Kansas House considers millions in tax cuts, increases despite some uncertainties
The Kansas House considered roughly $130 million in tax cuts and $35 million in new taxes Monday, its response to a much larger cut approved by the Senate last month.
The House proposal combines elements of the roughly $500 million Senate bill with a tax increase the chamber approved separately.
The measure cuts state revenue by increasing the standard deduction, allowing taxpayers to itemize state returns regardless of whether they did so on federal tax returns, and allows multinational corporations to bring overseas profits back to Kansas without paying income tax.
Some of those costs are offset by a measure that applies Kansas sales tax to out of state retailers who sell products online in Kansas.
Speaker of the House Ron Ryckman said last week that the measure was the “responsible” tax option in the Legislature.
The House is set to vote on the measure Tuesday as lawmakers are still looking for guidance from the federal government on how the policy will impact federal stimulus funds. They are also waiting on the estimated cost of a measure allowing businesses to deduct from taxes any expenses involving Paycheck Protection Program loans.
If approved, the measure will be sent to the Senate, which has already considered several elements of the policy, before going to Gov. Laura Kelly’s desk.
“To me it looks like a good package,” said Sen. Caryn Tyson, a Parker Republican and chair of the Senate tax committee.
In debate Monday, the House rejected several amendments brought by Democrats that would remove portions favorable to multinational corporations.
“Are we up here to represent the interests of large multinational corporations or are we up here to represent the interests of Kansans across the state,” said Rep. Jerry Stogsdill, a Prairie Village Democrat.
Republicans said that without those provisions, companies would leave Kansas or choose not to come.
“They’re moving employees from Kansas to other areas that are more beneficial to them. It’s a business decision,” Rep. Sean Tarwater, a Stillwell Republican, said.
Rep. Adam Smith, a Weskan Republican and chair of the House Taxation Committee, said in an interview last week that he favored moving forward with the measure despite “ambiguity” on whether Congress had prevented state tax cuts by specifying states couldn’t “directly or indirectly” fund tax cuts with federal stimulus dollars. Tyson called the measure an overreach by an “out of control” federal administration.
Smith said that if the federal government indicated funds would be withheld because of the legislature’s actions then the legislature could act to remedy the issue in May. The U.S. Treasury told the Associated Press last month that states could cut taxes as long as they used their own funds to offset the costs.
“There’s going to be some litigation so it wouldn’t necessarily be over at that point,” Smith said.
The Star’s Sydney Hoover contributed to this story.
This story was originally published March 29, 2021 at 2:16 PM.
