(The Center Square) – A proposal to cut Kansas income taxes passed its first vote after the bill’s lofty goals of cutting taxes by over $300 million were moderated.
Republican legislators in the Kansas Senate tax committee narrowed the bill to an approximate $170 million income tax cut before approving it. The reduction would go into effect during the budget year starting in July.
Lawmakers decided a tax cut was appropriate after federal income tax laws changed in a way that made Kansas’s state income tax rise back in 2017. Federal income tax reforms made it more difficult to claim itemized deductions. As it stands in Kansas, residents may not itemize their state returns if they did not do so on their federal return. The result: higher state income tax for Kansans.
Michael Austin, director of Kansas Policy Institute’s Sandlian Center for Entrepreneurial Government, said it’s still early in the legislative session to know the exact impact these tax cuts would have, though he expects they will return at least $100 million dollars back to Kansans.
“It’s not a massive overhaul like some are saying,” he told The Center Square. “It’s a modest reform to alleviate the burden on Kansas families.”
Fort Scott Biz reports Democratic Gov. Laura Kelly expressed concerns that any tax cuts at this point could undermine COVID-19 recovery. State and national policy experts offered the Governor’s Council on Tax Reform data indicating the income tax itemization reform would benefit about 7% of taxpayers, and of those many would be high-income earners, Fort Scott Biz reports.
Austin thinks a tax cut could be beneficial at this time. He said government should take the opportunity to restructure, just as Kansans are having to do with their lives. The government should find ways to cut the budget fat and use those savings to support a tax cut, he said.
“With the economy faltering under COVID, now more than ever, our elected officials should lift up those who produce goods and services,” Austin said. “It’s one of the best ways government can also slow out-migration, and make it easier for those living paycheck to paycheck or for those entering retirement.”
Austin said it’s likely the governor will veto the tax cut as her agenda includes hikes in spending.
But that doesn’t mean tax cuts are dead in the water.
“As such it creates a unique opportunity for the conservative legislature to rebuke that vision and help Kansans keep more of what they earn,” Austin said.