Members of the Kansas House tax committee said during a hearing Thursday they remain skeptical and unconvinced of claims that a major part of Gov. Sam Brownback’s tax policy is working as promised.
But several business owners who testified Thursday see the governor’s tax cut as an economic boost.
Opponents of the tax cut say it led the state to where it is today, facing more than $1 billion in projected shortfalls through the end of fiscal year 2019. The cut, approved in 2012, exempted roughly 330,000 businesses from paying income taxes.
The move has become the subject of scorn from Republican and Democratic lawmakers alike in Topeka.
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The bill the committee is considering would repeal the tax cut retroactive to the start of January.
To one Wichita business manager, repealing the tax cut was also about fairness.
“Like anyone else, I’m all for paying less taxes,” said John Lay, president of George Lay Signs Inc. “But I don’t think the current system is fair to all of its businesses and citizens.”
But several other businesses, including Manhattan-based Rocking M Media and NorthWind Technical Services, testified that they benefited from the tax cut and opposed the possible repeal.
“The small business owners in Kansas are what make the economy go,” said Christopher Miller, the president of Rocking M Media LLC. “Targeting the little engines that can with a tax increase that will not cover the budget shortfall is not the way to fix the spending problem.”
Mark Hutton, a former Republican state representative from Wichita, said he’s gone from supporting the policy to being against it.
At first, he said, people were told they had to be patient. But he hasn’t seen the promised job growth.
“Since 2013 the state has invested almost $1 billion in this policy,” Hutton said. “So the billion dollar question is, is it working? I don’t think so.”
Dave Trabert, president of the Kansas Policy Institute, said he was against the repeal of the state’s LLC exemption.
He testified that repealing the income tax exemption would hurt economic growth.
“The data shows us that government doesn’t need more revenue,” Trabert said.
New lawmakers, including Johnson County moderate Republicans, ran campaigns that focused on rolling back the tax exemption.
Brownback hasn’t wavered much on his support for the policy, but he did tell reporters recently that he was open to compromise on taxes.
Members of both parties have said that a long term structural fix has to be made to the state’s budget, and that repealing the LLC tax exemption may be a step towards bringing back financial stability.