Daily Archives: May 22, 2012

Brownback to sign state’s huge tax cut into law

Brownback

TOPEKA — Gov. Sam Brownback plans to sign one of the state’s largest income tax cuts in history into law at noon today in a ceremony at the Capitol.

But moderate Republicans and Democrats have urged the Governor not to sign the bill because it is projected to force the state to cut hundreds of millions of dollars in state spending, potentially reducing funding for education and other services used by thousands of Kansans.

The Governor’s signature would punctuate a wide-ranging debate about taxes in Kansas that dominated much of this year’s legislative session.

Kansans wage-earners could expect to send less money to their state government starting next year. The cuts collapse the state’s three tax brackets to two. Married couples filing jointly would pay 3 percent on their first $30,000 of income and 4.9 percent on earnings beyond that. And owners of limited liability companies, subchapter S corporations and sole proprietorships would no longer have to pay taxes on nonwage income.

The new law would increase the standard deduction for single head-of-household taxpayers from $4,500 to $9,000.

Lawmakers pressed throughout the past few months for a milder tax-cutting plan that wouldn’t force state government to cut spending so drastically, so fast. But many Republicans and Democrats rejected alternative proposals because they feared those plans would also force big cuts to state services.

The bill Brownback is poised to sign today took a strange path to his desk.

It stemmed from a proposal that Brownback outlined in his State of the State Address. But his proposal became politically unviable almost immediately because it proposed cutting many popular tax credits and exemptions, and it was projected to disproportionately hurt low-income Kansans while boosting cash flows for wealthier residents — particularly business owners.

When the Governor’s plan moved through a Senate panel, Senators voted to retain many of the credits and deductions Brownback wanted to cut. That drastically increased the cost of the plan.

Senators changed the bill even more when they debated it. Then they initially rejected the bill when they voted on it.

But Brownback’s administration pleaded with Senators to approve the bill so that House and Senate negotiators could work out a better plan. Some senators say Brownback said he wouldn’t sign it, and Senate leaders said they were sure the bill would never become law.

But when an alternative plan emerged after weeks of negotiations, House members heard the Senate would reject the bill and quickly concurred with the massive bill the Senate had passed. That sent it to the Governor, who said he would sign it, and his administration used it as leverage to press lawmakers to approve an alternative.

But the Senate never voted on an alternative, leaving Brownback, who made income tax cuts a cornerstone of his agenda, with only one tax-cutting option.

The bill is projected to force $242 million in cuts in 2014, and cause more than $2 billion in cuts over five years. Brownback’s administration, meanwhile, has said the cuts could generate 23,000 new jobs beyond natural growth by 2020.

Many are skeptical of that projection.