New income tax plan emerging in Kansas House | Wichita Eagle

TOPEKA, Kan. ? A powerful Republican lawmaker said Monday he has a proposal to reduce Kansas' personal income taxes that would also allow the state sales tax to drop as scheduled, avoiding the GOP governor's plan to stabilize the state budget by maintaining the current sales tax rate.

Rep. Richard Carlson, chairman of the House Taxation Committee, wants to allow the income tax rate to drop annually but only if state revenues grow by at least 2 percent each year. Gov. Sam Brownback's proposal calls for cutting income tax rates by a specific amount every year regardless of how much money the state is bringing in.

Carlson said his plan also would allow Kansas' sales tax to drop as scheduled, starting in July, as promised three years ago when lawmakers temporarily hiked the sales tax to help fill a budget gap. The governor's plan would keep the sales tax where it is - but Carlson said he doubts the House would approve canceling the decrease.

"We feel there's going to be difficulty in passing the extension of the sales tax," said Carlson, who shared details of his plan with The Associated Press on Monday, a day before he planned to present the plan to his committee.

Carlson also is proposing that the state divert $370 million from highway projects over the next two years if legislators can't trim spending enough elsewhere in the budget.

Both his and the governor's plans follow the massive income tax cuts that were enacted last year to stimulate the state economy but are now projected to create a budget shortfall for the fiscal year that begins in July. Carlson, of St. Marys, said he tried to craft a plan that could pass the House, where GOP leaders have been cool to canceling the sales tax decrease.

The governor also wants to eliminate two popular income tax deductions for homeowners to prevent budget problems. Carlson said he'd like to phase out all individual income tax deductions as tax rates dropped, rather than targeting specific breaks.

Brownback's goal is to position the state to phase out personal income taxes. Last year, the state reduced individual income tax rates, cutting the top one to 4.9 percent from 6.45 percent, and exempted the owners of 191,000 partnerships, sole proprietorships and other businesses from income taxes. However, the reductions created a projected budget shortfall for the next fiscal year.

Both the budget gap and the desire for additional income tax cuts led Brownback to propose keeping the sales tax at its current 6.3 percent rate, rather than letting it drop to 5.7 percent in July. Also, he wants to eliminate income tax deductions for homeowners' property taxes and the interest on their mortgages.

The Senate is expected to debate tax legislation this week. Its Assessment and Taxation Committee approved a bill containing the governor's plan, except for his proposal to scrap the property tax deduction.

Sen. Les Donovan, a Wichita Republican and chairman of his chamber's tax committee, said the emergence of a new plan in the House is a positive sign. The final version of any tax legislation is likely to be drafted by negotiators for the two chambers.

"At least we have something - a target," Donovan said.

But Rep. Tom Sawyer of Wichita, the ranking Democrat on the House tax committee, wasn't impressed with Carlson's plan. Like other critics of last year's cuts, he argues that they favored the state's wealthiest residents over its poorest ones, and he said Carlson's proposal does nothing to correct the problem.

Also, he said, continued reductions in personal income taxes will handcuff the state's efforts to finance public schools and force local districts to boost property taxes at a time when local levies already have been rising.

"We've got a property tax problem in Kansas, not an income tax problem," Sawyer said.

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Online:

Kansas Legislature: http://www.kslegislature.org

Source: http://www.kansas.com/2013/03/11/2711790/apnewsbreak-new-kan-income-tax.html

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