The House and Senate Tax Conference Committee has teed up a report that will repeal the income tax exemption from some 330,000 Kansas businesses.
A key part of the Brownback tax plan that has all but sunk Kansas into the abyss, the Governor has so far sworn he will not support any repeal. But as the revenue hole sinks ever deeper some legislators have had second thoughts.
So today, they came forward with a bill that simply repeals the loophole. Does this mean we can look forward to a turnaround in the state’s dire revenue system? Absolutely not.
While the business income loophole has been the most talked about problem with the 2012-13 Brownback tax plan, it is far from the costliest. And the bill crafted today will provide no relief until 2018 because it doesn’t go into effect until the 2017 tax year.
Even if this bill passes, it is highly likely that the legislature and Governor will forge ahead with plans to rob the highway plan, delay KPERS payments, mortgage early childhood programs, and cut everything from universities to kindergartens.
A YES vote on this bill does restore some fairness to the tax system – it is patently unfair that a partner in a law firm pays no income tax while his receptionist does – but it really raises far less money than a restoration of the tax brackets and rates to pre-2012 levels would.
You might be happy if it passes because you hate the unfairness in the current system, but you’ll likely be upset when it doesn’t buy a pencil or fill a pothole.
KNEA supports the repeal of the loophole as a matter of fairness and fiscal common sense, but believes it should be done inside of a complete overhaul of our tax system such that revenue is restored and state programs can again be fully funded.