When fully implemented, the Freedom from Taxes Fund in HCR 5034 would have fewer sales tax exemptions in Kansas, and use the additional sales tax revenue to eventually eliminate motor vehicle, property and income taxes.
According to written testimony by State Revisor of Statutes Adam Siebers, the legislation calls for a Kansas Citizens Freedom Review Board to make recommendations on all sales tax exemptions offered by the state. Those that are targeted for elimination would be forwarded in a report to the governor, the state treasurer and the legislature within a year of the approval of the new law. The board would then be disbanded.
Revenue from the discontinued sales tax exemptions would be collected by the state treasurer, placed in the Freedom From Taxes Fund (FFTF), where it will be professionally managed and invested. Interest from those investments would be directed toward a systematic elimination of first, motor vehicle property taxes, then state-mandated and imposed property taxes, and lastly, state-mandated income and privilege taxes. Privilege taxes are those imposed on financial institutions.
Any sales tax exemptions left in place by the Citizens Freedom Review Board will be subject to a five-year review and must be renewed at the end of that period to continue.
House Speaker Pro-Tem Blake Carpenter, the architect of the Freedom from Taxes Fund plan, testified to the House Tax Committee that there are $9 billion in sales tax exemptions currently in the state. He envisions that $2 billion could be eliminated and initially placed in the fund. He believes the Freedom From Taxes Fund represents a new approach to public finance:
“Rather than relying exclusively on annual tax collections to fund government, this proposal creates a permanent financial structure that gradually builds the capacity to replace certain taxes with investment earnings. In essence, it seeks to convert existing inefficiencies within the tax code into long-term capital that can grow over time.
“That capital would be preserved within a constitutionally protected fund and professionally invested with a focus on long-term stability and disciplined growth. Only the earnings generated from those investments may be used, and even then, only under clearly defined rules designed to ensure that the fund remains stable and continues to grow across generations.
“This distinction between principal and earnings is essential. The principal of the fund is protected and may not be appropriated, borrowed against, or diverted for other purposes. In this way, the fund functions as a permanent financial asset for the state rather than a short-term revenue source.
“The framework, therefore, emphasizes permanence over speed. Taxes are reduced or eliminated only when investment earnings are sufficient to replace the revenue in a sustainable manner. Once that threshold is met, the structure is designed so those taxes remain eliminated without placing future pressure on the state budget.
“Kansas has an opportunity to begin building a financial architecture that gradually reduces reliance on certain taxes while strengthening the long-term stability of the state’s finances.”
Carpenter concluded:
“Every generation of Kansans inherits the fiscal decisions made before them. The question we must always ask ourselves is whether the policies we enact today will leave the state stronger for those who follow.”
