The latest bid to change the way people are taxed in Kansas fell flat Thursday after Democrats, moderate Republicans and conservatives all said they would not support a new tax bill endorsed by Gov. Sam Brownback.
The Senate defeated the bill with a 4.6 percent flat tax on a 3-37 vote, another setback for lawmakers searching for support from all three political factions fighting over the state’s economic future.
“Back to the drawing board,” Sen. Dinah Sykes, a moderate Republican from Lenexa, said after the vote. “It’s going to be a long session.”
Conservative Republicans who supported the idea of a flat tax even voted against the bill, saying that the idea was a starting point but not quite ready yet.
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“This vote tells you absolutely nothing,” said Sen. Ty Masterson, an Andover Republican.
The state is facing projected budget shortfalls of more than $1 billion through June 2019. The Kansas Legislature is set to adjourn Friday until the beginning of May with little consensus on what kind of tax plan can become law.
Sen. Caryn Tyson, a Parker Republican, strongly defended the flat tax during the debate but voted against the bill.
She emphasized that because lawmakers restored deductions in the bill, she didn’t think it would harm people with lower incomes in the state.
“This one has a little different flavor,” she said of the plan.
Under current law, individual income filers who make more than $15,000 are taxed at a 4.6 percent rate, while those making less than that are taxed at 2.7 percent.
“It may look like it’s hurting certain individuals, but the majority of people ... it’s about fairness,” Tyson said.
Moderate Republicans and Democrats said they opposed the bill because of the tax increase on the state’s middle class.
“This tax plan is a burden,” said Sen. John Doll, a Garden City Republican.
Sen. Tom Holland, a Baldwin City Democrat, said the bill doesn’t help solve the long-term financial issues in Kansas.
The bill does feature a variety of changes moderate Republicans and Democrats have hoped for, including lowering the state’s tax on food and repealing the “LLC loophole,” a Brownback-endorsed tax exemption for roughly 330,000 business owners.
The governor had continued to champion the exemption as late as February, when he vetoed a bipartisan-supported tax plan that would have raised more than $1 billion over two years by ending the exemption and increasing income taxes.
But in meetings with legislative leaders this week, Senate Republicans said Brownback signaled he would be willing to roll back the LLC tax exemption if they passed the flat tax bill.
He later issued a statement saying he would sign a tax bill similar to the Senate’s flat tax legislation if it were passed and came to his desk.
“The governor recognizes this is the fairest way to tax,” Sen. Gene Suellentrop, a Wichita Republican, said about the flat tax bill.
For people who wanted to close the “LLC loophole,” Senate President Susan Wagle, a Wichita Republican, said voting for the flat tax bill was a good choice.
Republicans know they don’t have the 27 votes in the Senate to override Brownback’s veto of a tax plan, she said.
Wagle, Suellentrop and Majority Leader Jim Denning, an Overland Park Republican, were the only senators to vote for the flat tax.
Brownback’s spokeswoman issued a statement shortly after the vote that said the governor “will continue working with the legislature on taxes and other issues.”
Some conservatives said earlier this week that Brownback’s support of the plan may actually hurt its chances of passing.
And by the time the debate came around, several conservatives said they opposed the flat tax because it was a tax increase.
Sen. Rob Olson, a Republican from Olathe, said lawmakers need to look at spending instead of asking for a tax increase.
“I think there’s places where we can cut,” Olson said.