A tax plan rivaling one proposed by Kansas Gov. Sam Brownback emerged Friday as House Republicans proposed cutting taxes without eliminating popular tax credits and deductions.
House leadership outlined their proposal to lower personal income taxes with new revenues flowing into the state, with anything higher than 2 percent growth going toward easing the tax burden.
House Republicans also want to retain a range of tax credits and deductions — including ones for charitable contributions and interest on home mortgages.
They said their plan achieves comprehensive tax reform balanced against a responsible budget that ends the year with healthy cash reserves.
“We think this plan is a prudent approach to dealing with both of those expectations,” said House Speaker Mike O’Neal, a Hutchinson Republican. “We’re hoping the governor’s vision, our vision and ultimately the Senate’s vision will be that we all reach the same destination.”
Brownback on Friday defended his tax reform plan, which he unveiled last week, but said he’s open to suggestions.
“At the end of the day, we need to get our tax rates down and we need to get small businesses growing. I think those are the core essentials,” Brownback said. “If they want to do things differently, great. Let’s begin and put it in the legislative process.”
While House Republicans said their tax plan wasn’t intended to conflict with Brownback’s proposal, it clearly differed in several ways. They included:
• Guaranteeing cuts in personal income tax only when revenues grow. The governor’s plan lowers the upper-level tax bracket to 4.9 percent for taxpayers earning more than $15,000 individually and $30,000 for a married couple filing jointly. The current rate for anyone earning more than $15,000 ranges from 6.25 percent to 6.45 percent.
• Rolling back part of a 1-cent sales tax that the Legislature approved two years ago. Brownback wanted to keep the extra penny of sales tax to help pay for his plan. Republicans want to roll back .6-cent of the sales tax in 2013.
• Keeping many deductions and credits that the governor proposed eliminating, including food sales tax rebates as well as credits for historic preservation and child and dependent care.
Some House Republicans said they were particularly worried about whether this was the right time to do away with the home mortgage deduction, which is worth an average of about $390 a year.
No cost figures were available for the Republican plan Friday, and they aren’t expected until next week — leaving some Democrats wondering how much the plan will cost.
“I’m a little bit concerned about the fiscal impact that this plan is going to have,” said House Minority Leader Paul Davis, a Lawrence Democrat.
“The governor was attempting to pay for some of his plan through a variety of different means and it look likes they basically have erased a lot of those,” Davis added.
Republican lawmakers said their plan was modeled a after a similar tax-reduction measure that got through their chamber last year, but later died in the Senate.
Agreeing with the governor’s emphasis on reducing taxes to spur economic growth, Republicans said they wanted to meld the best parts of their plan with governor’s plan to come up with a bill that would pass.
Indeed, the House Republicans keep many elements of the governor’s plan, including:
• Eliminating income taxes for an estimated 191,000 limited liability companies, sole proprietorships and other small businesses.
• Eliminating the earned income tax credit, which benefits the working poor. They endorsed the governor’s plan to use the $91 million saved from the program and put it into social programs and matching federal aid for the poor and disabled.
• Using all revenues above 2 percent growth to go toward tax reduction.
The House Republican plan comes only days after it was revealed that the Brownback plan would raise taxes for more than a half million people who earn less than $25,000 a year, while cutting taxes for everyone else.
Some lawmakers said those figures from the state’s Revenue Department made it difficult to support the governor’s tax plan, especially when they also were being asked to eliminate popular tax credits.
The analysis showed that taxpayers making less than $25,000 a year would pay on average $156 more in taxes under Brownback’s plan. Those earning more than $250,000 would pay on average about $5,200 less.
“That was going to be an extremely difficult vote to make. That had to change,” Rep. Owen Donohoe, a Shawnee Republican, said of the state’s analysis.
State Rep. John Rubin, a Shawnee Republican, said the governor might have been a little ambitious to try to end so many tax deductions at once. “I don’t think we were prepared to eliminate all the tax deductions,” Rubin said.
Meanwhile, some Democratic legislators questioned whether there was really strong sentiment for what the governor was attempting with his tax plan.
“My sense is support for that plan is eroding very quickly,” Davis said. “I think in its form, I don’t see that it can pass either chamber right now. I think there is opposition all across the political spectrum for a variety of different reasons.”