600 million shortfall in the next fiscal year, which starts July 1.
Republicans on the panel said the bills represented the start of discussions on fixing the state’s budget problems, while Democrats said the measures didn’t go far enough in raising the revenue necessary to structurally fix the budget.
Senate Assessment and Taxation Committee Chair Caryn Tyson, R-Parker, described SB 147 as the Senate leadership plan and SB 97 as an option. Consideration of the measures by the full Senate could occur this week.
The proposals have been floated as a way for the Legislature to address a $325 million revenue shortfall in the current fiscal year and a nearly $600 million shortfall in the next fiscal year, which starts July 1.
Republicans on the panel said the bills represented the start of discussions on fixing the state’s budget problems, while Democrats said the measures didn’t go far enough in raising the revenue necessary to structurally fix the budget.
The measures also represented a reversal of significant portion of Gov. Sam Brownback’s tax cuts of 2012, which many blame for the continual budget problems. After a hearing Monday on SB 147, Brownback issued a statement criticizing the proposal. KASB testified in favor of SB 147, saying it represented a positive step in trying to avoid harmful cuts to schools.
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