Of Taxes, College Credits, and the Sad Case of Foreign Languages

Jan 28, 2019 by

Tax decoupling on the Senate fast track

There’s been quite a tax kerfuffle in the Senate. Tax Committee chair Caryn Tyson (R-Parker) appeared to have fast tracked a tax giveaway bill – the so-called “windfall” bill. Her intent was to decouple part of the Kansas income tax code from the federal income tax code. 

When Congress adopted the Trump tax cuts for the wealthiest Americans, the changes they made to the code would prevent many middle income Americans from itemizing deductions and instead taking a higher standard deduction. But since the state code and federal code are “coupled,” itemization would go away for most Kansans but without the benefit of a higher Kansas standard deduction. Thus some Kansans would see their state income taxes go up. 

This additional tax revenue is being portrayed as a “windfall” to the state that the state never planned on getting. Republican conservatives are crying foul and demanding that the state give this revenue back to the taxpayers (and conveniently forgetting that the entire Kansas Republican Congressional Delegation gleefully voted for the Trump tax changes). 

So here’s where things get sticky. Tyson’s bill also included a number of other tax changes not related to the income tax changes. Then Tyson invited the Kansas Chamber to present their wishlist of tax changes to benefit corporations. These are tied up largely in two complex provisions dealing with overseas earnings – the GILTI provision and the Repatriation provision. 

It was clear that Tyson intended to put the corporate tax revisions into the bill which would further clutter up the package. 

And, that’s when Senate President Susan Wagle (R-Wichita) stepped in. Wagle apparently wanted to go in a slightly different direction and so she formed a new committee to deal specifically with federal tax implications naming herself as Chair – The Senate Select Committee on Federal Tax Implementation.

Speculation is that Wagle wants the decoupling for itemized deductions and the GILTI and Repatriation provisions requested by the Chamber but doesn’t want them jumbled up with a bunch of unrelated provisions. Some say Tyson disagreed, wanting to push her bigger tax bill. 

That’s where things sit right now. And Wagle’s Select Committee will be meeting Tuesday through Thursday this week to hear SB 22, the bill decoupling from the federal tax code. The plan is to have final action by the Committee on Thursday.

The Governor is opposed to the decoupling at this time, urging the Legislature to go slowly on tax issues. No one has yet been able to accurately determine the impact of the decoupling and Kelly is suggesting that until that can be done – possibly this summer – there should be no changes as those changes could have a significantly negative impact on the state budget.

Meanwhile, the House Tax Committee, instead of rushing into the abyss, are engaged in thoughtful discussions about the actual impact of the federal tax changes on Kansas taxpayers, whether or not there is an alternative to decoupling that would accomplish the same thing, and what the fiscal impact of each option might be.

More tax issues being discussed

The House Tax Committee moved on to discussing new options on the collection of internet sales taxes.

This discussion is the result of a recent US Supreme Court decision that changes the standard for collection of sales taxes on internet sales. In the past, under a decision called the “Quill Decision,” sales taxes on internet sales were required only if the the seller had a physical presence in the state. This new decision – the “Wayfair Decision” – overturns the physical requirement and says physical presence or economic presence counts.

States are adopting a minimum sales threshold under which an internet sales provider would be required to collect destination sales taxes. Most states have adopted $100,000 in sales as the threshold; some have an either/or situation – either $100,000 in sales or 200 sales transactions in the state. Also in this discussion is how to handle the sale of digital properties like Netflix, Hulu, iTunes, etc.

The Kansas legislature will likely take this matter up.

Concurrent enrollment discussion in K-12 Budget Committee

A discussion in a meeting of the House K-12 Budget Committee focused primarily on the issue of concurrent enrollment programs for Kansas high school students.  Dr. Blake Flanders, President and CEO of the Kansas Board of Regents, joined Kansas Commissioner of Education, Randy Watson to present a plan to grow the current program.  Both presenters extolled the virtues of attainable post-secondary programs and the impact those graduates have upon the Kansas job market, salary growth and overall growth of economic prosperity.  

By growing the concurrent enrollment program, along with other pathways to post-secondary opportunities, more students in all parts of Kansas can seek certificates, undergraduate and graduate degrees.  Under this program, teachers of concurrent enrollment courses would be employed and paid by the district while the post-secondary partner institution- typically a community college- would receive funding for tuition, books and supplies for each enrolled program student.  The tuition fee- paid through an allocation of state dollars to this program- would be approximately $275 per course.  

Both the committee chairperson, Representative Kristey Williams (R-Augusta) and Vice-Chair Representative Kyle Hoffman (R-Coldwater), had questions regarding the funding amounts, who would be paid (the district or the college) and why this program would- in effect- be akin to double paying for students.  The funding amount- per enrolled student- is the median of a range of tuition amounts from ongoing programs throughout the state.  Dr. Flanders indicated that it would be the institution that would receive the funds under this program but that local agreements with districts could push portions of those funds back to the district. 

Are foreign language studies disappearing?

Last week we were sitting the House K-12 Budget Committee listening to a discussion on school performance and the Kansas school accreditation system. At one point Chairperson Kristey Williams (R-Augusta) commented on the importance of foreign language instruction. As Kansas educators know the value of studying foreign languages, we were pleased and surprised to hear a representative mention a subject other than STEM subjects.

But today we came across an article in the Chronicle of Higher Education reporting that from 2013 to 2016, colleges in the United States lost 651 foreign language programs (among those were 118 Spanish programs, 129 in French, 86 in German, and 56 in Italian). By comparison, only one program was lost between 2009 and 2013.

Given the global world in which we operate and in which today’s young people will compete, we hope this is an anomaly and not a trend but expectations are that the decline will continue into 2020.

You can read the article in the Chronicle by clicking here.