TOPEKA — Four of six members of Kansas’ congressional delegation endorsed Wednesday an overhaul of the federal tax code developed by House and Senate Republican leaders and President Donald Trump.
U.S. Reps. Lynn Jenkins, Roger Marshall and Ron Estes and U.S. Sen. Pat Roberts threw their weight behind legislation that would cut the corporate income tax rate and the upper individual income tax rate. The measure would drop the corporate rate from 35 percent to 20 percent, while the top individual rate would fall from 39 percent to 35 percent.
“There is widespread, bipartisan agreement on the need for tax reform,” Roberts said. “We ought to put aside partisan obstructionism and take action on something in which a majority of Americans agree.”
None of the four members’ statements on the tax legislation pointed to potential expansion of the federal deficit in the next decade.
The proposed GOP tax package nearly would double the standard deduction for individuals and allow multi-national companies to repatriate profits held offshore by paying a discounted income tax rate. The plan would drop the estate tax applicable to people with assets of more than $5.49 million.
Justin Carroll, a financial economist at the Kansas Department of Revenue, said the federal tax proposal was in such flux it would be difficult to precisely determine the impact on Kansans.
“What we’re saying is, unfortunately, the proposal that’s out now doesn’t give enough information for us to reasonably determine what it means for Kansans,” said Michael Austin, an economist with the revenue department.
State officials said changes to standard deductions on a federal level wouldn’t have a state impact, because the starting point of the Kansas tax return is federal adjusted gross income. That amount is determined before federal deductions or itemization changes are factored in. At least four out of five Kansas tax filers take the standard deduction, the agency said.
In addition, the GOP proposal would set a maximum federal tax rate on pass-through income for small or family owned businesses at 25 percent rather than the higher individual income tax. That provision is reminiscent of the 2012 Kansas law signed by Gov. Sam Brownback exempting owners of 330,000 businesses from state income tax. The statute was repealed by the 2017 Legislature.
Jenkins, who represents Topeka and the Second District, said the recommendation of Republican leaders shouldn’t be compared to a controversial recent Kansas law exempting owners of limited-liability companies from state income tax.
“While some may try to compare this tax reform framework to what was tried in Kansas, the truth is these two reforms could not be more different,” she said. “In terms of pass-through businesses, Congress will lower the rate to 25 percent — not 0 percent.”
Marshall said taxpayers were frustrated by a complicated tax code favoring the powerful, wealthy and well-connected.
“More than anything else, the most common complaint I hear about the existing tax system is its complexity,” he said. “With this in mind, we aim to make it possible to file your taxes on a postcard.”
Estes, who serves the Fourth District centered in Wichita, said adoption of the tax proposal would deliver higher wages and better jobs for American workers. The proposed reforms will allow people to save more for retirement or college, he said.