The Kansas Senate Committee on Assessment and Taxation will hold a hearing next week on a proposal that would eliminate the LLC-exemption and significantly increase personal income tax rates. Senate President Susan Wagle told Hawver’s Capitol Report that she has a consensus of 31 Republican Senate members, but that number appears to be in doubt.
At least three Senators, Sens. Gene Sullentrop, Mary Pilcher-Cook and Ty Masterson, say they will not vote to increase income taxes on all Kansans.
“The so-called Republican leadership plan is a massive tax increase on every single Kansan and does not square with conservative principles,” Masterson said. “Not only does it represent a tax hike on over 300,000 small business owners, it is also a rate increase on middle and lower income Kansans who are regular wage earners and living paycheck to paycheck. There is no consensus this is the best plan, and we are bewildered the leadership would claim that.”
Under the proposal, married couples filing jointly who earn less than $30,000 would see their taxes raised by 15 percent, as the tax rate would increase from 2.6 percent to 3 percent next year. For those making more than $30,000, the tax would increase by 6.5 percent, with rates going from 4.6 percent to 4.9 percent. The proposal would also impose a new income tax of 2.6 percent on married individuals with taxable income below $12,500 and individual with taxable income below $5,000. That would translate into additional taxes of more than $325 per year for a household with more than $12,500 of taxable income.
Back in October, Wagle told Statehouse Blend’s Sam Zeff that she didn’t think legislators would be wiling to raise income tax rates.
“I think raising a rate–there’s just not going to be 21 legislators that are going to go on record and raise an income tax rate,” she told the public radio broadcast audience.
Despite that belief, the Statehouse rumor mill suggests the legislation will be fast tracked with a vote of the full Senate to do just that coming as soon as next Thursday. However, there may be as many as 9 Republicans unwilling to vote for a tax increase on all Kansans.
“After reviewing the Senate leadership proposals and in just over 24 hours with little discussion and no debate, Senate leadership assumes there is consensus among Senators on raising taxes all Kansas taxpayers. That is certainly not my position,” Sullentrop said.
Kansas Democrat leaders in the House and Senate aren’t saying whether they will encourage their caucus members to support the legislation. The legislation assumes Kansas would raise an estimated $430 million in revenue with the tax increases, but a fiscal note has yet to be published. Sen. Anthony Hensley, Senate Minority Leader, called that amount “woefully inadequate.”
“If (the fiscal note) is only in the $400 million range, how do Republicans fill the hole?” Hensley said in a press conference Friday morning. He said he suspects Republican leadership will likely try to convince their membership to cut the budget.
“And that’s unacceptable,” he said.
Budget cuts would likely be palatable to the Republican Senators who say they will not vote for the tax increase as proposed.
“This plan may have been offered by certain Senators who call themselves Republicans, but it is not a Republican plan,” Pilcher-Cook said. “The faux campaign slogans of tax fairness and economic growth have been set aside, replaced by the reality of a tax scheme that would not only cost us jobs, but increase rates on the very people filling those jobs, including those who are lower income. It’s so disappointing that a tax increase is the first public proposal we see–no cuts, no efficiency, no deeper examination of tax policy in Kansas–just a big tax hike to fund government.”
Senators Masterson and Pilcher-Cook are part of a new KLEAR Steering Committee that calls themselves the Truth Caucus.
Masterson said they represent a large group of legislators in both chambers who feel it is important that conservative principles are given voice in ongoing debates in the legislature.
“The term ‘Republican’ must mean something, and to us, that means adhering to the conservative principles of limited government, individual liberty, free enterprise and limited government. In this case, it means resisting large tax increases masquerading as a Republican proposal. We will continue to speak out on this and other issues. Stay tuned,” Masterson said.
A hearing for the legislation is set for 1 p.m. on Feb. 6. If the bill passes out of committee, the full Senate may entertain the tax increase proposal on Thursday. It is rumored that the Senate is sending unrelated bills to the House so they could be stripped of their contents and used as ‘shells’ for the House to insert its own tax plan and send back to the Senate, requiring only one vote to concur and disallowing any amendments.
Assaria Republican Rep. Steven Johnson, who chairs the House Taxation Committee, has said the House will try to assemble a comprehensive tax package next week.