Daily Archives: May 9, 2012

House sends major tax-cut plan to governor

UPDATE (4:30 p.m.):  The House has approved a heavily-altered version of Gov. Sam Brownback’s tax plan after a series of attempts to stall the debate to give the Senate time to vote on a plan that was negotiated between the House and Senate. It now goes to Brownback, who has indicated he will sign it.

The bill House members approved in a 65-58 vote projects a $2 billion state deficit in 2018. Democrats are furious about the vote, saying House Speaker Mike O’Neal cut off debate. Rep. Jim Ward, D-Wichita, said the bill devastates public education, public safety and will let more people die while awaiting state services for people with physical and developmental disabilities. Rep. Richard Carlson, R-St. Marys, said he hopes that the Senate will move to approve their plan to give lawmakers another chance to negotiate a tax plan.

TOPEKA — The House this afternoon has abruptly taken up a massive tax-cutting bill that has been lying dormant for weeks as House and Senate negotiators tried to create a politically-viable and less expensive tax reduction bill.

The move would send a heavily-altered version of Gov. Sam Brownback’s plan to the Governor’s desk. Brownback has indicated he would sign the bill, but he has said he prefers a bill negotiated by the House and Senate that leaves a positive ending balance.

The House’s move is viewed by some as an attempt to pressure the Senate to approve the negotiated tax bill this afternoon. If the House approves their plan, it would kill the negotiated deal. But if the Senate votes first and passes its plan, it would kill the House’s version and advance the bill to the House where its passage is all but assured.

The House awaits a vote on a big tax cut plan. (This photo merges several photos to provide a wider perspective of House floor.)

That plan the House is considering this afternoon would cost an estimated $3.7 billion over five years. It is a heavily altered version of the governor’s original tax-reduction proposal. Senators removed from Brownback’s original pitch a 2 percent cap on the growth of government spending, and they reinstated a wide variety of tax credits and deductions that Brownback wanted to eliminate to simplify the tax code and reduce the impact of the tax cuts on state revenue.

Projections created by legislative researchers earlier this month show that the more expensive plan would leave the state with a $270 million deficit in the 2014 fiscal year, the first full year of the tax cuts. That deficit would grow to $2 billion by 2017, according to the projections.

Several House members have spoken against the bill. Meanwhile, others are trying to put an end to the debate and force a quick vote to preempt the Senate’s planned debate this afternoon, which was slated to start at 2 p.m.

If the House votes first and sends the bill to the Governor’s desk, it would kill the bill the Senate had planned to vote on today.

Projections on the plan the Senate is slated to vote on this afternoon show the plan would leave a $165 million budget surplus in 2018.

The proposal collapses the state’s three income tax brackets, which are now set at 3.5 percent, 6.25 percent and 6.45 percent. It would lock the lower bracket for the first $30,000 of income for married couples or $15,000 for individuals would be dropped to 3 percent. The bracket for income above that would be set at 5.5 percent in 2013-2014 and drop to 5.3 percent in 2015 before hitting 5.1 percent in 2016.

It phases out nonwage income taxes for 191,000 limited liability companies, subchapter S corporations and sole proprietorships. The first $100,000 of nonwage income would be exempt in 2013-2014. That would shift to the first $250,000 in 2015-2016 and eliminate the tax entirely starting in 2017.

It forces low-income families to choose between claiming the earned income tax credit or a food sales tax rebate.

The plan eliminates 17 tax credits. And renters would no longer be able to claim the homestead property tax refund. The money saved from that would go back into the program for homeowners, allowing them a maximum $800 refund.

Currently oil and gas companies get a two year exemption from severance taxes on new wells. Under the new plan, any producer drawing more than 100 barrels a day would have to pay the tax.

The plan provides $45 million a year to local governments for property tax relief.

Read more about the bills here: http://www.kansas.com/2012/05/09/2327940/brownback-plan-to-lower-income.html