People connected to Democrat Laura Kelly’s administration have repeatedly misled Kansans on the facts related to tax relief, and a recent column in the Wichita Eagle is their latest attempt. And like other attempts, those involved should certainly know better. The authors, Duane Goossen and John Wilson are appointed members of Kelly’s tax council, which was assembled to provide cover for her to raise taxes. Kelly appointed none of the fiscally conservative economists at state universities, opting instead to load up the council with current and former government officials who support her tax-and-spend agenda.
Goossen and Wilson certainly didn’t let the truth get in the way of their three claims.
Tax relief related to conformity with the federal tax code is permitted
Goossen and Wilson should know that U.S. Treasury guidance indicates that tax cuts arising from “all measures of conformity” and not prohibited under the terms of the American Relief Plan Act (ARPA).
According to The National Law Review, conformity bills will not trigger claw-back provisions in the $1.6 billion the State of Kansas is set to receive. In its press release, Treasury stated:
… Treasury has decided to address a question that has arisen frequently: whether income tax changes that simply conform a State or territory’s tax law with recent changes in federal income tax law are subject to the offset provision of section 602(c)(2)(A) of the Social Security Act, as added by the American Rescue Plan Act of 2021. Regardless of the particular method of conformity and the effect on net tax revenue, Treasury views such changes as permissible under the offset provision.
National Law Review says this should ease concerns of state legislatures.
“Passing a conformity bill will not cause any loss of federal funding. Treasury’s guidance, because it applies to all “methods of conformity,” should cover any legislation that either couples with or decouples from the Internal Revenue Code.”
No basis for the alleged $360 million revenue loss
Goossen and Wilson repeated the now-disproven March 30 allegation by Budget Director Proffitt and KDOR Secretary Mark Burghart that state revenues would be $360 million lower due to PPP loan expenses being deductible.
Payroll and other expenses have always been deductible, so for that to have been true, Proffitt and Burghart would have to show that revenue estimates were increased at some point last year to account for their alleged belief that those expenses would not be deductible. In other words, one cannot remove something that wasn’t there in the first place.
Last week, the Department of Revenue responded to our Open Records request, admitting that they have no documents to substantiate their allegation.
SB 50 returns taxpayers’ “found wallet”
The purpose of the Eagle column was to dissuade legislators from overriding Kelly’s veto of Senate Bill 50, calling it “generous tax breaks to big corporations and high-income earners.” The truth, however, is that SB 50 reverses tax increases that were never approved by the Legislature.
The 2017 Congressional tax relief bill reduced federal taxes, but the changes cause some people and businesses to pay more state tax. The higher standard federal deduction prompted people to use that instead of itemizing deductions, but that prevented them from itemizing for state purposes. Another change caused businesses to be charged state income tax on foreign income.
Senate President Ty Masterson and others say it’s like the State of Kansas found a wallet with taxpayers’ money on the sidewalk and kept it. Governor Kelly and her tax-and-spend allies know the money in SB 50 rightfully belongs to taxpayers, but they want to keep it.
Former state budget director Duane Goossen and former state representative John Wilson aren’t letting the truth get in the way of their mission to help Governor Kelly continue stealing taxpayers’ money.