Lawmakers adopted a bill that would allow taxpayers to keep the savings garnered by last year’s federal tax cuts. Under SB 22, Kansas taxpayers who take the standard deduction on their federal tax forms will be able to itemize on their Kansas income taxes and businesses won’t be taxed on foreign income, saving taxpayers an estimated $200 million. Gov. Laura Kelly appears poised to veto it, however.
Senators last year adopted a similar proposal, but the House balked. This year, SB 22 was one of the first bills to pass through the Senate. Senators approved the legislation, 26-14, on Feb. 7. The House passed the legislation, 76-43, last week. House members made two significant changes to the bill; the state’s sales tax on food is reduced from 6.5 percent to 5.5 percent and retailers without a Kansas presence would have to collect sales tax on online purchases.
Senate President Susan Wagle said she had hoped to pass a clean bill, but she supported the House’s changes on Thursday.
“We pay an absurdly high tax on food,” she said. “They’ve been asking us to lower it for a long time.”
Wagle, a Wichita Republican, said the internet sales tax is an issue of fairness. Currently, only companies with locations in Kansas must charge sales taxes on internet sales. SB 22 would require sales taxes be collected and charged to sellers operating outside of Kansas.
“We’ve been asked for a long time to fix the sales tax problem,” Wagle said. “That is a fairness issue. This bill keeps companies, families, and individuals in business, and a vote against this bill is a vote for a tax increase.”
Though internet sales tax provisions and the food sales tax reductions take effect months into the future, Oct. 1, 2019, much of the debate in the Senate looked back. Moments before debating SB 22, Senators adopted a proposal to increase school funding by approximately $90 million next year, hoping to ultimately end school funding litigation. Initially, the state board of education and school lobbying groups supported the effort, but in recent days, the plaintiffs in the ongoing school funding lawsuits have said $90 million falls $270 million short of their expectations.
Sen. Barbara Bollier, a Mission Democrat, questioned how the state will pay for increased school funding when SB 22 shrinks the state’s revenue by approximately $200 million.
Wagle said the state has a balance problem that has been preventing funding for every critical service except schools for several years.
“I thought we solved the problem last year for schools,” she said. “A number of people today said I think that vote is going to end the litigation, and I pray it does. But I’m not getting any message from the plaintiffs that we’re getting out of this mess. In fact, they want more.”