Kansas lawmakers send Gov. Kelly a new bill lowering taxes. Will she veto it?

Gov. Laura Kelly must again decide whether to veto a Republican plan to limit how much individuals and corporations pay in taxes.

But this time Republicans may have more support to override her veto.

The Senate approved the plan with 27 votes, enough to override a veto. The House passed it 83-41 late Saturday night, just one vote shy of a veto-proof majority.

The Democratic governor vetoed a first attempt in March and Republicans, unable to summon enough support, didn’t attempt an override. On Saturday, lawmakers passed a new version that is somewhat similar but costs about half as much.

As a matter of practice, Kelly doesn’t say if she’ll veto legislation. But in a statement on Thursday, she said tax reform discussions “should be guided by a thoughtful, data-driven, big-picture vision for Kansas — not by a hasty attempt to achieve an immediate political victory.”

Republicans seeking the law say they want to stop the state from collecting extra revenue because of a mismatch between state and federal law caused by President Donald Trump’s 2017 tax code overhaul.

“This returns some part of that,” Rep. Steven Johnson, R-Assaria, said.

The new tax plan came together more quickly than the first plan. Lawmakers unveiled the bill on Wednesday.

It is expected to keep Kansas from collecting about $245 million over three years. The first bill, passed in March, would have kept $500 million out of state coffers.

The bill allows taxpayers to itemize their state taxes even if they don’t itemize at the federal level, a change called decoupling. Because of a mismatch between federal and state tax law, Kansans now can’t itemize state income taxes unless they itemize federal taxes.

The bill permits the deduction of so-called global intangible low-taxed income, or GILTI. It means that multinational corporations could bring profits earned overseas back to the state without having them taxed as income.

“A lot of companies and the realtors and the bankers and everybody involved in this bill made a lot of concessions” to help move it forward, Senate President Susan Wagle, R-Wichita, said.

The business provisions will cost Kansas about $120 million in future revenue over the next three years. The individual itemization option costs about $156 million over the same period. Those costs will be partially offset by expected additional tax revenue from internet sales.

Under the bill, the sales tax on food would fall over time based on a formula that funnels additional revenue collected from internet purchases. Kansas has one of the highest sales tax rates on food in the country, at 6.5 percent.

Legislative researchers predict the sales tax rate on food would drop to 6 percent by 2021.

For most people, the cut won’t add up to large savings. You would need to spend $100 at the grocery store to save 50 cents.

“Too little, too late,” Rep. Jim Gartner, D-Topeka, said.

The food sales tax reductions will be paid for by tax revenue from internet purchases that the state isn’t currently collecting.

This story was originally published May 5, 2019 at 12:23 AM with the headline "Kansas lawmakers send Gov. Kelly a new bill lowering taxes. Will she veto it?."