TOPEKA — Kansas congresswoman Lynn Jenkins praised the federal tax proposal unveiled Thursday as a significant step toward development of a fairer system and for avoiding a feature of 2012 tax policy in Kansas that exempted business owners from paying state income tax.
Jenkins, a Republican who represents the Second District of eastern Kansas, said she was excited about language lowering tax rates for families and businesses, simplifying the tax code and improving college savings plans and child-tax credits.
She emphasized the bill released by U.S. House Republicans was not a mirror image of the supply-side tax program adopted by Kansas five years ago. It exempted owners of approximately 400,000 businesses from state income tax. The controversial provision contributed to state budget woes and was repealed in 2017, despite objections of Gov. Sam Brownback.
The proposal in the federal reform bill would drop the income tax on those businesses to 25 percent, and limit that break to 30 percent of a business’ pass-through income.
“While Kansas took the pass-through rate to 0 percent, we are dropping the rate to 25 percent along with implementing strong safeguards to prevent the type of tax avoidance that was possible in the Kansas plan,” Jenkins said.
Jenkins’ statement didn’t address a complaint among some Republicans and Democrats about the federal bill’s limit on deduction of state and local property taxes to $10,000.
Kansas House Minority Leader Jim Ward, D-Wichita, criticized plans by President Donald Trump and other Republicans to model federal tax reform on “failed” tax experiments in Kansas. He said during a hearing in Washington, D.C., economic expansion and job growth promised by Brownback didn’t materialize after income taxes were slashed. Instead, the state faced years of budget shortfalls. Legislators responded by increasing the statewide sales tax in 2015 and by adopting a huge state income tax hike in 2017.
“The Kansas tax experiment was a complete and utter failure that bankrupted our state,” Ward said. “It resulted in severely limited, and in some instances gutted, essential state services, harmed our schools, our hospitals and our most vulnerable citizens.”
Sarah LaFrenz, a Kansas Department of Health and Environment employee and member of a state government union, said Kansas budget problems led to reductions in the number of state employees and diminished government services. She said staffing problems contributed to state prison riots, failure to track missing children in foster care, delayed highway construction projects tied to improve public safety and problems monitoring potential environmental problems.
She said KDHE no longer had laboratory employees to test water, soil and plant samples from Wolf Creek nuclear power plant near Burlington. The Wolf Creek samples are shipped to a lab in Iowa for analysis.
“The last two people who worked in this lab left in September 2015 due to low pay and rampant mismanagement,” she said. “Unstaffed for more than two years, no one in Kansas has been testing those samples for radiation.”
The federal GOP tax proposal would reduce the number of individual federal income tax brackets from seven to four, lower the federal corporate tax rate to 20 percent and limit the home interest deduction to loans up to $500,000. The legislation would raise the child-tax credit to $1,600, increase the standard deduction for individuals and households, and repeal the estate tax in 2024.
U.S. Rep. Roger Marshal, a Republican serving the large First District, said the proposal meant a family of four earning the national median income of $59,000 could receive a $1,182 reduction in federal taxes.
Democrat Andrea Ramsey, who is seeking the Third District congressional seat held by Republican U.S. Rep. Kevin Yoder, said the federal tax code must be modified to eliminate special-interest loopholes and trim taxation of the middle class.
“The Republican plan introduced today is not tax reform,” she said. “It’s just another attempt to cut taxes for the wealthy and corporations at the expense of the middle class. The average Kansas family will pay more under this plan.”
Yoder said he was excited about prospects of altering the House GOP proposal.
“We’re going to work through the amendment process, make this an even better final product, and hopefully bring a bill to the president that makes the tax code more simple and fair, helps create jobs and grow paychecks.”